As of June 13, 2019, the Canada Business Corporations Act (the “CBCA”) requires that each federal private corporation (a “Corporation”) implements and maintains a register (the “Register”) listing all individuals with significant control over the Corporation (the “Individuals with Significant Control”). The register must be kept at the corporation’s registered office or another place in Canada designated by its directors.
While each Corporation has until June 13, 2019, to comply with this new Register requirement, we recommend that you begin, as soon as possible, to prepare the required Register and to develop the internal procedures necessary to ensure compliance with this requirement on an ongoing basis. To assist you in this task, we enclose a Register template that can be used for this purpose.
The Register must accurately list the Individuals with Significant Control which are:
- Each individual who has the ability to control the Corporation through indirect or direct influence (“control in fact” of the Corporation); and
- Each individual who is the beneficial or registered owner of, or has direct or indirect control or direction over, 25% or more of the outstanding shares of the Corporation, measured by fair market value, and
- Each individual who is the beneficial or registered owner of, or has direct or indirect control or direction over, a number of shares carrying at least 25% of the outstanding voting rights of the Corporation.
This covers any individual who (i) is a registered shareholder; (ii) is a beneficial owner; (iii) has direct or indirect control or direction over the shares of the Corporation or (iv) has joint ownership or control over the shares of the Corporation.
The law is in some cases unclear as to when a particular shareholder must be included in the Register, but this description is a starting point for understanding what is required.
Additionally, the Register must contain the following information for each Individual with Significant Control:
- Name, birthdate and latest address;
- Jurisdiction of residence for tax purposes;
- Date when Individual with Significant Control obtained significant control and ceased to hold significant control of the Corporation;
- Description of how the Individual with Significant Control has significant control of the Corporation;
- Description of the reasonable steps taken by the Corporation in each financial year to ensure the Register is complete and accurate; and
- Any other prescribed information as set forth in any regulations (which are yet to be determined).
Shareholders are responsible for replying accurately to the Corporation when it requests information, to the best of their knowledge. In turn, the Corporation is responsible for creating and maintaining the Register and updating it once every year as well as within 15 days of being informed of a change. Every director, officer or shareholder who knowingly acts in contravention of these duties will be liable to a fine of up to $200,000, or up to six months imprisonment, or both, and a Corporation that fails to comply with its obligations respecting its Register faces fines of up to $5,000.
Corporations Canada has prepared general information on the topic that Corporations can use as a guide when preparing their Individual with Significant Control Register. Additional materials will be published at http://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/home as more information becomes available. Kindly note that we will continue to monitor and, where appropriate, provide guidance and any further updates.
Corporations Canada further expects all Corporations to be compliant with the amendments upon coming into force. No grace period will be given to non-compliant Corporations.