In June 2019, amendments to the Canada Business Corporations Act (the CBCA) came into effect, requiring most non-publicly traded CBCA corporations to prepare and maintain a register (the ISC Register) of individuals with significant control over the corporation (ISCs).
We discuss two recent (and significant) developments to this register and its related requirements. First, Corporations Canada has announced that, commencing January 22, 2024, CBCA corporations subject to the ISC Register requirements must file information regarding their ISCs with Corporations Canada. Second, new legislation to amend the CBCA (Bill C-42) is expected to come into force shortly, which will result in some of the ISC information that is required to be filed being made publicly available by Corporations Canada on a website that is expected to go live in January 2024. These developments represent a watershed moment for corporate transparency in Canada.
For the purposes of this update, we have summarized the regime as it currently exists, but we expect there may be changes as Corporations Canada refines and revises the filing and publication process.
ISC Register filing and publication requirements
Filing requirements
Starting January 22, 2024, all CBCA corporations—including corporations that are exempt from the requirement to maintain an ISC Register—will have to file either ISC information or a confirmation that they are exempt from the requirements with Corporations Canada, as follows:
Annually: An ISC filing must be made with the annual return, which is due on the anniversary date of incorporation or continuance under the CBCA. The annual return will not be capable of being filed without the completed ISC filing. Note that historical ISC information before January 22, 2024 will not need to be filed.
Non-exempt corporations: Existing corporations will be required to file ISC information (which includes the information in the section below) when they file an annual return after January 22, 2024.
Exempt corporations: Exempt corporations will have to file a confirmation that they are exempt and provide the basis for their exemption when they file an annual return after January 22, 2024.
Within 15 days of any change: Upon becoming aware of any change to the ISC Register, a filing must be made to update ISC information.
Non-exempt corporations: If there is a change in a corporation’s ISC Register after January 22, 2024 but before its annual return is due, it will have to file its ISC information (reflecting the changed information) within 15 days of the change.
Exempt corporations: If an exempt corporation ceases to be exempt from the ISC requirements, it will have to file its ISC information within 15 days of that change.
Incorporation: As of January 22, 2204, to incorporate, a filing of ISC information or confirmation of exemption will be required. An incorporation cannot be completed without the contemporaneous ISC filing.
Amalgamation and continuance: A filing of ISC information or confirmation of exemption must be made within 30 days of an amalgamation or continuance under the CBCA that is completed after January 22, 2024. Corporations that do not file within the 30-day window may be subject to involuntary dissolution.
An exempt corporation is any CBCA corporation that is:
- a reporting issuer under provincial securities law or a wholly owned subsidiary of such a corporation;
- a public corporation that trades its securities on a Canadian or foreign stock exchange designated by the Income Tax Act or a wholly owned subsidiary of such a corporation; or
- a member of a prescribed class (Corporations Canada has indicated that this currently includes Crown corporations or a wholly owned subsidiary of a Crown corporation).
Information required to be filed
Non-exempt corporations are required to file the following information regarding each ISC with Corporations Canada:
- full legal name
- date the individual became an ISC or ceased to be an ISC, as applicable
- description of the ISC’s significant control
- residential address
- address for service (if one is provided as an alternative to a residential address)
- date of birth
- country (or countries) of citizenship
- country (or countries) where the ISC is considered a resident for tax purposes
Accordingly, ISCs and their related CBCA corporations should consider including an address for service with the ISC filing to avoid disclosure of residential addresses. The address for service can be any address where the ISC can receive mail and does not require a formal appointment of an agent.
What will be published
All of the filed information referred to above will be made public, except:
- date of birth
- country (or countries) of citizenship
- country (or countries) where the ISC is considered a resident for tax purposes
- residential address (but only if an address for service is provided).
Exemptions from publication
Bill C-42 provides for limited exemptions from the publication requirement, including:
- where an ISC is under the age of 18
- upon application to the Director of Corporations Canada (the Director)
- where there is a reasonable belief that making the information available would present “a serious threat to the safety of the individual”
- where the ISC lacks decision-making capacity
- where the information is to be kept confidential pursuant to obligations under legislation governing conflicts of interest
- where prescribed circumstances apply to the individual (none have yet been proposed by Corporations Canada)
It is not yet clear in what circumstances these exemptions from publication will apply or how Corporations Canada will interpret them and evaluate any applications. The provisions give broad discretion to the Director to impose terms and conditions on any exemptions that they grant.
If you have any questions regarding CBCA Corporations, feel free to contact finnection via email at info@finnection.ca or call us at (647) 795-5462
Disclaimer: Above information is subject to change and represent the views of the author. It is shared for educational purposes only. Readers are advised to use their own judgement and seek specific professional advice before making any decision. Finnection Inc. is not liable for any actions taken by reader based on the information shared in this article. You may consult with us before using this information for any purpose.