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Important Developments in Canadian Transparency Requirements

January 18, 2024

Several Canadian jurisdictions have made significant changes to the transparency requirements related to disclosure of information about ultimate beneficial owners. This bulletin includes information on key current developments under the federal corporate statute, upcoming changes to the British Columbia requirements and new filing requirements in Quebec.

Upcoming Changes to Federal Corporate Transparency Requirements

As noted in our September 2022 Blakes Bulletin: Upcoming Changes to Ontario and Federal Corporate Transparency Requirements, amendments to the Canada Business Corporations Act (CBCA) were passed in June 2022 that, once effective, will require applicable private CBCA corporations to file with Corporations Canada information contained in the corporation’s register of individuals with significant control (ISCs). At the time, these amendments were described as another step in expanding the corporate transparency measures applicable to federal business corporations.

As a further step in increasing corporate transparency for federal corporations, Bill C-42 An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts (Bill C-42) was introduced in March 2023 and received Royal Assent on November 2, 2023. Once in force, Bill C-42 will make additional amendments to the CBCA to provide that certain information regarding the ISCs of non-exempt CBCA corporations will be made publicly accessible.

January 22, 2024 was determined as the date when all these amendments will come into force.

Filing Requirement for CBCA Corporations

Starting on January 22, 2024, all CBCA corporations will have to make filings with Corporations Canada at least annually — either to provide ISC information or confirm that the corporation falls within one of the classes of corporation that is exempt from the applicable ISC register requirements, including certain public corporations or their wholly-owned subsidiaries.

In connection with this development, Corporations Canada has published a notice outlining the new filing requirements applicable to CBCA corporations. In summary, every CBCA corporation to which the ISC register requirement applies will need to file with Corporations Canada the information contained in its ISC register annually and within 15 days after new information is recorded in its ISC register. Additionally, every CBCA corporation will be required to file this information (or confirmation that the corporation is exempt) upon incorporation and within 30 days following amalgamation or continuance under the CBCA.   

Creation of a Public Registry for CBCA Corporations

Upon the amendments contained in Bill C-42 also coming into force on January 22, 2024, the following information regarding the ISCs of non-exempt CBCA corporations will be made publicly accessible through Corporations Canada’s website:

  • The individual’s full legal name;
  • The individual’s address for service, if one has been provided;
  • The individual’s residential address, if a separate address for service has not been provided;
  • The dates on which the individual became and ceased to be an ISC, as applicable; 
  • The description of how each individual is an ISC, including, as applicable, a description of their interests and rights in respect of shares of the corporation; and
  • Any other information as may be prescribed by future regulations.

The Bill C-42 amendments provide an exception to public disclosure where an individual is less than 18 years of age or is someone who fits within additional circumstances as may be prescribed by future regulations. Additionally, if an ISC applies to the director responsible for overseeing the CBCA (Director) to have any information not made available to the public, the Director may choose not to publicly disclose such information for certain specified reasons, including but not limited to where the Director reasonably believes that making such information available presents, or would present, a serious threat to the safety of the individual.  

As noted above, the amendments will allow an address for service to be provided for each ISC in addition to a residential address. If both addresses are provided, only the address for service will be made publicly accessible. Accordingly, many ISCs may desire to ensure an address for service is included in the applicable corporation’s filings to avoid public disclosure of a residential address.

Other Amendments

The CBCA amendments will increase penalties for non-compliance with ISC requirements.  Notably, the penalty for directors and officers who knowingly authorize, permit or acquiesce in a corporation’s non-compliance with the ISC requirements will also be increased to a fine not exceeding C$1-million and/or imprisonment for a term not exceeding five years. This is a significant increase from the current maximum of a C$200,000 fine and/or imprisonment for a term not exceeding six months.

The amendments will also make additional changes to the existing requirements, including among other things:

  • The information required to be collected in respect of each ISC will be expanded to include each ISC’s country (or countries) of citizenship;
  • The update of ISC information may be required upon the request of the Director and at additional times provided for in future regulations, and not just annually and when the corporation becomes aware of changes to the information;
  • The Director may share information with provincial corporate registries or government departments that are responsible for corporate law in a province; 
  • The Director will have the ability to refuse to issue a certificate of compliance and the power to dissolve a corporation in instances of non-compliance with the ISC requirements; and
  • Consequential and related amendments to other federal legislation.

Upcoming Changes to British Columbia Corporate Transparency Requirements

Similar to the changes to the CBCA, the British Columbia government has recently passed amendments to the Business Corporations Act (BCBCA) that seek to create a public and searchable beneficial ownership registry. The stated purpose behind the amendments is to increase corporate transparency and to curtail the use of private British Columbia companies in money laundering and other criminal schemes. 

As previously noted in our April 2020 Blakes Bulletin: BCBCA Amendments: Transparency Register to Track Significant Individuals, private companies in British Columbia are currently required to maintain at their registered records office a transparency register listing the “significant individuals” with control over the company. With the passage of Bill 20, Business Corporations Amendment Act, 2023 (Bill 20) in May 2023, the British Columbia government has made additional amendments to the BCBCA that, once in force, will require private BCBCA companies to send to the registrar the significant individual information contained in the company’s transparency register. Certain information regarding significant individuals will also be made publicly accessible. 

Filing Requirement for British Columbia Companies

Once effective, the amendments will require transparency registers be sent to the registrar: 

  • For all existing companies, on an annual basis;
  • For newly incorporated companies, within six months of incorporation; and 
  • Within 15 days after a change to the transparency register. 

The proposed amendments will also permit the registrar to take on a more active role in verifying the significant individual information. 

Creation of a Public Registry for British Columbia Companies

In addition, under Bill 20, the following information regarding significant individuals of private BCBCA companies will be made publicly accessible: 

  • The individual’s full name and year of birth; 
  • Whether or not the individual is a Canadian citizen or permanent resident of Canada; and
  • If the individual is not a Canadian citizen or permanent resident of Canada, every country or state of which the individual is a citizen. 

The proposed changes will also require the following information regarding significant individuals to be collected by BCBCA companies and made publicly available for search and inspection by select government officials in certain situations: 

  • The individual’s date of birth and last known address;
  • Whether or not the individual is resident of Canada for the purposes of the Income Tax Act (Canada);
  • The individual’s social insurance number, if any;
  • The individual tax number, if any, assigned to the individual by the Canada Revenue Agency;
  • The date when the individual became or ceased to be a significant individual in respect of the company;
  • A description of how the individual is a significant individual; 
  • If the private company ascertains that the individual is incapable of managing the individual's own affairs, a statement setting this out; and 
  • Any other information as prescribed. 

The situations under which the above enumerated information may be required to be made available for search and inspection include for tax purposes, law enforcement purposes, by request of an enforcement officer or ministry official, regulatory purposes, pursuant to information-sharing agreements with equivalent corporate registries in other Canadian or non-Canadian jurisdictions, or pursuant to information-sharing agreements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada)

The amendments provide an exception to public disclosure where an individual is less than 19 years of age or has been designated as incapable of managing their own affairs. Additionally, if a significant individual applies to the registrar to have some or all their information not made available to the public, the registrar may choose not to publicly disclose such information if the registrar reasonably believes that making it available could reasonably threaten the safety or mental or physical health of the individual or members of the individual’s household. 

Quebec’s Ultimate Beneficiary Disclosure Regime

Unlike the upcoming changes to the CBCA and the BCBCA, the Quebec government has opted to amend certain provisions of An Act Respecting the Legal Publicity of Enterprise (LPLE), the act which governs the Quebec Enterprise Registrar (REQ) and its registrants, following the adoption of Bill 78: An Act mainly to improve the transparency of enterprises (Bill 78). This amendment effectively requires all registrants, regardless of their juridical form or governance, to disclose certain information with the REQ and allows for free public access to information on the ultimate beneficiaries of a registrant.

As mentioned in our January 2021 Blakes Bulletin: Corporate Transparency: Quebec Moves Forward with Its New Ultimate Beneficiary Disclosure Regime, these new disclosure obligations are aimed at countering tax havens, tax evasion, abusive tax avoidance, criminal activities and corruption. The new disclosure obligations position Quebec among the most transparent jurisdictions, alongside the United Kingdom and most member states of the European Union.

Filing Requirement with the REQ

Effective March 31, 2023, all registrants are required to disclose to the REQ the following information (with certain exceptions):

  • Their ultimate beneficial owner(s);
  • The date of birth of all individuals, whether they be a director, officer, shareholder or beneficial owner;
  • A valid piece of government-issued identification for all directors; and
  • Disclosure of the residential addresses of all individuals and, if applicable, a professional address. 

For the entities currently registered with the REQ, such new disclosure obligations were required to be declared within the filing of the registrant’s Quebec Annual Updating Declaration due after March 30, 2023. In all other instances, such information is required to be disclosed within the filing of a Declaration of Registration or Initial Declaration, or within 30 days of change to the information declared with the REQ.

Compliance Enforcement

A registrant should comply with Bill 78 as soon as they are able to, as some other amendments to the LPLE per Bill 78 have broadened the powers of the REQ to ensure the accuracy of the information declared which includes auditing the corporate registration of a registrant. Although an audit was always possible, it was not as prevalent prior to Bill 78.

Following an audit, should it be deemed that certain information is erroneous or missing, a notice of non-compliance would be issued to the registrant. It should be addressed by the registrant within a 60-day period. Should the deficiencies not be remedied within that period, the REQ may cancel the corporate registration of the registrant or the registrant may be subject to fines. This cancellation would paralyze the registrant in Quebec, as it would entail the cancellation of any other registration tied to the NEQ (corporate registration number) including, but not limited to, Revenu Québec, the CNESST, etc. 

Part of a Growing Trend

The foregoing developments represent only the latest changes in the rapidly developing area of corporate transparency in Canada. With the exception of Alberta and the three territories, all Canadian jurisdictions of incorporation have now enacted some form of corporate transparency requirements. We anticipate that there will be additional amendments and guidance as the federal and provincial governments further develop and refine their approaches to corporate transparency.

For further information, please reach out to a member of our Corporate & Commercial group or your usual Blakes contact at any time.