HLA Magazine Feature: Transparency Requirements: Publicizing Private Company Ownership – FEB 2024
As of June 13, 2019, through an amendment to the Canada Business Corporations Act (the “CBCA”),
most private federally incorporated companies are required to maintain a register containing personal
information about individuals that hold significant control (the “ISC Register”).
As of January 22, 2024, CBCA corporations subject to the ISC Register requirement will also be
required to submit the information in the ISC Register to Corporations Canada. Some of that
information will then be made publicly available on Corporations Canada’s website.
1. Rationale
The ISC Register, and publicizing certain personal information in the ISC Register, is intended to
combat illicit activities such as money laundering and tax evasion, while also producing certain
ancillary benefits.
The public register will increase transparency. Increased transparency will purportedly provide
authorities assistance in criminal investigations by identifying potential suspects or witnesses faster
and streamlining the process to trace and/or freeze assets. It will also assist regulated industries, such
as banks and realtors, to comply with their due diligence obligations and for consumers to further
understand whom they are doing business with.
Despite being well-intentioned, the amendments will result in additional administrative obligations for
impacted CBCA companies and give business owners pause in knowing that some of their personal
information will be made public.
2. Individuals with Significant Control
An Individual with Significant Control (an “ISC”) is one who by themselves or jointly (with one or
more individuals) has an interest in a “significant number of shares” of the company,
(a) as the registered security-holder;
(b) as the beneficial holder; or
(c) through direct or indirect control, influence or direction.1
A significant number of shares in the company means 25% or more of the voting rights in the company
or 25% of the company’s outstanding shares measured by fair market value.2 3
The wording would ensure that, in a scenario involving several layers of holding companies, the
individual(s) at the top of the corporate pyramid is identified. In doing so, however, the wording is
seemingly crafted to encourage greater disclosure through terms such as “control, influence or
direction”.
3. ISC Register & Publicly Accessible Information
Below, is the information to be contained in the ISC Register and that which will be made public.
4
Notwithstanding the foregoing, certain law enforcement and investigate bodies will have access to all
filed ISC information.
5
4. Filing Timelines
The information in the ISC Register is to be updated and filed with Corporations Canada annually at the time of filing the company’s annual return.6 Any changes will need to be filed within 15-days of the change being recorded in the company’s ISC register.7
Incorporations, on or after January 22, 2024, subject to the ISC Register will require a filing or confirmation of exemption.
With respect to amalgamations and continuances, the ISC information is to be filed within 30-days of the date of the Certificate of Amalgamation or Certificate of Continuance.8
5. Exemptions
There are certain exemptions, pursuant to which personal information of an ISC will not be made publicly available, and include,9
(a) an ISC who is below 18-years of age. Upon reaching the age of 18, provided the individual remains an ISC of a company, the information will be made available to the public;
(b) an ISC who applies to the Director of Corporations Canada, for their personal information not to be made public, and the Director,
i. reasonably believes making the information public would present a serious threat to the safety of the ISC;
ii. is satisfied the ISC is incapable;
iii. is satisfied the information is to be kept confidential under the Conflict of Interest Act or similar legislation; or
iv. is satisfied a prescribed exemption (as may be regulated in the future) is available.
6. Non-Compliance
Failing to comply, may result in,
(a) a Certificate of Compliance not being issued, which can impact a company’s ongoing business activities including financings or transactional matters;
(b) the company being administratively dissolved;
(c) the company being subject to an offence and liable on summary conviction to a fine not exceeding $100,000;
(d) a person committing an offence under the provision being liable on summary conviction to a fine not exceeding $1,000,000 dollars or to imprisonment for a term not exceeding 5 years, or to both.
7. Ontario Business Corporations Act (“OBCA”)
As of January 1, 2023, through amendments to the OBCA, most private OBCA companies are required to maintain a similar ISC Register.10 However, at the present moment, there is no requirement to make public filings which, in the interim, may encourage entrepreneurs to incorporate or continue their corporation in Ontario.
That being said, public disclosure requirements may eventually be introduced in Ontario. Should Ontario move in that direction, it would not be the first province to institute such a requirement, as the government of Quebec has already implemented such (which is arguably broader than that introduced under the CBCA).
1 Canada Business Corporations Act (R.S.C., 1985, c. C-44), ss. 2.1(1) and 2.1(2).
2
Ibid, s. 2.1(3).
3 For context, during parliamentary discussion of the amendment, a lower threshold of 10% was proposed, but was
unsuccessful. The transcript of the parliamentary discussion can be found at:
https://www.ourcommons.ca/DocumentViewer/en/44-1/house/sitting-215/hansard
4 Supra note 1, ss. 21.1(1) and 21.303(1).
5Ibid, s. 21.301.
6Ibid, s. 21.21(1)(a).
7Ibid, s. 21.21(1)(b).
8Ibid, s. 21.21(2).
9Ibid, s. 21.303(3).
10 Business Corporations Act, R.S.O. 1990, c. B.16, s. 140.2.
