In recent years, requirements for private companies to disclose corporate ownership information on what are often referred to as “transparency registers” have swept across Canada. All Canadian jurisdictions apart from Alberta, Yukon, the Northwest Territories and Nunavut have now adopted legislation requiring transparency registers. The goal of these registers is to increase corporate transparency and accountability by listing individuals with significant control (ISC).[1]
While there are broad similarities across the Canadian jurisdictions with respect to transparency register requirements rules, there are unfortunately differences as well. This creates a complex compliance environment for organizations with entities formed across Canada. In this Update we seek to both explain the regime and highlight certain of these differences.
One of the most notable features of transparency registers is whether or not they are publicly accessible. In most Canadian jurisdictions, these registers can only be accessed by bodies such as police forces, governmental tax entities and regulators. However, the landscape is changing as some jurisdictions are moving towards creating registers with greater public access:
- Federally, proposed legislation under Bill C-42 will allow Corporations Canada and The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to make certain information regarding beneficial owners of federal corporations public. Proposed amendments introduced by a Committee Report from June 14, 2023, would also introduce the steepest fines in Canada associated with contravening rules related to transparency registers. Bill C-42 had its third reading in the House of Commons and first reading in the Senate on June 22, 2023.
- In British Columbia, a bill that proposed a publicly accessible register received royal assent on May 11, 2023.
- In Québec, registers are already publicly accessible and, as of March 31, 2024, it will be possible to search the Registraire des entreprises du Québec (the REQ) by the name of a natural person. However, in accordance with the Act respecting the legal publicity of Enterprises (the LPA), certain personal information — such as the date of birth or residential address (if a professional address is disclosed) of an individual or the name and domicile of a minor — will not be included in these searches.
For the purposes of this Update, we will focus on the regime as it exists now and as it is anticipated to evolve. However, we note that these rules raise not only challenging interpretative questions for clients with complex ownership structures but also legitimate concerns regarding the ability of companies and individuals to privately order their affairs, in addition to creating potentially significant compliance costs.
Key themes
Fundamentally, each transparency regime sets out
- who is caught by these requirements
- what must be disclosed pursuant to these requirements
- who can access the register
- the penalties associated with non-compliance
Comparison
Set out below is a summary of the beneficial ownership transparency regimes across the key Canadian jurisdictions. While most jurisdictions follow a similar model, there are key differences among the regimes.
As mentioned, “ISC” refers to an individual with significant control (or, in Québec, natural persons who are ultimate beneficiaries), with significant control generally defined to capture ownership or control of 25% or more of the voting power or value of an entity.
|
Jurisdiction |
Federal (CBCA) |
Ontario (OBCA) |
Quebec (LPA) |
British Columbia (BCBCA) |
|---|---|---|---|---|
|
In-force date |
June 13, 2019, with new regulations in effect as of May 4, 2023. Timing of public access remains to be determined. |
January 1, 2023 |
March 31, 2023 Feature to enable a search by name effective on March 31, 2024. |
October 1, 2020 Timing of public access remains to be determined. |
|
Application |
Privately held CBCA corporations. |
Privately held OBCA corporations. |
All entities (not just corporations) registered to carry on business in Québec, regardless of the jurisdiction of incorporation, with certain exemptions. |
Privately held BCBCA corporations. |
|
Who is listed in the register |
All ISCs. |
All ISCs. Similar to federal requirements. |
All ISCs, but broader than federal/Ontario requirements because individuals with influence, general partners, and trustees are also captured. |
All ISCs, but broader than federal/Ontario requirements because individuals who can appoint the majority of the board of directors are also captured. |
|
Are joint owners captured? |
Yes |
Yes |
Yes |
Yes |
|
Penalties for corporations |
Up to $5,000; however, proposed amendments would raise this to $1,000,000 and/or the dissolution of the entity and/or imprisonment. |
Up to $5,000. |
Not less than $1,000 nor more than $10,000 ($500/$5,000 for individuals), doubled for a subsequent offence, and/or the dissolution of the entity or cancellation of its registration. |
Up to $100,000. |
|
Penalties for directors/officers |
Up to $200,000 and/or imprisonment; however, proposed amendments would raise this to $1,000,000. |
Up to $200,000 and/or imprisonment. |
Not less than $1,000 nor more than $10,000, doubled for a subsequent offence. |
Up to $50,000. |
|
Penalties for shareholders |
Up to $200,000 and/or imprisonment; however, proposed amendments would raise this to $1,000,000. |
Up to $200,000 and/or imprisonment. |
Not less than $500 nor more than $5,000, doubled for a subsequent offence for a natural person; not less than $1,000 nor more than $10,000, doubled for a subsequent offence for a legal person or other entity. |
Up to $50,000 for a natural person; up to $100,000 for a legal person or other entity. |
|
Who can access the register |
Law enforcement, tax authorities, directors, shareholders, creditors and certain other regulatory bodies. Proposed amendments would also require Corporations Canada to create a publicly accessible register, and would also permit Corporations Canada to provide the information to FINTRAC. |
Law enforcement, tax authorities and certain other regulatory bodies. |
Publicly accessible register in force March 31, 2023. Fully searchable register by name of natural persons starting on May 31, 2024. |
Law enforcement, tax authorities, directors and certain other regulatory bodies. Publicly accessible register has been proposed. |
|
Information available in register |
Personal information and information pertaining to the individual’s status as an ISC. A description of steps taken each year to verify ISCs and any other prescribed information must also be provided. Proposed amendments would include a residential address. |
Personal information and information pertaining to the individual’s status as an ISC. A description of steps taken each year to verify ISCs and any other prescribed information must also be provided. |
Personal information and information pertaining to the individual’s status as an ISC, including type of control exercised, or percentage of shares, interests or units held or beneficially owned. Certain details will be excluded from the public register. |
Personal information and information pertaining to the individual’s status as an ISC. A description of steps taken each year to verify ISCs and any other prescribed information must also be provided. |
|
Other |
A corporation that is unable to identify any ISCs must set out a statement and a summary of the steps taken to try to identify these individuals. |
A corporation that is unable to identify any ISCs must set out required information that the corporation was able to confirm in respect of the ISC and provide a summary of the steps taken to confirm the information. |
