{"id":323,"date":"2026-02-19T09:42:51","date_gmt":"2026-02-19T09:42:51","guid":{"rendered":"https:\/\/techajob.co.uk\/northgate\/?p=323"},"modified":"2026-06-11T19:27:49","modified_gmt":"2026-06-11T18:27:49","slug":"leaving-canada-but-keeping-your-company-a-deeper-look-at-the-bagtech-decision-and-its-implications","status":"publish","type":"post","link":"https:\/\/techajob.co.uk\/northgate\/2026\/02\/19\/leaving-canada-but-keeping-your-company-a-deeper-look-at-the-bagtech-decision-and-its-implications\/","title":{"rendered":"Leaving Canada but Keeping Your Company: A Deeper Look at the Bagtech Decision and its Implications for CCPC Status (Part 2)"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"323\" class=\"elementor elementor-323\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-7eaceca e-flex e-con-boxed e-con e-parent\" data-id=\"7eaceca\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-2aa32cef elementor-widget elementor-widget-text-editor\" data-id=\"2aa32cef\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<div data-breakout=\"normal\"><p id=\"viewer-sboqp70\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">This post explores how Canadian business owners who are considering relocating\u2014whether to Israel, the U.S., or elsewhere\u2014may maintain the Canadian-Controlled Private Corporation (\u201c<strong>CCPC<\/strong>\u201d) status of their company.<\/span><\/p><p id=\"viewer-sboqp70\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">\u00a0<\/span><\/p><\/div><div data-breakout=\"normal\"><p id=\"viewer-jcz0s75\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">Key benefits of the CCPC designation are more clearly outlined in <a class=\"f6ol- uOBW3\" href=\"https:\/\/techajob.co.uk\/northgate\/post\/ccpc-status-and-aliyah-what-canadian-israeli-business-owners-need-to-know\" target=\"_blank\" rel=\"noopener noreferrer\" data-hook=\"web-link\"><u>Part 1<\/u><\/a> of this series. Here, we\u2019ll get deeper into some governance tools that may allow companies to preserve their CCPC designation even when non-resident shareholders hold significant voting power. <\/span><\/p><p id=\"viewer-jcz0s75\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">\u00a0<\/span><\/p><p class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><em><u>Note: <\/u><\/em><em>The following is not and should not be construed as legal or tax advice. <\/em><\/p><p class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><em>\u00a0<\/em><\/p><p class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><strong><em>Bagtech, Unanimous Shareholders Agreements, and the De Jure Canadian Control Test<\/em><\/strong><\/p><p class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><strong><em>\u00a0<\/em><\/strong><\/p><div data-breakout=\"normal\"><p id=\"viewer-qvsws89\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">Per <a class=\"f6ol- uOBW3\" href=\"https:\/\/laws-lois.justice.gc.ca\/eng\/acts\/i-3.3\/section-125.html\" target=\"_blank\" rel=\"noopener noreferrer\" data-hook=\"web-link\"><u>ss. 125(7)<\/u><\/a> of the <em>Income Tax Act<\/em>\u00a0(the \u201c<strong>Act<\/strong>\u201d), a CCPC is a private corporation resident in Canada that is not controlled, directly or indirectly, in any manner whatsoever, by one or more non-residents or public corporations.<\/span><\/p><p id=\"viewer-qvsws89\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span style=\"font-size: 1rem;\">\u00a0<\/span><\/p><p id=\"viewer-qvsws89\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span style=\"font-size: 1rem;\">In assessing whether a corporation is a CCPC, the Canada Revenue Agency (\u201c<\/span><strong style=\"font-size: 1rem;\">CRA<\/strong><span style=\"font-size: 1rem;\">\u201d) will first apply the<\/span><em style=\"font-size: 1rem;\">\u00a0de jure<\/em><span style=\"font-size: 1rem;\"> Canadian control test. The test focuses on who has the legal right to elect the company\u2019s board of directors, which is typically determined by:<\/span><\/p><p id=\"viewer-qvsws89\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\">\u00a0<\/p><\/div><div data-breakout=\"normal\"><ul class=\"Lzei8 gpBvH\"><li class=\"bHcMT\" dir=\"auto\" aria-level=\"1\"><p id=\"viewer-wa8i1105\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"\"><span class=\"SWVek\">Voting share ownership;<\/span><\/p><\/li><li class=\"bHcMT\" dir=\"auto\" aria-level=\"1\"><p id=\"viewer-xggyy108\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"\"><span class=\"SWVek\">Share classes and voting rights; and<\/span><\/p><\/li><li class=\"bHcMT\" dir=\"auto\" aria-level=\"1\"><p id=\"viewer-yv13z111\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"\"><span class=\"SWVek\">Restrictions in constating documents (<em>i.e<\/em>., the company\u2019s articles, partnership and shareholders agreements, among others)<\/span><\/p><\/li><\/ul><\/div><div data-breakout=\"normal\"><p id=\"viewer-jals1116\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">This test is the CRA&#8217;s default when assessing CCPC status.\u00a0<\/span><\/p><\/div><div data-breakout=\"normal\"><p id=\"viewer-781vj119\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">In <a class=\"f6ol- uOBW3\" href=\"https:\/\/www.canlii.org\/en\/ca\/fca\/doc\/2013\/2013fca164\/2013fca164.html\" target=\"_blank\" rel=\"noopener\" data-hook=\"web-link\"><em><u>The Queen v. Bioartificial Gel Technologies (Bagtech) Inc.<\/u><\/em><\/a><em>\u00a0<\/em>(\u201c<strong>Bagtech<\/strong>\u201d), non-residents held between 62.5% and 70% of the company&#8217;s voting shares (the majority). However, an internal Unanimous Shareholders Agreement (&#8220;<strong>USA<\/strong>&#8220;) granted the <u>Canadian-resident <\/u>shareholders alone the right to elect a majority of the company\u2019s Board.<\/span><\/p><p id=\"viewer-781vj119\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">\u00a0<\/span><\/p><\/div><div data-breakout=\"normal\"><p id=\"viewer-np2b524304\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">While originally denied CCPC status by the CRA, the Tax Court and the FCA maintained that CCPC status should not be denied on the sole basis of voting power. If a USA legally restricts how voting rights can be exercised, these restrictions will inform the <em>de jure<\/em> control analysis, and a company may remain a CCPC even where non-residents hold a majority of voting shares.<\/span><\/p><p id=\"viewer-np2b524304\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">\u00a0<\/span><\/p><\/div><div data-breakout=\"normal\"><p id=\"viewer-c7bfw134\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">For business owners relocating to Israel or America, <em>Bagtech<\/em> signals that non-residency does not necessarily mean the end of CCPC status.<\/span><\/p><p id=\"viewer-c7bfw134\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">\u00a0<\/span><\/p><p dir=\"auto\">\u00a0<\/p><\/div><div data-breakout=\"normal\"><p id=\"viewer-h1wms138\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\"><strong><em>A Word of Caution: De Facto Control Still Matters<\/em><\/strong><\/span><\/p><p id=\"viewer-h1wms138\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\"><strong><em>\u00a0<\/em><\/strong><\/span><\/p><\/div><div data-breakout=\"normal\"><p id=\"viewer-dcxpn140\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">While, thanks to <em>Bagtech<\/em>, a carefully drafted USA can support a finding of <em>de jure<\/em>\u00a0Canadian control, the CRA (and the courts in Canada) will ultimately evaluate who actually runs the company via the Act\u2019s<em>\u00a0de facto<\/em> Canadian control test. <\/span><\/p><p class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\">Potential red flags for the Canadian authorities include:<\/p><\/div><div data-breakout=\"normal\"><ul class=\"Lzei8 gpBvH\"><li class=\"bHcMT\" dir=\"auto\" aria-level=\"1\"><p id=\"viewer-jn0uo150\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"\"><span class=\"SWVek\">Board meetings that simply ratify previous decisions;<\/span><\/p><\/li><li class=\"bHcMT\" dir=\"auto\" aria-level=\"1\"><p id=\"viewer-b7w7r153\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"\"><span class=\"SWVek\">Major negotiations conducted exclusively by non-resident founders; and<\/span><\/p><\/li><li class=\"bHcMT\" dir=\"auto\" aria-level=\"1\"><p id=\"viewer-lih96156\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"\"><span class=\"SWVek\">Any evidence that Canadian directors are acting on the instruction of non-resident shareholders.<\/span><\/p><\/li><\/ul><\/div><div data-breakout=\"normal\"><p id=\"viewer-rcx87158\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">If these sorts of alarm bells are raised, the CRA may examine Board minutes, email records, and\/or the practical flow of decision-making, in order to assess where foreign influence amounts to \u201ccontrol.\u201d<\/span><\/p><p id=\"viewer-rcx87158\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">\u00a0<\/span><\/p><p dir=\"auto\">\u00a0<\/p><\/div><div data-breakout=\"normal\"><p id=\"viewer-poaxz164\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\"><strong><em>Conclusion: Preserving CCPC Status While Living Abroad<\/em><\/strong><\/span><\/p><p id=\"viewer-poaxz164\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\"><strong><em>\u00a0<\/em><\/strong><\/span><\/p><\/div><div data-breakout=\"normal\"><p id=\"viewer-1pguu162\" class=\"EcgWU aKYSf gpBvH HPRgD\" dir=\"auto\"><span class=\"SWVek\">For founders planning Aliyah, U.S. expansion, or any international move, corporate structure and substance must align. While a carefully drafted USA is useful, it cannot compensate for a company that is not in fact Canadian.<\/span><\/p><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>This post explores how Canadian business owners who are considering relocating\u2014whether to Israel, the U.S., or elsewhere\u2014may maintain the Canadian-Controlled Private Corporation (\u201cCCPC\u201d) status of their company. Key benefits of&hellip;<\/p>\n","protected":false},"author":1,"featured_media":324,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-323","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights"],"_links":{"self":[{"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/posts\/323","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/comments?post=323"}],"version-history":[{"count":17,"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/posts\/323\/revisions"}],"predecessor-version":[{"id":942,"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/posts\/323\/revisions\/942"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/media\/324"}],"wp:attachment":[{"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/media?parent=323"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/categories?post=323"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/techajob.co.uk\/northgate\/wp-json\/wp\/v2\/tags?post=323"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}