Most federal corporations governed under the Canada Business Corporations Act (the “CBCA”) are required to prepare and maintain registers of individuals with significant control (“ISC Registers”).
Effective January 22, 2024, Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts, will expand these requirements with the goal of enhancing transparency and combating tax evasion and money laundering.
Who is an ISC?
An individual with significant control (“ISC”) is someone who owns or controls a corporation. This individual must:
- own, control, or direct 25% or more of shares (that have the right to vote at shareholder meetings or based on the fair market value of the shares) individually, jointly, or in concert with other individuals;
- have control in fact over the corporation without any shares; or
- meets a combination of any of these factors.
Current ISC Register Requirements
Corporations governed under the CBCA are currently required to prepare and maintain ISC Registers with the following information for every ISC:
- full legal name;
- date of birth;
- residential address;
- country of residence for tax purposes;
- date on which the individual became an ISC;
- date on which the individual ceased to be an ISC, if applicable; and
- description of the ISC’s significant control.
ISC Registers must be prepared upon incorporation, continuance, or amalgamation and must be updated annually and within 15 days of a corporation becoming aware of any changes to the information contained in the register.
New ISC Register Requirements
As of January 22, 2024, most corporations governed by the CBCA will be required to file ISC information with Corporations Canada. This information should be filed annually with an annual return, during an incorporation process, within 30 days of the date on a Certificate of Amalgamation, and within 30 days of the date on a Certificate of Continuance.
Some of the information filed with Corporations Canada will then be used by the federal government to create a publicly accessible federal register (see below).
Some corporations are excluded from the requirement to create and maintain an ISC Register because information about their ISCs is available under applicable securities laws, or the only owner is a Canadian government. CBCA corporations exempt from filing an ISC Register will be required to file a confirmation of this exemption when filing an annual return.
What Information Will Be Publicly Available?
The following information will be publicly available for every ISC:
- full legal name;
- date the individual became and/or ceased to be an ISC, as applicable;
- description of the ISC’s significant control;
- residential address (unless an address for service is provided); and
- address for service (if one is provided).
The following information will remain confidential for every ISC:
- date of birth;
- country of citizenship;
- country of tax residence; and
- residential address (if an address for service is provided).
Information about an ISC under the age of 18 will also be confidential until the individual turns 18 years of age.
In some circumstances, individuals may submit an application to Corporations Canada to have their information remain confidential. Information will be withheld from publication where:
- Corporations Canada is satisfied that the individual is incapable;
- Corporations Canada reasonably believes that making the individual’s information available to the public presents, or would present, a serious threat to the safety of the individual; or
- The information should be kept confidential under the Conflict of Interest Act or a similar provincial or territorial act.
An application to have information remain confidential is recommended to be submitted 30 days before filing or updating the ISC information with Corporations Canada or 30 days before filing articles of incorporation, amalgamation, or continuance.
Sanctions for Non-Compliance
A corporation that does not comply with its requirements to file ISC information with Corporations Canada may be subject to the following sanctions:
- A Certificate of Compliance may be refused;
- The corporation may be administratively dissolved; or
- The corporation may be found guilty of an offence and liable on summary conviction to a fine not exceeding $100,000.
Directors and officers may also be liable on summary conviction to a fine not exceeding $1,000,000 or to imprisonment for a term not exceeding 5 years, or to both.
Federal corporations will need to take extra care to regularly update their ISC Registry given the consequences for not filing ISC information. We recommend that you review your ISC Registers at least annually and within 15 days of becoming informed of any changes affecting an ISC Register to ensure it is accurate, complete, and up-to-date.
For more information about ISC Registers and help filing ISC information with Corporations Canada, our experienced Business Law lawyers can assist you. To learn more about how we can assist you, please contact us online or by telephone at (416) 863-0125.
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