Canada makes regulatory amendments concerning passive investment resulting in closure of Partner Categories of NL-PNP & PEI-PNP

The Newfoundland and Labrador, and Prince Edward Island (PEI) have immediately discontinued the Partner Category of their Provincial Nominee Programs (PNP) due to a regulatory amendment made by the Department of Citizenship and Immigration Canada (CIC) on June 25, 2008 concerning passive investment. The new Regulations have gone into effect September 2, 2008.

The Partner Category of both provincial nominee programs was intended for prospective immigrants with business and/or entrepreneurial skills and expertise who wish to "partner", in a limited manner, with other prospective immigrants in establishing a new business to be located in respective province, or invest in an expanding existing company within his/her province of choice. In both situations, the immigrant partner was required to take an active role in the new or investee company through his/her participation in the day-to-day operations and decision making activities of a company, as a director or senior manager, with a meaningful managerial role.

The problem that has been identified by the CIC was that the previous Regulations have proven to be worded in such a way that they allowed the use of PNPs Partner Category to attract passive investments in exchange for the promise of permanent residency. This wording suggested that any involvement, even minor, satisfied the exclusion because it did not define a minimum level of involvement by an entrepreneur in the active management of business in which they invested under the PNPs Partner Category. It was never intended that province and territories select passive investors under their PNPs Partner Category because the selection on the basis of ability to invest capital without involvement in the management of recipient business or organization is exclusive to the Federal Immigrant Investor Program (Federal IIP). Further Studies show that passive investors under PNPs Partner Category often move away from the region in which they originally settle.

For a better understanding of the issue it was important for CIC to distinguish the Federal Investors, who bring capital, from the provincial business immigrants who seek to come to Canada to become involved in the operation of a business. Also, this distinction was extremely relevant to the objectives of the PNP.

The Regulations amended subsections of the IRPR which set out excluded investment proposals under the PNP. The Regulations strengthen and clarify existing rules regarding the PNP and the passive investment of capital in Canadian businesses. The purpose of these Regulations is to prevent abuse of the PNP via passive investment schemes (as well as circumvention of the Federal IIP) while retaining flexibility so that a province can nominate a foreign national who makes an active investment in the province.

After the implementation of these Regulations, both provinces are consulting with immigrant and business organizations to implement a new "Entrepreneur" stream under their PNPs. Until then, any business plans and/or applications under the discontinued Partner Category will remain suspended and may be considered under the new proposed Entrepreneur Category.

Manitoba taking significant steps to protect temporary foreign workers from potential exploitation

To adequately protect foreign workers from potential exploitation, the provincial government of Manitoba is not only improving its Employment Services Act that governs the activities of third-party placement agencies but also increasing its coordination with federal government.

As part of its legislative improvements and increased monitoring, the Labor and Immigration Ministry has proposed a new Worker Recruitment and Protection Act. This proposed legislation will replace the existing Employment Services Act that hadn’t been amended since 1987.

The proposed legislation, which is the first of its kind in Canada, will introduce provincial license to regulate third-party placement agencies that recruit temporary foreign workers from other countries. It will also make necessary for such agencies to be members in good standing of either a law society in Canada or the Canadian Society of Immigration Consultants (CSIC, http://www.csic-scci.ca/). It would prohibit recruiters from charging workers, directly or indirectly, any fees whatsoever for recruitment.

The proposed legislation will also look to help employers get access to "legitimate and reliable" recruitment choices by requiring all employers to first register with the province before the recruitment of foreign workers begins. The registration would ensure that employers are using a licensed recruiter and have a good history of compliance with labor legislation.

The proposed legislation will introduce significant steps to improve the enforcement of new Act. For example, there would be penalties for employers and recruiters who will fail to comply with the legislation. As an another step, province would have the authority to refuse or revoke a license, investigate and recover monies from employers and recruiters who force a foreign worker to work on changed terms and conditions than promised. This improvement in enforcement mechanism would help to reduce incidents of workers arriving with no job or an illegal job and incidents of extortion and exorbitant charges.

As part of its increased coordination with federal government, Manitoba and federal ministry of Human Resources and Social Development Canada (HRSDC) have developed a Letter of Understanding (LOU) that will strengthen protections for temporary foreign workers. After Alberta and British Columbia, Manitoba is the third province that the federal government has begun collaborating with to ensure that these workers are guaranteed safe working conditions and the fulfillment of employment contracts.

Through a legislative improvement and increased monitoring, Manitoba intend to create a positive, sustainable recruitment process that will provide business with access to skilled labor and respond to issues of worker vulnerability. Through federal-provincial coordination of services, Manitoba will be able to better understand the arrival, location and numbers of temporary workers as well as increase overall compliance with employment standards and workplace safety.