Operational Bulletin 080 –
October 2, 2008 (expired)

Regulatory Amendments – Provincial Nominee Program

This Operational Bulletin has expired. Please refer to manual OP 7(b) – Provincial Nominee Program for current information.

Regulatory amendments concerning provincial nominees came into force on September 2, 2008 to clarify the provisions related to passive investment. These instructions will be added to the relevant operational manuals.

Background

The Provincial Nominee (PN) Class is prescribed as a class of persons who may become permanent residents on the basis of their ability to become economically established in Canada.

Provincial nominees are named in a nomination certificate issued by a provincial or territorial government. Provinces (except Quebec) and territories are responsible for the management and design of their respective Provincial Nominee programs, including nomination criteria. Once a candidate is nominated, they submit an application for permanent residence in Canada.

CIC is responsible for:

• assessing the candidates’ admissibility;
• assessing their eligibility under R87; and
• rendering a final decision on their eligibility as members of the Provincial Nominee Class [R87(2)].

Foreign nationals, who are nominated on the basis of a passive investment, are excluded from membership in the PN Class [R87(5)].

A passive investment occurs when an individual invests capital in a business or organization without being actively involved in its management. Such an investment is prohibited under the Immigration and Refugee Protection Regulations. Under the previous regulations, the description of a passive investment was worded in such a way that it did not effectively prevent the Provincial Nominee programs from being used to attract such an investment. This misuse occurred because the concepts “active management” and “immigration-linked investor scheme” were not sufficiently defined. The original wording suggested that any involvement in the management of the business, however minor, could overcome the exclusion. It did not define a minimum level of active involvement in the business.

What has changed

R87(5) and (6) were amended to specify that foreign nationals cannot be considered members of the PN Class in cases where passive investment may arise. A foreign national is precluded from being considered a member of the PN Class, if the nomination was based on their provision of capital or their participation in an immigration-linked investment scheme.

A foreign national may still be considered a member of the PN Class if:

• the capital provided to a business is not made primarily for the purpose of deriving interest, dividends or capital gains;
• the foreign national controls, or will control, at least 331/3 percent of the equity in the business, or has made a minimum $1 million equity investment in the business;
• the foreign national will participate actively, on an ongoing basis, in the management of the business; and
• the terms of investment in the business do not include a redemption option.

As is consistent with the federal business classes, the percentage of equity controlled by both the principal applicant and their spouse or common-law partner will be considered.

“Immigration-linked investment scheme” has been defined in R87(9) to support these revisions. The definition includes any strategy or plan where:

• one of the objectives is to facilitate immigration to Canada;
• one of the objectives of the promoters of the strategy or plan is to raise capital; or
• the agreement or arrangement was entered into primarily for the purpose of acquiring status or privilege under the Act.

Note: In cases of investment schemes, R87(6)(b) requires that the Provincial Nominee applicant control a percentage of equity in the business equal to or greater than 331/3 percent or make an equity investment in the business of at least $1,000,000. These requirements are consistent with active and ongoing management of a business which is a requirement set out in R87(6)(c).

Procedures

All applications for permanent residence in progress at the federal level prior to September 2, 2008 will be assessed according to the regulation in effect immediately prior to September 2, 2008, as will all nomination certificates issued on or before September 1, 2008. Please note that the application for permanent residence does not need to have been received by September 2, 2008; only the nomination certificate itself must have been issued as of September 1, 2008, or earlier.

New applications with a nomination certificate issued on or after September 2, 2008 are subject to the new regulation.

Monitoring and compliance

The requirements to be a member of the PN Class and to economically establish in Canada always apply. Officers should request additional documentation or clarification from the applicant or the nominating province if they are not satisfied that all criteria will be met by the applicant.

If the nomination certificate is not a sufficient indicator that a foreign national can economically establish in Canada, an officer may substitute their evaluation of the likelihood of the ability of the foreign national to become economically established in Canada. Such a substitution requires that the officer consult with the government that issued the certificate and also requires the concurrence of a second, appropriately delegated, officer.

The intention to reside in the nominating province should be reaffirmed in all cases. This is especially important when it is anticipated that a significant time lag may occur between nomination and visa issuance.

Officers who have reason to believe that applicants, whose nomination certificates are issued after September 2, 2008, have been nominated on the basis of a passive investment, should proceed to interview the client and/or request additional documentation to satisfy R87(5), (6) and (9) requirements.

Officers are still required to consult with the nominating province or territory if a refusal will result.

References

• OP 7b – Provincial Nominees
• Amendments to R87 in the Canada Gazette
• R88(1), for more information on calculating percentage of equity.
• IL 3 – Designation of Officers and Delegation of Authority