Amendments to the Canada Business Corporations Act Officially Ends Ownership Confidentiality in Canada

Amendments to the Canada Business Corporations Act Officially Ends Ownership Confidentiality in Canada

January 18, 2024

New amendments to the Canada Business Corporations Act (Federal) (“CBCA”) are about to come into force on January 22, 2024, which will once again change requirements regarding transparency and public disclosure of corporate ownership in Canada.

Amendments to ISC Disclosure Requirements

The Federal Government will now seek automatic disclosure of information pertaining to an “Individual with Significant Control” (“ISC”) of a corporation incorporated under the CBCA.

As previously detailed (see our article New Shareholder Information Requirements for CBCA Companies), the CBCA was amended by Bill C-86, which came into force on June 13, 2019. Those amendments mandated that CBCA corporations maintain an ISC Register (“ISC Register”) for individuals deemed by the CBCA to have a controlling interest in the corporation. Initially, this information was to be reviewed annually and kept internally by corporations, disclosed only to specific government entities in prescribed circumstances.

Subsequently, in March of 2023, the Federal Government introduced Bill C-42. Bill C-42 not only sought to expand disclosure requirements for the ISC Register but also make disclosure of the ISC Registries to the Federal Government mandatory along with permitting the Federal Government to make some of that information publicly available (see our article The Beginning of the End of Corporate Ownership Confidentiality in Canada for full summary).

Bill C-42 was ultimately passed and received Royal Assent on November 2, 2023, and is set to come into force on January 22, 2024.

What this means – Disclosure Requirements for CBCA Corporations After January 22, 2024

After January 22, 2024, CBCA corporations will now be required to disclose information contained in their ISC Register to the Federal Government when the following occurs:

  • Annual Returns are required to be filed by the corporation;
  • Within 15 days of a change required to be made to the ISC Register by the corporation;
  • A new corporation is incorporated under the CBCA; or
  • Within 30 days after a certificate of amalgamation or continuance is issued by Corporations Canada.

Additionally, the following amendments will apply in general to CBCA Corporations and their ISC disclosure requirements:

  • Two new pieces of information required for ISC Registers: an address for service (if it exists) and the citizenship of each ISC;
  • Creation of a public searchable registry (“Public Registry”) which will contain the name of the ISC, their address for service, the day on which the ISC became an individual with significant control of a CBCA corporation, and a description of how the ISC holds that control;
  • Other required information of the ISC may become publicly disclosed later, if set forth in updated regulations;
  • Additionally, if an address for service for an ISC is not provided, the residential address of an ISC will be included (corporations should make sure to include a separate address for service if the ISC does not wish for their residential address to be disclosed);
  • The fine for a corporation failing to comply with disclosing ISC Registers in prescribed form has increased from $5000 to $100,000. Additionally, conviction of an offense for failure to comply for an officer or director (for failing to ensure the corporation records accurate information in its ISC Register) or a shareholder (for failing to provide required information) has increased from $200,000 to $1,000,000, in addition to potential jail time; and
  • Failure to provide the required ICS Register to the Federal Government can result in 1) refusal by Corporations Canada to issue a Certificate of Compliance for the corporation, and/or 2) dissolution of the corporation.

In short, the requirements to disclose information contained in the ISC Register to the Federal Government are now part of the required annual filings for a CBCA Corporation.

Integration of the Public Registry with Provincial ISC Information

Although disclosure requirements for CBCA corporations is effective January 22, 2024, as of now, there has been no confirmation from the Federal Government on when the Public Registry will be up and running. However, the express intention of the Federal Government is to design a nationwide public registry that can incorporate information from all provincial corporation systems, and actively pursue integration with the provinces. Quebec has already implemented these requirements, with the introduction of a publicly searchable Quebec corporate beneficial ownership registry as well as British Columbia, which introduced amendments to the Business Corporations Act (British Columbia) to facilitate a public beneficial owners registry.

The Government of Newfoundland and Labrador (the “NL”) has not officially announced if they  will be joining any federal initiative for such disclosure, however, as previously discussed, NL has already passed amendments to the Corporations Act (Newfoundland and Labrador) implementing similar internal requirements for maintaining ISC Registries for NL corporations (see our article, Amendments Affecting All Newfoundland and Labrador Corporations). It will be interesting to see whether further amendments will be made to the Corporations Act (Newfoundland and Labrador) to bring it up to date with the Federal amendments.

Exceptions to ISC Requirements

Certain CBCA corporations may be exempt from the requirement to disclose an ISC Register, and they include:

  • “Public companies”, (i.e., corporations which are “reporting issuers” under securities legislation or the securities of which may be traded on a Canadian or international stock exchange);
  • Crown corporations; and
  • Wholly owned subsidiary corporations of either a public company or Crown corporation.

Note, any CBCA corporation in which no individual is considered an ISC pursuant to the CBCA, or the corporation is unable to obtain such information, must maintain an ISC Register which addresses the steps taken to identify those individuals.

Finally, if an ISC of a CBCA corporation does not want certain personal information made available to the public, they must apply to the Director of Corporations Canada with such request. The Director may consider such request and may grant such exception if the Director reasonably believes:

  • Making such information public presents or would present a serious threat to the safety of the ISC;
  • The ISC is incapable;
  • The information is to be kept confidential pursuant to the Conflict of Interest Act (Federal) or similar provision of provincial legislation; or
  • Prescribed circumstances pursuant to regulations are applicable to the ISC.

Going Forward

Owners and managers of CBCA corporations are once again advised to implement and bring up to date their ISC Registers immediately if they have not already done so. Although these new requirements come into force on January 22, 2024, submittal dates for this information will be specific to when an existing corporation’s annual return is due to be filed, and or when changes are made to the ISC of a corporation as prescribed by the CBCA.

As previously cited, failure to maintain these records and provide them to the Federal Government in the prescribed manner can not only result in fines and potential imprisonment for corporate players, it can also give rise to delays in the context of transactions and financing activity, specifically where officers are required to affirm a corporation is in compliance with all relevant legal obligations, and/or a Certificate of Compliance is sought from Corporations Canada.

Corporations Canada has provided helpful resources to deal with questions that CBCA corporations may have in regard to these amendments which can be found here. Additionally, Cox & Palmer is ready to provide advice on these issues and is able to help corporations  comply with these amendments if required.

If you require guidance or are interested in receiving more information, please contact a member of our Corporate Commercial group in Newfoundland and Labrador.

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