Big Changes to Corporate Privacy
As of June 13, 2019, all corporations governed by the Canada Business Corporations Act, except some distributing corporations, are required to create and maintain a register for any “individuals with significant control” (ISC) over the corporation. ISC is defined as anyone who has:
- registered or beneficial ownership of 25% or more of the corporation’s shares;
- direct or indirect control of 25% or more of the corporations shares;
- direct or indirect de facto control over the corporation;
- or any combination of these facts that cumulatively gives them significant control over the corporation.
These factors also apply to individuals who have joint ownership of, or control over, the corporation. The ISC Register must contain the following information:
- the name(s) and date(s) of birth of the ISC(s);
- their last known address;
- the jurisdiction of their residence for tax purposes;
- the date on which the individual/s acquired significant ownership or control;
- the date on which they ceased to have significant ownership or control;
- a description of how the individual meets the definition of an ISC;
- and a description of steps taken by the corporation to identify ISCs.
The ISC Register must be verified or updated at least once a year. It must also be updated within 15 days of a corporation becoming aware of an ISC, and within a year after the 6th anniversary of the day that an individual stops being an ISC. Upon request, shareholders and creditors of the corporation, and Corporations Canada, may have access to the ISC Register. Failure of a corporation to prepare and maintain an ISC Register may result in a fine up to $5,000.00 and/or imprisonment for up to six months. Any director, officer, or shareholder who provides false information to, or knowingly fails to comply with, the ISC Register may face a fine up to $200,000.00 and/or imprisonment for up to six months.
We would be pleased to discuss any particular fact situation with you upon request and can assist you with the preparation of the ISC Register if you so require.