On the heels of federal amendments to the Canada Business Corporation Act discussed in our previous blog post (the “CBCA Amendments”) and British Columbia’s 2017 commitment to adopt safeguards to prevent the misuse of corporate entities for tax evasion and other criminal purposes, such as money laundering, corruption and the financing of terrorist activities, amendments to the British Columbia Business Corporations Act (the “BCBCA”) will require British Columbia companies to maintain a register of “significant individuals” (the “BCBCA Amendments”). The BCBCA Amendments, which are in many ways similar to the CBCA Amendments, will come into force by regulation.
Similar to the CBCA Amendments, the BCBCA Amendments will only apply to private British Columbia companies, exempting reporting issuers (or equivalents), companies listed on qualifying stock exchanges and certain other companies, which will be specified in the regulations.
An individual will be a “significant individual” if, individually or jointly with others, he or she:
- directly or indirectly owns or controls:
- more than 25% of the issued shares of the company; or
- issued shares of the company that carry 25% or more of the rights to vote at general meetings; or
- has the right or ability (directly or indirectly) to elect, appoint or remove directors of the company or the ability to “significantly influence” an individual who has such a right or ability to elect, appoint or remove directors.
It is expected that the regulations will include further guidance on how individuals who are not shareholders may qualify as an individual with “significant influence” over a company.
What Information is Required?
British Columbia companies will be required to maintain a new register containing the following information about “significant individuals” (the “Transparency Register”):
- the individual’s full name, date of birth and last known address;
- whether or not the individual is a Canadian citizen or permanent resident of Canada;
- if the individual is not a Canadian citizen or permanent resident of Canada, every country or state of which the individual is a citizen;
- whether or not the individual is resident in Canada for the purposes of the Income Tax Act (Canada);
- the date on which the individual became or ceased to be a significant individual in respect of the company;
- a description of how the individual is a significant individual; and
- additional information, if any required under the forthcoming regulations.
Even if it has no “significant individuals”, a company will need to include a statement to that effect on its Transparency Register, and companies are obliged to give notice to a person that has been identified as, or has ceased to be considered, a “significant individual”. Information about “significant individuals” must remain on a company’s Transparency Register for a period of six years after an individual ceases to be a “significant individual” of the company.
Companies, directors and officers risk penalty of fines of up to $100,000 if a company does not make reasonable efforts to identify “significant individuals” and maintain an accurate and current Transparency Register (which must be reviewed on an annual basis). Shareholders are obligated to respond to company requests for Transparency Register information in a timely manner and will be in contravention of the BCBCA if they provide false, misleading or incomplete information.
While the CBCA Amendments allow creditors of a corporation to access the Transparency Registers, the BCBCA Amendments specify that Transparency Registers will be available only to directors and certain regulatory authorities.
Transparency Registers must be available during regular business hours at the records office of the company and may be copied by representatives of the applicable authorities, including tax authorities, police officers conducting investigations and intelligence operations and the British Columbia Securities Commission, the Financial Institutions Commission, the Financial Transactions and Reports Analysis Centre of Canada, the Law Society of British Columbia and other bodies to be specified in the regulations.
The trend across Canada towards increasing transparency of corporate ownership has arrived in British Columbia. BCBCA companies should begin to institute processes that will enable them to track information pertaining to “significant individuals” and maintain a Transparency Register. Maintaining an accurate and up-to-date Transparency Register will allow BCBCA companies to respond to requests for information from regulatory authorities in a timely manner and ensure that the company, its officers and directors are not subject to liability under the BCBCA.
Lawson Lundell LLP will continue to monitor developments with respect to the BCBCA Amendments and the forthcoming regulations, which will specify when the BCBCA Amendments will come into force.
 The 2017 Agreement to Strengthen Beneficial Ownership Transparency was an agreement between federal, provincial and territorial finance ministers to adopt legislative amendments to increase transparency with respect to corporate ownership by July 1, 2019 (https://www.fin.gc.ca/n17/data/17-122_4-eng.asp).
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