Endeavor Law recently reported that Bill C-86, which received Royal Assent on December 13, 2018 and included amendments to multiple pieces of legislation including the Canada Business Corporations Act ("CBCA") including a requirement to record individuals (a natural person) who have significant control over a corporation, would come into force on June 13, 2019 (see here). All private corporations formed under the CBCA should soon include a register of prescribed beneficial shareholder information as part of their corporate records.
In furtherance of this trend, the British Columbia government recently introduced Bill 23 (the "Land Owner Transparency Act") which will create a public beneficial ownership registry requiring off-title ownership to be reported for all lands in British Columbia; and Bill 24 (the "BCBCA Amendment Act") , which will amend British Columbia's Business Corporations Act (the "BCBCA") to require a B.C. company to identify and track individuals who own 25 per cent or more of the issued shares or voting rights of a company or have other significant rights or interests in the company. On May 17th the BCBCA Amendment Act received royal assent in the British Columbia legislature. Provisions related to bearer shares and warrants came into force immediately on royal assent and the key provisions of the BCBCA Amendment Act are anticipated to be come into force by regulation on a relatively short timeline.
The BCBCA Amendment Act adopts requirements substantially similar to those soon to be implemented under the CBCA., requiring private British Columbia companies to take reasonable steps to maintain a transparency register containing accurate, complete and up-to-date information about "significant individuals" including:
full name, date of birth and last known address;
whether or not the individual is a Canadian citizen or permanent resident of Canada or, if not, a list of every country of which the individual is a citizen;
whether or not the individual is a resident of Canada for tax purposes;
the date on which the individual became or ceased to be a significant individual;
a description of how the individual meets the definition of a "significant individual"; and
any further information that may be required by regulation.
In addition to the company's obligation to take reasonable steps to obtain the required information, a B.C. private company must also review the register annually and update the register throughout the year as new information becomes available.
A "significant individual" is an individual who, with respect to the company jointly or individually:
directly owns, indirectly owns, or indirectly controls: (a) 25% or more of the issued shares of the company, or, (b)shares that carry 25% or more of the voting rights at general meetings of the company; or,
has the right or ability to directly or indirectly elect, appoint or remove the majority of the company’s directors through any, or any combination, of the following: (a) the right to elect, appoint or remove one or more of the directors; (b) indirect control of the right to elect, appoint or remove one or more of the directors; or (c) the ability to exercise direct and significant influence over an individual who directly or indirectly has the right or control to elect, appoint or remove one or more directors.
Individuals may also qualify as “significant individuals” if they have interests, rights, or abilities that, combined, meet the above and therefore agreements or arrangements such as shareholder agreements and voting agreements to exercise such rights jointly or in concert; arrangements as a result of a close family relationship (such as spouse, son, daughter or a relative of the individual or their spouse who shares the same home) must be considered.
Once the transparency register is prepared, the information must be held at the company’s records office and remain available for inspection by prescribed officers. Unlike the CBCA, which will allow shareholders and creditors the right to inspect beneficial ownership information, under the BCBCA, such information will be available only to directors and officials conducting tax, regulatory or law enforcement investigations.
Under Bill 24 when adopted, it will be an offence for a B.C. private company to do the following in its transparency register:
identify an individual as a significant individual if that person is not a significant individual;
exclude an individual who is a significant individual; or
include information that is false or misleading in respect of any material fact, or omit information, if the omission makes the information false or misleading.
If a director or officer authorizes, permits or acquiesces in the commission of the offence by the company, they will commit an offence. A shareholder who sends information that is false or misleading or omits any material fact, the omission of which makes the information false or misleading, will also commit an offence. A person who commits an offence is liable, in the case of a person other than an individual, to a fine of not more than $100,000 or, in the case of an individual, to a fine of not more than $50,000. The company, directors, officers and shareholders will not have committed an offence if they did not know that the identification or exclusion of the individual was incorrect or that the information was false or misleading, and with the exercise of reasonable diligence, could not have known that the information was false or misleading.
Endeavor Law can assist BCBCA companies as well as any directors, officers or shareholders of such corporation with legal advice and services directed at compliance with these, and other, corporate regulatory matters. Endeavor Law will always seek to provide competitive pricing for any legal services requested and is pleased to discuss fee arrangements that suit any potential client.
Does not constitute legal or other advice and must not be used as a substitute for legal advice from a qualified legal professional in your jurisdiction who has been fully informed of your specific circumstances. Information may not be up-dated subsequent to its initial publication and may therefore be out of date at the time it is read or viewed. Always consult a qualified legal professional in your jurisdiction.