As described in our previous bulletin linked here, the Canada Business Corporations Act (the “CBCA”) was amended in June of 2019, to require private CBCA corporations to track and record individuals with significant control (“ISC”) over the corporation.
The Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry (the “Minister”), announced in a press release dated January 22, 2024, that effective as of January 22, 2024,
the CBCA was further amended to require private CBCA corporations which are required to maintain a register of individuals with significant control (the “ISC Register”) to report such information Corporations Canada. It is expected that the ISC Register information provided to Corporations Canada will be publicly available in the near future.
As articulated by the Minister “The announcement is the result of a series of amendments to the CBCA over the last two years to create greater transparency in corporate ownership in Canada and to strengthen actions against illegal activities. Making some beneficial ownership information public will help protect Canadians against money laundering and terrorist financing, deter tax evasion and tax avoidance, and make sure Canada is an attractive place to conduct business".
The Minister’s statement highlights the government's commitment to transparency and accountability in corporate governance, reflecting broader efforts to combat financial crime and foster a robust business environment in Canada. Filing Requirements If the CBCA corporation is exempt from the requirement to maintain an ISC Register, they will be required to confirm their exemption with Corporations Canada.
a) When to File Beginning on January 22, 2024, all non-exempt CBCA corporations will be required to file the information described below with Corporation Canada when the following events occur:
• Annually (at the same time the corporation files its annual returns, which is due on the anniversary date of incorporation or continuance under the CBCA).
• Upon incorporation.
• If the corporation becomes aware of any change to any information included in the ISC Register, the corporation must file the change within 15 days of recording the change in their ISC Register.
• Following an amalgamation or continuance under the CBCA which must be filed within 30 days of the date of the certificate of amalgamation or continuance, as applicable.
b) What Must be Filed The following information for each ISC of the corporation must be filed with Corporations Canada (not all of which will be public):
• full legal name;
• date the individual became an ISC and/or ceased to be an ISC (as applicable);
• description of the ISC’s significant control; • residential address; • address for service (if one exists);
• date of birth;
• country (or countries) of citizenship; and • country (or countries) where the ISC is considered to be a resident for tax purposes.
c) Public Information Only the following information for each ISC of the corporation will be publicly available:
• full legal name;
• the date the individual became an ISC and/or ceased to be an ISC, as applicable;
• description of the ISC’s significant control; • residential address (if no address for service is provided);
• address for service (if provided); and
• any other prescribed information. Accordingly, the date of birth, jurisdiction of residence for tax purposes, country of citizenship and residential address (if an address for service is provided) of an ISC will not be publicly disclosed. Exceptions to Public Disclosure The following exceptions have been created to exempt certain persons from the public disclosure requirement:
• If the ISC is less than 18 years old. • Upon application to the Director of Corporations Canada:
• if there is a reasonable belief that making the information publicly available would present “a serious threat to the safety of the individual”;
• if the ISC is incapable; • if the information is to be kept confidential under federal or provincial conflict of interest legislation; and
• if prescribed circumstances apply to the individual. Penalties for Non-Compliance
a) Corporation. Failure of a corporation, without reasonable cause, to comply with the filing requirements is subject to a fine of up to $100,000.
b) Directors and Officers. A director or officer of the corporation who knowingly authorizes, permits, or acquiesces in the violation of the corporation’s failure to comply with the CBCA filing requirements with Corporations Canada is guilty of an offence and the penalties for such offences are fines up to $1,000,000 and/or up to five years of imprisonment.
c) Shareholder. A shareholder who fails to provide information required to prepare the ISC Register is guilty of an offence and the penalties for such offences are fines up to $1,000,000 and/or up to five years of imprisonment. d) Certificate of Compliance & Existence. Corporations Canada can refuse to issue certificates of compliance and/or certificates of existence for CBCA corporations that have not complied with the ISC filing requirements. e) Dissolution. Corporations Canada may dissolve a corporation that has not complied with the ISC filing requirements in certain circumstances.