This is an update on my earlier blog posted in 2022 titled “New Requirements for Private Federal Corporations to Report Individuals with Significant Control Coming Soon”.
In an effort to increase transparency around beneficial ownership of corporations and to curb illegal activities such as money laundering, tax evasion, and terrorist financing, all private corporations governed by the Canada Business Corporations Act (“CBCA”) have been required, since June 2019, to maintain a register (the “ISC Register”) of individuals with significant control over the corporation (“ISC”). As of January 22, 2024, private corporations governed by the CBCA are now also required to disclose to Corporations Canada certain information about the ISCs.
Who is an ISC?
An ISC is anyone who, individually or jointly with others (including where there is an agreement or arrangement under which right or rights are to be exercised jointly or in concert), has any of the following:
- registered or beneficial ownership of 25% or more of the voting rights attached to the corporation’s voting shares or 25% or more of all of the corporation’s shares measured by fair market value
- direct or indirect control of or direction over of 25% or more of the voting rights attached to the corporation’s voting shares or 25% or more of all of the corporation’s shares measured by fair market value
- direct or indirect de facto control over the corporation
- any combination of these facts that cumulatively gives them significant control over the corporation
Which Information Needs to be Disclosed?
The following information about each ISC must be filed electronically with Corporations Canada:
- Full legal names of the ISC
- Date(s) the individual became and ceased to be an ISC, as applicable
- Description of how such individual meets the definition of an ISC, including a description of the individual’s interests and rights in respect of the corporation’s shares
- Residential address of the ISC (address for service may also be provided but is not required)
- Date of birth of the ISC
- Country(ies) of citizenship of an ISC
- Country(ies) where the ISC is considered a resident for tax purposes
Which Information Will be Publicly Available?
The following information about ISCs will be publicly available on Corporation Canada’s website:
- Full legal names of the ISC
- Date(s) the individual became and ceased to be an ISC, as applicable
- Description of how such individual meets the definition of an ISC
- Address for service of the ISC if it has been provided
- Residential address of the ISC if an address for service has not been provided
When Should the Information be Filed?
The above-mentioned information about the ISCs must be filed as follows:
- upon incorporation, amalgamation, or continuance of the corporation;
- annually with the corporation’s Annual Return; and
- within 15 days of a change in ISCs.
What are the Penalties for Not Complying?
Failure by a corporation to complete an ISC filing may result in administrative dissolution of the corporation and/or summary conviction with a fine not exceeding $100,000.00. In addition, any director, officer, or shareholder who provides false information with respect to, or knowingly fails to comply with the requirements relating to, the ISC Register may face a fine up to $1,000,000.00 and/or imprisonment for up to 5 years.
To learn more about ISCs and ISC Registers, please click here. For more information about how to file the required ISC information, please visit this link.
This blog post was written by Marina Abrosimov, a member of the Business Law team. Marina can be reached at 613-369-0363 or at [email protected].
