Canadian firms relocate to the US, raising concerns over market hollowing and economic policy gaps
Barrick Gold Corp., a $44bn mining company trading as ABX on the Toronto Stock Exchange, was originally named American Barrick.
Founder Peter Munk added “American” in 1983 to appeal to US investors, though the company dropped the word in the mid-1990s, according to Financial Post.
More than 40 years after starting with two small mines in Ontario and Quebec, Barrick is still courting US investors.
In February, CEO Mark Bristow disclosed that the Toronto-based company, which now operates multiple mines in Nevada, might redomicile in the US to gain inclusion in index-driven trading via the S&P 500.
Barrick has previously considered relocating its headquarters to the US due to its growing operations there. However, this time, broader economic factors are at play, including a trade war and policies introduced by the administration of US President Donald Trump.
Bristow indicated that Trump’s aggressive push for foreign companies to become American could accelerate Barrick’s decision to move, a possibility that analysts had estimated in 2020 could cost the company up to $300m before the idea was shelved.
Jock Finlayson, a senior fellow at the Fraser Institute, pointed to multiple factors influencing corporate relocations.
“With a thickening Canada-US border and America’s decisive turn toward protectionism and mercantilism, coupled with lower taxes and a more attractive regulatory environment for business in the US, it is not difficult to imagine scenarios in which more than a few Canadian companies choose to move their head offices to the US,” he said.
Analysts at TD Securities warned in February that the ease of Canadian companies shifting south—through mergers, acquisitions, or corporate reorganizations—could lead to a hollowing out of Canada’s capital markets.
The firm cited recent moves by Brookfield Asset Management Ltd., which shifted its head office from Toronto to New York in January, and Shopify Inc., which listed a New York headquarters in a regulatory filing on February 11.
The analysts suggested Shopify’s shift in geographic segmentation to favour the US might indicate a broader move toward American investors.
“Make no mistake, each time a Canadian company becomes less Canadian, it is harmful to Canada’s capital markets as trading volumes will migrate to the US,” TD’s analysts stated in a February 18 note.
Days later, they urged policymakers to respond, particularly given Ottawa’s leadership vacuum during Parliament’s prorogation for the Liberal Party’s leadership election.
“It is time for Canadian officials to wake up and fight back to defend against the company migration to the US—this is Defcon 1 for the country that just celebrated its 65th year with a red maple leaf in the middle of its flag,” they said.
Canada has been losing corporate head offices to the US for years. In 2019, Calgary-based Encana Corp. moved to Denver and rebranded as Ovintiv Inc., following a $5.5bn acquisition of Houston-based Newfield Exploration Co.
Encana’s American CEO, Doug Suttles, cited greater access to US investors and index trading.
Some Alberta politicians blamed federal oil and gas policies, arguing that Ottawa’s approach penalized the industry.
Brookfield’s recent move reignited concerns, especially as Trump escalated his tariff rhetoric.
Analysts projected an eight percent rise in demand for Brookfield shares following its move to the US, even before Trump’s re-election brought new economic pressures on Canada.
Trump positioned tariffs as a tool to curb illegal drug and immigration flows, but analysts suggested another motive.
“The real reason may be to uproot Canadian companies to redomicile to the US and transfer jobs to the US,” said Richard Leblanc, a professor of governance, law and ethics at York University.
Trump’s administration introduced incentives for businesses, including a January executive order requiring the repeal of 10 regulations for each new one proposed, a rollback on anti-money-laundering measures, and reduced enforcement of anti-bribery laws under the Foreign Corrupt Practices Act.
Even if some of these policies change, Canada will likely face continued pressure as companies consider moving south.
“If we can navigate our way out of the trade/tariff imbroglio with the US, policymakers can then focus their attention on the country’s structural economic problems, which include the weakness of the corporate head office sector,” Finlayson said.
Statistics Canada data shows that between 2012 and 2022, nearly one in 20 Canadian head offices closed or merged. The trend continued in 2023, with head office numbers down nearly five percent since 2012.
Suggestions to counteract the corporate migration vary.
Leblanc proposed linking government aid to restrictions on redomiciling, executive pay caps, shareholder dividend limits, and worker retention commitments.
He also pointed to Canada’s corporate governance laws, which require boards to consider multiple stakeholders beyond shareholders, including employees and governments.
This legal framework, he suggested, could serve as a basis for litigation if stakeholders argue that relocations neglect Canadian interests.
Corporate relocations for index inclusion are not unique to Canada. In the UK, Ferguson PLC and Smurfit Kappa Group PLC moved to the US to join the S&P 500.
Similar speculation surrounds BP PLC and Shell PLC. In Germany, some companies have shifted to Switzerland for lighter regulations and lower taxes.
However, Canada faces unique challenges. Interprovincial trade barriers, concentrated industries like telecommunications and banking, and regulatory burdens have constrained competition and growth.
“The existence of too many protected/oligopolistic markets … arguably dampens business innovation and impedes the ‘creative destruction’ process that is an important feature of thriving, market-based economies,” Finlayson said.
He advocated for broad regulatory reform, particularly in project approvals, environmental permitting, and homebuilding.
Canada’s mining sector has also become increasingly restrictive, leading to capital shortages for junior miners.
Andrew House, a partner at Fasken Martineau DuMoulin LLP, noted that these factors have prompted more mining companies to consider leaving. “Was this the outcome we wanted?” he asked.
Finlayson also called for a tax system overhaul, shifting burdens away from work, investment, and savings toward consumption.
Despite the trend, shareholder intervention has kept some companies in Canada. Montreal-based TFI International Inc. reversed its US relocation plan after pushback from investors, including Quebec’s Caisse de dépôt et placement.
However, analysts caution that this scenario may not apply to firms like Barrick or Brookfield, where Quebec-based investors do not hold decisive stakes.
TD Securities analysts, led by Peter Haynes, proposed reviving income trusts, which attracted foreign investment until the federal government ended the structure in 2006.
They suggested limiting income trusts to companies valued under $5bn to prevent large firms from converting to tax-efficient structures that reduce government revenue.
Other potential measures include tax incentives for investing in Canadian companies and a revival of the Quebec Stock Savings Plan, established in 1979 to boost local investment.
TD analysts also suggested requiring firms receiving government research grants to go public in Canada if they pursue an IPO.
Canada’s IPO market has been slow. In 2023, only 25 IPOs raised $642.4m, according to CPE Analytics. Without special purpose acquisition vehicles, the total fell to 17 IPOs and $345.8m, with only one, Groupe Dynamite Inc., listing on the Toronto Stock Exchange.
A University of Calgary study suggested Canada’s regulatory environment discourages IPOs, limiting access to public capital markets.
“To actually compete with the US would require real regulatory innovation,” said Bryce Tingle, a professor at the University of Calgary and member of the Alberta Securities Commission.
TD analysts concluded that capital migration is a structural challenge, not an emotional issue. “These corporate decisions are not about the heartstrings,” they said.
“Given that capital sees no borders, it is left to country leadership to fight back through incentives to keep these companies local and penalties for leaving. Unfortunately for Canada, we do not think this topic has gotten enough attention in C-suites and with government officials and regulators across the country.”
