Changes to Ontario’s Business Corporations Act: Register of Individuals with Significant Control

Effective January 1, 2023, most Ontario corporations must prepare and maintain a register of individuals with significant control over the corporation (an “ISC Register”) pursuant to Ontario’s Business Corporations Act, RSO 1990, c B16.

Who has significant control?

The following individuals have significant control over a corporation:

1. The registered holders, beneficial owners, or individuals with direct or indirect control of:
   a. any number of shares that carry 25 percent or more of the voting rights attached to all of the
   corporation’s outstanding voting shares; or
   b. any number of shares that is equal to 25 percent or more of all of the corporation’s
   outstanding shares measured by fair market value.
2. An individual who has any direct or indirect influence that, if exercised, would result in control in fact of the corporation.
3. An individual to whom prescribed circumstances apply.

Please note that, an “individual” with significant control can also be multiple people in certain circumstances, such as when the shares are held jointly.

Information to be Contained in the ISC Register

The ISC Register must set out: 

1. The name, date of birth and latest known address of each individual with significant control;
2. The jurisdiction of residence, for tax purposes, of each individual with significant control;
3. The day on which each individual became and ceased to be an individual with significant control;
4. A description of how each individual is an individual with significant control, including, as applicable, a description of their interests and rights in respect of shares of the corporation; 
5. Any other prescribed information; and,
6. A description of each step taken to ensure that the corporation has identified all of the individuals with significant control and that the information in the ISC Register is accurate, complete and up to date.

Corporation and Shareholder Continuing Obligations

In addition to initially preparing and maintaining the ISC Register, a corporation must take reasonable steps at least once during each of its financial years, and within 15 days of becoming aware of any information that is required to be contained in the ISC Register, to ensure that it has identified all the individuals with significant control over the corporation and that the information in the ISC Register is accurate, complete and up to date.

Upon request for disclosure of an ISC Register for law enforcement, tax or regulatory purposes, a corporation must respond within the period specified in such request by providing a copy of the ISC Register or with the information contained in the ISC Register that is specified in such request to the person making the request.

Moreover, a corporation must dispose of any personal information that is recorded in an ISC Register within 7 years of the day on which the individual the personal information is from ceases to be an individual with significant control.

Shareholders have a duty to reply accurately and completely to a corporation’s request for information that it requires for an ISC Register promptly and to the best of their knowledge.

Consequences for Failure to Comply

A corporation that, without reasonable cause, contravenes the requirement to maintain an ISC Register is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000. A corporation that, without reasonable cause, contravenes the requirement to respond to a request for disclosure of its ISC Register for law enforcement, tax or regulatory purposes is guilty of an offence and on conviction is liable to a fine of not more than $5,000.

Directors or officers of a corporation who knowingly authorize, permit or acquiesce in a corporation’s failure to maintain an ISC Register, to the recording of false or misleading information in an ISC Register, or provide any person or entity false or misleading information relating to an ISC Register, is considered to have committed an offence. Similarly, shareholders who knowingly contravene their obligation to reply accurately and completely to a request for information from a corporation commits an offence. Upon conviction of such offences, directors, officers and shareholders are liable to a fine not exceeding $200,000 or to imprisonment for a term not exceeding six months, or to both.

If your corporation requires guidance or assistance with developing an ISC Register and meeting your compliance obligations, please reach out to Lucia Kim and the Business lawyers at Mills & Mills LLP.

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