How many directors of a federally incorporated (CBCA) company must be Canadian residents?

The ordinary rule and the four sectors that raise it

CBCA s.105(3) sets the general floor: “Subject to subsection (3.1), at least twenty-five per cent of the directors of a corporation must be resident Canadians. However, if a corporation has less than four directors, at least one director must be a resident Canadian.” CBCA s.105(3) s.105(3.1) raises that bar to a majority for a corporation that “engages in an activity in Canada in a prescribed business sector,” and the Canada Business Corporations Regulations, 2001 name exactly four such sectors at s.16: “(a) uranium mining; (b) book publishing or distribution; (c) book sales, where the sale of books is the primary part of the corporation’s business; and (d) film or video distribution.” SOR/2001-512, s.16 A film or video distribution company therefore needs a majority-resident board, not a quarter, purely because of its sector.

Where it changes: this is a federal rule only

Ontario repealed its own director-residency requirement in 2021. A company incorporated under the Business Corporations Act (Ontario) can seat a board of any residency mix — the constraint that binds a CBCA company's directors disappears entirely on continuance into Ontario, rather than merely relaxing. Whether a foreign buyer needs to find resident-Canadian directors at all, in other words, turns first on which statute incorporated the target, and only then on its sector.

Where This Plays Out in the Case Files

• • A film distributor where a quarter of the board was not enough — the s.105(3.1) elevated threshold applied for real, on a target whose business fell inside the four prescribed sectors.
• • A board the foreign buyer could not legally fill — the ordinary 25% CBCA rule, and what s.114(3) does to a board that does not meet it.
• • The board seat problem that does not exist once the target continues into Ontario — the identical acquisition, continued into an OBCA company — where the requirement disappears rather than tightening.

Sources

• • Canada Business Corporations Act, R.S.C. 1985, c. C-44, s.105 — s.105(3) (the ordinary 25% residency threshold) and s.105(3.1)-(3.2) (the elevated majority threshold for prescribed sectors, and the no-reduction clarification).
• • Canada Business Corporations Regulations, 2001, SOR/2001-512, s.16 — the four prescribed business sectors, quoted above.
• • Treadstone Law — the resident Canadian director requirement — adjacent background on the requirement generally; it does not address the s.105(3.1) prescribed-sector threshold above.