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New Mandatory Reporting Requirements on Corporate Beneficial Ownership Ahead
It is expected that private federal business corporations must soon submit beneficial ownership information directly to the federal government. If enacted in its current form, Bill C-19, also known as the Budget Implementation Act, 2022, no. 1 will implement new disclosure requirements for companies governed by the Canada Business Corporations Act(“CBCA”). The bill has passed the House of Commons and is currently under consideration by the Senate.
Since 2019, private CBCA corporations have been required to prepare and maintain registers disclosing “individuals with significant control” over the corporation (“ISC Registers”). These transparency registers effectively disclose who ultimately owns or controls private federal corporations.
Under the current regime, ISC Registers must be kept at a corporation’s registered office or another location within Canada and be accessible to police, tax and certain regulatory authorities (including Corporations Canada) as well as shareholders and creditors under certain conditions upon request.
If the proposed amendments to the CBCA are enacted, private corporations will be required to report the information in their ISC Registers to Corporations Canada on an annual basis and within 15 days of any change to the information contained in their ISC Registers. Corporations Canada will also have the authority to provide all, or part of this information to investigative bodies and other entities.
It appears that these new reporting requirements will serve as the foundation for the national public and searchable beneficial ownership registry announced by the federal government in its 2022 budget. For more information on the planned national database, please see our bulletin “Transparent to the World – Push for Public National Beneficial Ownership Registry Unveiled in 2022 Federal Budget“.
Background Information on the ISC Register
In Canada, in an effort to assist in combat tax evasion, money-laundering, and terrorist financing, the establishment of ISC Registers became mandatory for private CBCA corporations in 2019. Similar transparency rules exist or are expected to come into force in British Columbia, Ontario, Quebec, Manitoba, Saskatchewan, Prince Edward Island, and Newfoundland and Labrador, as well as in many OECD member states. The United States is also set to introduce beneficial ownership registers for US companies under its 2021 Corporate Transparency Act.
The information private CBCA corporations must record in their ISC Registers includes:
- name, date of birth, and latest known address of each individual with significant control;
- the jurisdiction of residence for tax purposes of each individual with significant control;
- the day on which each individual became or ceased to be an individual with significant control;
- a description of how each individual is an individual with significant control; and
- a description of the steps taken by the corporation to identify individuals with significant control and to update the information.
For more information, please see Fasken’s blog “Timely Disclosure – Bill C-86 – New record-keeping obligations for all CBCA private companies“and our newsletter”Current Amendments and Future Amendments to the CBCA“.
Changes Introduced by Bill C-19
Bill C-19 will bring three main changes to the ISC Register requirements:
- CBCA corporations which are required to prepare and maintain an ISC Register will need to disclose the information included in their ISC Register at least once every year to Corporations Canada. Similarly, if a corporation makes changes to its ISC Register, it must report these changes to the federal government within 15 days. The form and manner of reporting the beneficial ownership information (or updating such information) has yet to be determined by Corporations Canada.
- Corporations Canada will be authorized to provide all or part of the beneficial ownership information received to an investigative body, the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) or other entities to be determined by future regulations.
- CBCA corporations that have any of their securities listed and posted for trading on a “designated stock exchange” are not required to create and maintain an ISC Register. This amendment clarifies the existing rules, which were not tailored for reporting issuers.
What Comes Next?
It remains to be seen as to how exactly this new framework will be implemented and finalized. As more information on these new reporting requirements becomes available, private CBCA corporations should evaluate and update their procedures for preparing and annually reviewing ISC Registers. Corporations Canada has also prepared general information on ISC Registers, which corporations can use as a guide for compliance.
To obtain further information on ISC Registers or corporate transparency requirements in your province, please contact:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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