Issuance of Inshore Licences to Companies
Questions & Answers
Q1.Who is eligible for this initiative?
A1.Independent Core licence holders will be entitled to request the issuance of eligible vessel based licences they currently hold in the inshore sector to a wholly owned company.
Q2.What is meant by wholly owned?
A2.For the purpose of this policy wholly owned is:
A private corporation incorporated under the laws applicable in Canada, for which all voting and non-voting shares are issued to and controlled by one individual who meets the Independent Core eligibility criteria set out in DFO's policy titled Preserving the Independence of the Inshore Fleet in Canada's Atlantic Fisheries (PIIFCAF).
Q3.Are all Independent Core fishers obligated to form companies?
A3.No. The decision by an Independent Core fisher to request the issuance of his/her vessel-based licence to his/her wholly owned company is voluntary.
Q4.Do all of the licences I currently hold have to be issued to my company ?
A4.No. The choice is left to the licence holder to determine whether he/she wishes to request the issuance of all or some of his/her eligible vessel based licences to his/her company.
Q5.Which of the licences I currently hold are eligible to be issued to my company?
A5.Inshore vessel based licences are eligible to be issued to wholly owned companies excluding those licences listed in Section 16 (11) of the Commercial Fisheries Licensing Policy For Eastern Canada, 1996.
Q6.If only some of the licences I currently hold are issued to my company, will I still be the head of a Core enterprise?
A6.Yes. The Core concept will remain unchanged. The head of the Core enterprise will remain the person who is named on the licences issued to his/her name and will be designated as the operator on the licences issued to his/her wholly owned company. All licences will remain in the Core package and will continue to be subject to DFO’s licensing policy. (Example: If the wholly owned company wishes to issue the licences issued in its name to a qualified new entrant, the entire core package consisting of licences both in the name of the individual and the company must be issued to that new entrant as a package.)
Q7.Can my company hold a licence for the same species with same gear type as I hold personally?
A7.The Core concept will remain unchanged. Personally-held and company-held licences will be considered part of a single Core package and will continue to be subject to DFO’s licensing policy.
Q8.What information will I be required to provide when requesting the issuance of my licence(s) to my wholly owned company?
A8.Before an eligible vessel based licence may be issued to a wholly owned company, the following criteria are to be met:
- a. The 100% controlling shareholder of the company must meet the Independent Core eligibility criteria as defined in PIIFCAF;
- b. The company must provide certification by legal counsel or a registered professional accountant verifying that all voting and non-voting shares of the company are issued to and controlled by the 100% controlling shareholder of the company;
- c. The company must file a Declaration confirming that the company is not party to a Controlling Agreement as defined in PIIFCAF;
- d. The company must provide a copy of the Certificate of Incorporation showing the registration number and the official name of the company.
Q9.Will my company be eligible to apply for substitute operator privileges?
A9.Yes, your company will be eligible to apply for substitute operator privileges. You, as an officer or an agent of the company, may be authorized to sign the application for substitute operator.
Q10.Will my company be subject to the Owner Operator policy and Fleet Separation policies
A10.Yes, inshore vessel based licences will continue to be subject to the Owner-Operator and Fleet Separation policies, whether they are issued to an individual or a wholly owned company as defined above (see question 2):
- Owner Operator Policy - As the owner of the company being issued the licence(s), you will be required to fish your licence(s) personally.
- Fleet Separation Policy - To be eligible to be issued a licence in the inshore sector, a company must be a private corporation incorporated under the laws applicable in Canada, for which all voting and non-voting shares are issued to and controlled by one individual who meets the Independent Core eligibility criteria set out in PIIFCAF.
Q11.How will the issuance of licences I currently hold to my company affect my taxes and my company’s taxes?
A11.We advise you to consult your financial advisor to determine how your personal taxes and company’s taxes may be affected.
Q12.Can I stay in my current partnership agreement or enter into a flexible partnership, buddy-up or stacking agreement?
A12.The privileges available to Independent Core fishers will also be available to his/her wholly owned company.
Q13.Will DFO issue a licence to a company owned by another company?
A13.No. A company owned by another company is not eligible under the Policy. The 100% shareholder of the company will be required to sign a declaration that the company is not a party to a controlling agreement.
Q14.Can my company be financed by a company where I am not the full owner but own the majority of shares?
A14.Arrangements for financing will continue to be assessed on a case-by-case basis to determine whether the financial agreement is in line with PIIFCAF.
Q15.I already have my fishing business in a family company. Can I put my licence in that company?
A15.To be eligible to be issued a licence in the inshore sector, one of the criteria is that the company must be wholly owned - all voting and non-voting shares are issued to and controlled by one individual who meets the Independent Core eligibility criteria set out in PIIFCAF. Other criteria are listed in question 8.
Q16.How will having my licences issued to my wholly owned Company affect my ability to transfer my business to my children?
A16.The transfer of your company to your children will result in a change in the ownership of the shares. To continue to be eligible to be issued a licence in the inshore sector, the company will have to be wholly owned (all voting and non-voting shares are issued to and controlled by one individual who meets the eligibility criteria including Independent Core criteria set out in PIIFCAF).
Q17.Can I sell my company to a new share holder?
A17.Any change to the ownership structure of a wholly owned company may affect its eligibility to hold a licence pursuant to this policy. Therefore when considering changes to share structure DFO encourages affected parties to contact DFO to obtain information regarding eligibility.
- Date modified: