Owner Operator LMIA

The Owner Operator LMIA is one of the most useful tools for Business Immigrants who can meet the Express Entry requirements as it helps in improving Comprehensive Score Rating CRS by 200 points. This program is the only hope for those qualified and experienced applicants who are eligible to create Express Entry profile, but their CRS score is too low to beat the current threshold cut-off.

Work permits may be issued to foreign nationals( the applicant) whose proposed Canadian employer( The applicant himself) has obtained an opinion from Employment and Social Development Canada (“ESDC”), which ensures that the job offer( to the applicant only) is genuine; and would likely have a neutral or positive effect on the Canadian labour market.

ESDC (Service Canada):  New instructions on owner/Operator LMIA Program:

Although the new instructions have been released now but internally most of the decisions made in the recent past were based upon these instructions only. We have been already following these instructions and guiding our clients to follow the true spirt of the Owner operator LMIA program i.e buying only an operating Business with middle management job position already in place.

If we go by the true spirt of the program, the emphasis  is on “Significant Benefits to Canadian economy in terms of investment and job creation in Canada”, the following changes made by Service Canada to its standard policy only justify the purpose of Owner-Operator LMIAs :

• Existing Business: Service Canada will not consider applications from start-up companies or franchise owners for new locations. if the business is not in operation and is not running on the ground, Service Canada will not approve LMIA. Service Canada has clearly emphasized that the business must have its operations running with physical location, employees and customers, actively engaged in a business being a core requirement.
• Middle Management: Service Canada will only issue LMIAs for NOC 00 (e.g. CEO CFO, CTO, COO positions) if, at the time of the LMIA application, a company already have middle management in place (senior staff/senior managers) on payroll. The middle management positions must already exist, be filled and be ready to be overseen by a Senior Executive, NOC 00 applicant. Mere intention to hire senior staff and managers after receiving an LMIA and Work Permit approval will no longer be considered by Service Canada.
• Job Advertisement: The NOC 00 Job position for the owner will now be advertised as per LMIA rules before filing an application with Service Canada. The advertisement must run for minimum of four weeks prior to submitting. At least one advertisement (usually with Job Bank Canada) must remain posted until the decision is made by Service Canada. This whole process might take at least  2 to 3 months.

There are a few things to note:

• Business Purchases: It would thus be easier to purchase a business rather than start up a new Enterprise, as applicant could show that the business is running, and he is “actively engaged” in the business.
• Role of the Owner Operator prior to LMIA approval: There must be absolute clarity with respect to the Owner Operator’s role in the business. While one must be able to show that the employer company, which the Owner Operator wishes to purchase is “actively engaged in the business”, and after buying the business, it is necessary to show that the proposed Owner Operator is already involved in the business?
• Owner Operator’s future role: Applicants would need to show that they are needed in the business. If the business already has a manager, and the Officer may questioned the need for the owner operator to be in Canada unless we prove that the things the Canadian manager could do are limited and that the business needed to have an Owner Operator to really take overall responsibility.
• Ability to afford Owner Operator: Ensure that the company has sufficient financial resources to be able to hire and pay, the Owner Operator, especially if there is a salary commitment to owner operator.
• Compliance with Employment laws: Ensure that the business being purchased has been compliant insofar as per the recruiting and employment laws and it has not been “blacklist” by ESDC
• LMIA Exempt Work Permits for Start-ups: If the client really wished to start a particular business from scratch, it may be better to have him/her obtain a Work Permit as a Free Trade Investor or one of the LMIA Exempt categories ( under C10 or C11) first, and then apply for the Owner Operator LMIA after the business has been established and operating.

TFWP Owner Operator Guidelines

For the purposes of the TFWP, “Owner/Operators” are defined as foreign nationals who hold a share in a business located in Canada and are classified under NOC 0 or 00 occupation. Owner/Operators are not the same as self-employed individuals and are not required to be hands-on with the day to day operations of the company.

“LMIA exemptions are determined by CIC under C-10 or C11 where CIC may issue a work permit without an LMIA, if it is determined that the foreign national would create or maintain significant social, cultural or economic benefits. ESDC Canada is required to assess all LMIA applications. Although an employer-employee relationship is generally required in order to provide an LMIA, there are certain situations, such as the owner/operators, where the principal owner would also serve as the worker.

An officer is to consider the following in deciding as to whether an offer of employment to a foreign national would have a neutral or positive effect on the Canadian Labour Market. Whether the employment of the foreign national will or is likely to result in direct job creation or job retention for Canadian citizens or permanent resident. ESDC officers must examine all the evidence put before them, then decides to whether or not issuing the owner operator LMIA would have a neutral or positive effect on the Canadian labour market.

The holder of the largest share of the business is the “Principal Owner”. Where there are few equal shareholders, one of them can be designated as the “Principal Owner.

Few more things to consider:

• Direct ownership vs Holding Companies: Based on recent guidance from ESDC, the Owner/Operator must own his or her share in the operating business directly. Business Immigrants who own shares in the operating company for voting rights only would not likely qualify.
• Licences and Registrations: Any licences or registrations that may be required to operate the business should be obtained or at least be in process at the time of the application.
• Location: Should be secured at the time of the application (e.g. a lease for a property). If there are multiple business locations that the applicant will work at, clearly indicate as such in the application.
• Forms: Although ESDC’s LMIA application forms were not designed for the Owner Operator LMIA, it is important to complete all fields of the forms. For fields that may not be applicable because of the claim for an Owner Operator LMIA, clearly state that the field is not applicable and, if necessary, explain why the field is not applicable.
• Supporting Business Documentation: Include evidence that the business is operating and is already hiring Canadian citizens or permanent residents. This can include past financial statements, information from websites demonstrating the business’ past activities, payroll account with CRA, the inclusion of public information about employees (e.g. employee pages from business websites), pictures of the business, etc.
• Job description for the Owner Operator: While the Bulletin states that Owner/Operators need not be involved in the hands-on operation of their business, it is always helpful to prepare the Business Immigrant with explaining what their role in the business will be crucial and very important.
• Know the Business: Ensure that the Business Immigrant is knowledgeable about the business being purchased prior to his or her interview with ESDC.
• Median Wages: Prepare the Business Immigrant for a possible request by ESDC to pay median wages. Some ESDC officers have insisted on seeing median wages paid, even though the Bulletin states this is not necessary for the Principal owner.
• Language: It is worthwhile to note that the Business Immigrants’ language ability is not crucial to the success of the LMIA. Having said that, the Business Immigrant should be prepared to work to improve their English in order comply with the terms of any transition plan or representation that permanent residence will be pursued.
• Conditional Purchase of a Business: For Owner Operator LMIAs ESDC has all right to question the eligibility of business purchases which is conditional and is subject to a work permit approval for the Business Immigrant. It remains to be seen if ESDC will develop a consistent policy regarding Owner Operator LMIA applications where a Business Immigrant’s business purchase is subject to work permit approval for the Business Immigrant. As a matter of speculation, one might consider whether proof of a significant and non-refundable deposit of funds for such a business purchase could be a beneficial factor to an Owner Operator LMIA applicant.
• Business Plan: There must be a clear and genuine business plan to be submitted with the application which can assist the ESDC officer in understanding the basic concept and operations of the business. The business plan should also clearly demonstrate the genuineness of the business as well as the employment of the Owner Operator and that, it is likely to have a positive or neutral effect on the Canadian labour market.

Remember that the ultimate goal in the application is to assist the ESDC officer in understanding the basic concept and operation of the business as possible to demonstrate the genuineness of the business and that the employment of the Owner Operator is likely to have a positive or neutral effect on the Canadian labour market.