Amendments to the Canada Business Corporations Act come into effect on June 13, 2019 which mandate (non-public) federal corporations to maintain a register of individuals who have “significant control” over the corporation. An individual with “significant control” is an individual (not a corporation or a trust) who, directly or indirectly, owns, controls or directs shares carrying 25% or more of the voting rights or 25% or more of the fair market value of the corporation’s shares. “Significant control” includes an individual who has any direct or indirect influence that, if exercised, would result in control in fact of the Corporation.
The register must include the following information with respect to each individual with “significant control”:
The corporation must also take reasonable steps annually to update the beneficial ownership register and shareholders must respond to requests for such information. The corporation must amend the register within 15 days after becoming aware of the need for amendment.
Every non-public corporation incorporated under the Canada Business Corporations Act will need to ensure that the register is created and maintained for the corporation as required by law. The register must be maintained at the corporation’s registered office or any other place in Canada designated by the directors. It is not required to be filed with a government agency but the information may be requested by Corporations Canada. Failure to comply with these obligations is an offence and on conviction a director, officer or shareholder failing to comply with the requirements may be liable for a fine of up to $200,000 or imprisonment or both.
This is the federal response following agreement in 2017 among the finance ministers in Canada to pursue new legislation to require increased transparency of beneficial ownership. While provincial legislation has not yet been introduced for similar obligations, it is anticipated this will be coming.