What's A Real Canadian Company, Really?
Every couple years, when the Canadian Olympic uniforms are revealed, we get to have a conversation about nationalism through athleisure.
(And some people really don’t like the Lululemon Olympic gear, suggesting on social media that the contract should go back to Roots).
But in spite of marketing itself with a distinctly Canadian identity, the truth is that Roots stopped being solely Canadian-owned more than a decade ago. The company’s head office is still in Toronto, but the majority owners are foreign.
Over the past year we’ve all been thinking a lot more about buying from Canadian companies, but we haven’t defined what makes a company truly Canadian.
Across Canadian public policy, “Canadian” isn’t one consistent concept. Rather, it’s a menu of tests, and the test changes depending on what the government is trying to protect and champion.
In tax law (Income Tax Act), the emphasis is on residence and control. In one particular definition, a Canadian-controlled private corporation is a private, Canadian-resident corporation not controlled by non-residents or public companies. This CCPC concept turns on whether control ultimately sits with Canadians. In other words: for tax purposes, Canada already treats control as a meaningful attribute.
The Investment Canada Act goes broader: a “Canadian business” can basically mean a place of business in Canada, with people, operations, or assets here. That’s useful for foreign direct investment (FDI) review, but it also shows the core gap: you can have a real Canadian footprint without being Canadian-controlled.
And in strategic sectors, Canada is already comfortable with hard guardrails. Telecom eligibility hinges on being Canadian-incorporated and Canadian-owned and controlled (including thresholds like 80% having Canadian directors and 80% Canadian voting interests, plus a “not otherwise controlled” test). Air transportation similarly emphasizes majority Canadian voting interests and control in fact, with caps and aggregation limits.
Broadcasting and CanCon use a different kind of domestic test that is less about corporate ownership and more about creative control, key roles, and spending, but the instinct is the same: Canada asks who decides and who benefits.
This all reminds us that Canada knows how to write and enforce corporate control tests. However, we don’t apply them consistently when we talk about “Canadian companies” in everyday economic life and procurement, and figuring this out isn’t as simple as reading the fine print on a label (we tried).
Today, plenty of companies can count as being “Canadian” when they have an address here. In fact, sometimes this shows up when foreign multinationals register a local subsidiary here. That’s how we have companies like Amazon Canada, Google Canada, Microsoft Canada, TikTok Canada, and Huawei Canada that qualify as “Canadian” companies in some definitions.
This website claimed to list the top 100 “Canadian” defence companies, but our analysis found that while all of them have a Canadian address, only 57 of them are actually Canadian-controlled. The nuance matters.
In most countries, simply having a local address, and adding Canada to the end of your name, is not the real test of whether that company counts as being domestic.
Jurisdictions like the UK, Singapore, and Australia also target where decisions are made as a factor in determining whether a company is domestic. Japan and South Korea factor in whether a company’s headquarters is clearly on their soil. In Europe, there is a specific corporate entity called a “European Company” or Societas Europa; which requires that a firm have both its registered office and head office in the same EU country.
What does this all amount to? Generally defining a domestic company is based on some combination of:
– Ownership;
– Headquarters location;
– Control (meaning: who has the practical power to direct the company’s key decisions).
Right now, we don’t have a good definition. It’s all kind of a mess.
That’s why we’re doing the work to come up with a stronger standard for what constitutes a Canadian company. We’re looking at what other countries have done, talking to stakeholders across the country, and working on a definition that will strengthen our sovereignty and economy. We’d love to hear from you if you have thoughts on this, and we’ll share our proposed definition soon.
Shield In the News
In her latest Globe and Mail op-ed, Shield Managing Director Vass Bednar makes the case for Canada to follow in the footsteps of the French government, which recently announced it would be ditching Microsoft Teams and Zoom for homegrown alternatives. This switch comes at a time when many countries, Canada included, are grappling with their dependence on American Big Tech and the risks it represents. We were also quoted in Bloomberg about meaningful ways to drive economic resilience beyond the sugar high of AI adoption.
Song of the Week
“Who Are You Gonna Worship Now” by Cape Breton’s Goldie Boutilier.
Ever since Prime Minister Mark Carney visited the European Parliament in September, we’ve been thinking about what a deeper alliance across the Atlantic Ocean could mean. As we hit send on this email, Carney is meeting with António Costa, President of the European Council, and Ursula von der Leyen, President of the European Commission, in Montreal. At the end of it all, we’re expecting an announcement of … something. There have been a lot of anonymous tips in news reporting, but at the Canadian Shield Institute, we prefer to read the formal communiqué rather than trying to interpret whispers. In the run-up to the summit, we’ve been doing a bit of research, and we published a few articles to set the stage. EU Media Marketplace The Europeans are trying to break the AdTech duopoly. Canadian companies have tried to work together to create an alternative to Google and Meta’s dominance. So far, Canada’s efforts have fallen flat. Will this new EU enterprise fare any better? Read our analysis here. We find this whole situation very interesting for two reasons: First, Canada and Europe have a lot of the same problems right now. We’re all trying to figure out how to reduce vulnerability from the United States, and that vulnerability extends to digital reliance on private-sector technology platforms. It seems like we could benefit by joining forces, but it’s going to take some work figuring out exactly what that looks like in practice. Second, AdTech is just really interesting! Programmatic targeted advertising is the economic engine of the internet, and in turn this kind of advertising is hugely influential on culture and society. AdTech dictates what kinds of businesses thrive and what kinds of content gets posted online. Once you start researching it, AdTech quickly starts to look like one of the most important dimensions of digital sovereignty. If the online economy is entirely dominated by systems controlled by a handful of big American technology companies, realistically both Canada and the EU will always be on the back foot on digital governance. Digital Services Trade Speaking of being on the back foot, did you know that U.S. digital services exports to Canada are worth more than all the autos, steel, aluminum, lumber, potash and electricity put together? Why aren’t we talking about digital trade policy more in the negotiations with the United States? Read our analysis here. And the European Union is in a similar position. The EU has done a lot more to assert digital governance, but their trade deficit on digital services just keeps going up. This is a kind of reliance that creates a meaningful vulnerability if the United States keeps playing hardball. Read our analysis about EU digital trade here. Digital services might be a promising area for Canada and the European Union to work together. When the final communiqué is delivered from the Canada-EU summit, we will be combing through it for specific mentions of digital trade collaboration. Digital Sovereignty Policy Despite the EU’s digital dependence, we see a lot to admire in how the Europeans have been trying to assert their digital sovereignty. To be blunt: They’re trying things! Canada has often been slow to pass meaningful digital regulation, and quick to walk back policies that offend the Americans. The EU has enacted some really interesting regulations. Could Canada use “digital trade alignment” as cover to follow the EU’s lead? Read our analysis here. The Bottom Line Overall, when it comes to digital governance, we have a lot of hard work ahead of us. Digital policy is complicated and opaque, and it’s not enough to just pass a good law. Ongoing enforcement is a real challenge too. But this is one of the most pressing policy issues of our time, and with the accelerating deployment of AI systems, this issue is only going to become more urgent. It’s not as easy as striking a deal to sell soybeans, but digital governance is an area where Canada and the EU are natural partners, and it’s something we should be working on.
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