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CORPORATE LAW BY ALAIN RANGER BRAZIL - CANADA COMPARATIVE LAW subsidiary of a foreign corporation. This type of corporation may be used as an alternative to a branch, as it may allow for losses incurred by the corporation in Canada to be deductible by the foreign corporation in its jurisdiction (principally in the United States), while still providing the advantages of corporate status in Canada. While an unlimited liability company may be viewed as a disregarded entity in certain foreign jurisdictions (for instance, the United States), it is considered and taxed as any other corporation in Canada. 1.2 Non-Corporate Entities (A) Branches of Foreign Corporations While most foreign investors elect to conduct business in Canada through a Canadian corporation, a foreign entity can carry on a business in Canada directly through a branch operation. The branch must be licensed or registered in each of the provinces in which it will operate. The taxation of branches and subsidiaries varies considerably, and differences exist in the liability of parent companies. (B) Partnerships A partnership is a for-profit business owned by two or more individuals or corporations, based on a contract between them. Partnerships are governed by provincial legislation and generally must be registered with provincial authorities. In addition, partnerships have no distinct legal personality from their partners, and are thus considered flow-through entities for tax purposes. There are two types of partnerships: general and limited. In a general partnership, all partners are subject to unlimited liability. Unless otherwise agreed, the partners have an equal claim on capital and profits, and are equally responsible for all losses, debts and liabilities of the partnership. A limited partnership consists of both one or more general and one or more limited partners. One or more general partners are responsible for managing the business. One or more limited partners contribute capital, and maywork for the firm, but do not participate in its management. Unlike general partners, limited partners are not exposed to unlimited liability unless they take part in the control or management of the business. A partnership itself is not a taxable entity, but it is rather a flow-through entity for Canadian tax purposes. Each partner is taxed directly on its share of the income of the partnership as allocated (but not necessarily distributed) by the partnership agreement. (C) Joint Ventures A joint venture is an association of two or more business entities for 14

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