Business & Corporate Law
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The era of corporate anonymity in Canada is officially coming to a close. In a concerted effort to combat money laundering and increase corporate transparency, both federal and provincial governments have introduced strict new disclosure rules regarding beneficial ownership.
Whether your business is incorporated federally under the Canada Business Corporations Act (CBCA) or provincially under the British Columbia Business Corporations Act (BCA), the landscape has fundamentally shifted. Business owners and legal professionals must understand these “Individuals with Significant Control” (ISC) registers to avoid falling into a costly compliance trap.
Under both the federal and BC frameworks, the threshold for significant control is largely the same. An individual is generally considered a “significant individual” or an ISC if they own, directly or indirectly, 25% or more of the company’s shares, or shares carrying 25% or more of the voting rights.
However, control isn’t just about share volume. You also qualify as a significant individual if you have the right or ability to directly or indirectly elect, appoint, or remove a majority of the company’s directors. Furthermore, the federal CBCA explicitly includes individuals who have any direct or indirect influence that would result in “control in fact” of the corporation.
If you operate a non-distributing (private) corporation under the CBCA, the rules became significantly stricter on January 22, 2024. The federal government has mandated the creation of a public beneficial ownership registry.
Previously, ISC registers were only available to shareholders, creditors, and investigative bodies upon request. Now, certain information—such as the individual’s name and their address for service—must be made available to the public by the Director of Corporations Canada.
Corporations must update this information annually, upon incorporation, after amalgamation, and within 15 days of becoming aware of any changes to the register.
Failing to prepare and maintain this register is a serious offence. A corporation that contravenes this requirement without reasonable cause can face a fine of up to $100,000. Directors or officers who knowingly record or provide false or misleading information can face fines of up to $200,000, up to six months in prison, or both.
In British Columbia, private companies have been required to establish and maintain a “transparency register” since October 1, 2020. Currently, this register must be kept at the company’s records office (or accessible electronically from it).
Unlike the new federal rules, BC’s transparency register information is currently only available to directors of the company and certain tax, regulatory, and law-enforcement officials.
BC is poised to follow the federal government’s lead. Amendments under the Business Corporations Amendment Act, 2023 are expected to introduce a searchable public registry by the fall of 2025. Private BC companies will be required to file their transparency register information online with the BC Business Registry within 15 days of becoming aware of any changes, as well as on an annual basis.
Similar to the federal rules, if a private BC company commits an offence regarding its transparency register, any director or officer who authorizes, permits, or acquiesces in the offence also commits the offence, regardless of whether the company itself is convicted.
While the dual systems aim for the same goal, there are nuanced differences in the data you must collect. For BC companies, the transparency register must include the individual’s full name, date of birth, last known address, jurisdiction of residence for tax purposes, and whether they are a Canadian citizen or permanent resident.
For federal CBCA corporations, the requirements go slightly further. Instead of just a “last known address,” CBCA companies must record the individual’s residential address and their address for service. Additionally, CBCA corporations must list the citizenship of each ISC (regardless of Canadian residency) and must include a description of the steps taken to keep the register’s information current.
The end of corporate anonymity requires a proactive approach. The days of treating corporate minute books as a “set it and forget it” task are over. To navigate this compliance trap, Canadian businesses must:
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