Policy on issuing licences to companies

For Canada's Inshore Atlantic Fisheries

Table of Contents

1. Policy Statement

The Policy on the Issuance of Licences to Companies (hereinafter "Policy") for Canada's Inshore Atlantic Fisheries represents an important step in providing licence holders with tools and options to achieve economic prosperity. This Policy, which is in keeping with the previous work on the policy on Preserving the Independence of the Inshore Fleet in Canada's Atlantic Fisheries (PIIFCAF), is a valuable addition to the suite of tools that will enable licence holders to generate wealth for coastal communities in Quebec and Atlantic Canada.

DFO consulted extensively on this Policy. The consultations that lead to PIIFCAF development and implementation included discussions on the need for provisions to facilitate issuance of licences to companies. Following PIIFCAF consultations, DFO engaged the fishing industry as well as the financial and legal community to explore the option of issuing inshore fishing licences to companies.

Throughout the consultation process, there was continued support for moving forward with development of a policy to allow, on a voluntary basis, the issuance of inshore fishing licences to wholly owned companies.

This policy is established by DFO under the authority of the Department of Fisheries and Oceans Act and of the Fisheries Act.

2. Objectives

(1) The objectives of the Policy are to:

  1. Promote economic viability, prosperity and wealth generation;
  2. Maximize choice by licence holders to organize their businesses in the most efficient manner.
  3. Ensure that the Core/Enterprise policy, and the Owner Operator, and Fleet Separation policies continue to be respected.

3. Application

(1) The Policy applies to licences in the inshore vessel based fishery, except those listed in section 16 (11) of the DFO Commercial Fisheries Licensing Policy for Eastern Canada in DFO's Newfoundland and Labrador, Maritimes, Gulf, and Québec Regions.

(2) The Policy does not apply to fishing licences issued under the Aboriginal Communal Fishing Licences Regulations (ACFLR).

(3) The Policy does not apply to licences issued to fleets identified in Section 8 of the PIIFCAF policy, and to licences issued to fleets granted exemption.

(4) The Policy will be integrated into a consolidated Commercial Fisheries Licensing Policy.

(5) This is a policy which guides the Minister. It is not binding on the Minister nor does it fetter his/her discretion to issue licences granted under Section 7 of the Fisheries Act.

4. Definitions

(1) Controlling Agreement as defined in Section 2 of the PIIFCAF policy.

(2) Independent Core as defined in Section 2 of the PIIFCAF policy.

(3) Inshore refers to the fishing sector where fishers are restricted to using vessels less than 19.8m (65') Length Over All (LOA), and in the Newfoundland and Labrador Region, where fishers may be permitted to use a vessel less than 27.4m (90') LOA when specific conditions are met.

(4) PIIFCAF: DFO's policy titled Preserving the Independence of the Inshore Fleet in Canada's Atlantic Fisheries.

(5) Wholly Owned Company: 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.

5. Criteria

(1) Before an eligible vessel based licence may be issued to a wholly owned company, the following criteria are to be met:

  1. The 100% controlling shareholder of the company must meet the Independent Core eligibility criteria as defined in PIIFCAF;
  2. 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.
  3. The company must file a Declaration confirming that the company is not party to a Controlling Agreement as defined in PIIFCAF;
  4. The company must provide a copy of the Certificate of Incorporation showing the registration number and the official name of the company.

(2) When exercising his/her discretion to renew a licence, at the time of renewal, the Minister reserves the right to confirm that the wholly owned companies in the inshore sector continue to meet policy requirements as listed in paragraph (1).

6. Rules Applicable in the Case of Death of Independent Core 100% Shareholder

The following rules apply upon the death of the Independent Core 100% shareholder of a company holding an inshore vessel based licence.

(1) A replacement licence may be issued to an individual who meets the eligibility criteria including the Independent Core criteria set out in PIIFCAF, or to his or her wholly owned Company, within a period not to exceed 5 years following the death of the Independent Core 100% shareholder.

  1. The request for a replacement licence must be signed by an officer of the company.

(2) During the five year period, the licence must be renewed annually, and the Department may approve the designation of a substitute operator.

  1. The request for a renewal must be signed by an officer of the company.
  2. The request for a substitute operator must be signed by either an officer of the company or the officer's agent.

(3) The licence(s) may continue to be issued to the company, beyond 5 years, if all the voting and non-voting shares of the company are issued to and controlled by one individual who meets the eligibility criteria including the Independent Core criteria set out in PIIFCAF.

7. Associated Policy Support

The Core concept, Owner Operator, and Fleet Separation policies outlined in the Commercial Fisheries Licensing Policy for Eastern Canada, 1996 will continue to be applied with the introduction of policy to allow the issuance of licences to companies.

Core Concept:
Licences included in a Core Enterprise will continue to form part of the enterprise whether the licence holder chooses to have the licence(s) issued personally or to the licence holders' wholly owned company.

For example, licences held by a wholly owned company, and licences held by the independent core shareholder all form the same Core Enterprise. Issuing licences to a wholly owned company will not result in core splitting.

Owner Operator Policy
Whether a licence is held by an individual or their wholly owned company, the Owner Operator policy applies. When a licence is held by a wholly owned company, the independent core shareholder will be required to personally fish the licences pursuant to s.11.7 of the Commercial Fisheries Licensing Policy for Eastern Canada, 1996.

Fleet Separation Policy
The eligibility criteria used to issue inshore licences to wholly owned companies continues to restrict the issuance of licences to companies that are subject to controlling agreements pursuant to s.15 of the Commercial Fisheries Licensing Policy for Eastern Canada, 1996.

8. Implementation

(1) The Policy authorizing Independent Core licence holders to request the issuance of eligible vessel based licences they currently hold to their wholly owned company came into effect in April 1, 2011.

9. Further Information

Questions should be referred to local DFO Licensing Officials.