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CORPORATE LAW UPDATE: Privately Owned CBCA Corporations To Begin Submitting Significant Shareholder Information To Feds

As at January 22, 2024, federally incorporated Canadian corporations must file information contained in corporation's register of individual shareholders with significant control with Corporations Canada and, once active, certain information to be filed with Corporations Canada will be publicly available through a website that is expected to go live in 2024.

CBCA Corporations To Submit Significant Shareholder Information To Feds

Since 2019 privately-owned corporations under the Canada Business Corporations Act ("CBCA") have been required to maintain a detailed register of information about individual shareholders with significant control ("ISCs") over shares of the corporation (see our earlier Corporate Law Update here). Starting on January 22, 2024, all CBCA corporations will have to make filings with Corporations Canada to either provide prescribed ISC information or confirm that the corporation falls within one of the classes of corporation that is exempt from the applicable ISC register requirements, including certain public corporations or their wholly-owned subsidiaries.


ISC information will need to be filed with Corporations Canada at the following times:

  • annually (at the same time as filing a corporation's Annual Return);

  • within 15 days of a change in a corporation's ISC register; and

  • upon incorporation or within 30 days of the date of the Certificate of Amalgamation or the Certificate of Continuance.

Additionally, the update of ISC information may be required upon the request of the Director of Corporations Canada and at additional times provided for in future regulations, and not just annually or when the corporation becomes aware of changes to the information.


The following information with respect to any non-exempt CBCA corporation's ISCs will need to be filed with Corporations Canada (and, eventually, certain information will be made available to the public on Corporations Canada's website):


  • full legal name of any ISC (public);

  • date of birth of any ISC (non-public);

  • country (or countries) of citizenship for any ISC (non-public);

  • country (or countries) where any ISC is considered a resident for tax purposes (non-public);

  • date an individual became an ISC and ceased to be an ISC, as applicable (public);

  • description of the ISC's significant control (public);

  • if provided, address for service (public); and

  • residential address (non-public if address for service is provided, but will be made public if no address for service is provided)

 

There are exceptions to public disclosure where an individual is less than 18 years of age or is someone who fits within additional circumstances as may be prescribed by future regulations. Additionally, if an ISC applies to the Director of Corporations Canada to have any information not made available to the public, the Director may choose not to publicly disclose such information for certain specified reasons, including but not limited to where the Director reasonably believes that making such information available presents, or would present, a serious threat to the safety of the individual.


In certain situations, a corporation may fail to identify any ISCs. This is typically either because no individual meets the applicable tests or because of the corporation's inability to obtain information needed to identify its ISCs. In either case, the corporation must still maintain an ISC register which must include a statement that no ISCs have been found, along with a summary of the steps taken by the corporation to identify its ISCs.


A corporation may be exempt from the requirement to maintain an ISC register with their corporate records (for example as a public company or a wholly-owned subsidiary of a public company). However, exempt corporations are still required to disclose this fact to Corporations Canada and any exempt status will likely be made public.


The new CBCA amendments have repealed the right of shareholders and creditors to request access the ISC Register maintained by the corporation as of January 22, 2024. Like all members of the public, however, shareholders and creditors will have access to the ISC information to be included on the public website. Law enforcement and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) will have access to ISC information whether or not the information is made public.


The new CBCA amendments also broaden the power of Corporations Canada to make inquiries to any person regarding compliance and to request any records, documents or information.


The new CBCA amendments further provide certain protections for whistleblowers. In circumstances where a person provides information regarding wrongdoing (defined as non-compliance with the CBCA, fraudulent formation of a corporation or fraudulent activity involving persons concerned with the formation, business or affairs of a CBCA corporation), the Director is prohibited from disclosing information that would reveal the identity of, or the information provided by, the whistleblower without consent of the whistleblower. The identity of the whistleblower and information provided by them can, however, be provided by the Director to investigative authorities without consent of the whistleblower.


The fine for a corporation failing to comply with disclosing ISC registers in prescribed form has increased from $5,000 to $100,000. Additionally, conviction of an offense for failure to comply for an officer or director (for failing to ensure the corporation records accurate information in its ISC register) or a shareholder (for failing to provide required information) has increased from $200,000 to $1,000,000, in addition to potential jail time.


Due to the manner in which the ISC information must be submitted to Corporations Canada, on or after January 22, 2024 a corporation will not be able to file its annual returns without completing the required ISC disclosure portions of the filing. In addition, failure to comply with these new filing requirements may mean that a CBCA corporation cannot obtain a certificate of compliance or certificate of status. Further, the Director may administratively dissolve a corporation in default for more than one year, or where a corporation fails to submit the required ISC information within 30 days of an amalgamation or continuance under the CBCA.


While CBCA corporations are only required to submit this new ISC disclosure in respect of 2024 annual return filings submitted on or after January 22, 2024 and incorporations, amalgamations and continuances federally going forward, all CBCA corporations should take the opportunity to review their ISC registers to ensure that they are up to date. ISCs should ensure that an address for service is provided if they would prefer their residential address to remain private.


Endeavor Law can assist CBCA corporations 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.



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