Corporations Canada has announced that starting January 22, 2024, all federal corporations under the Canada Business Corporations Act (CBCA) will be required to file information on individuals with significant control (ISC) with Corporations Canada unless an exemption applies.
What is an ISC?
An ISC is defined in the CBCA and includes an individual who:
- is the registered or beneficial owner of, or has control or
direction over, directly or indirectly, either
- 25% or more of the outstanding number of voting shares of the corporation, or
- 25% or more of the corporation's shares measured by the fair market value;
- has any direct or indirect influence that, if exercised, would result in control in fact of the corporation; or
- is one of two or more joint owners of – or has agreed to act jointly with a group of shareholders who collectively own 25% or more of – the outstanding number of voting shares of the corporation or 25% or more of the corporation's shares measured by the fair market value.
New measures
Introduced in Bill C-42, these measures are intended to increase transparency in the ownership of Canadian corporations and help combat money laundering and tax evasion.
Since June 2019, non-publicly traded corporations under the CBCA have been obligated to keep a registry of ISCs, but that information has not been made public. The new amendments mark a turning point in business secrecy in Canada. Key details are below.
Information about ISCs to be filed that will be made public:
- full legal name
- date that the person became an ISC or ceased being an ISC
- description of the ISC's significant control over the corporation
- residential address (only if an address for service is not provided)
Information about ISCs to be filed that will not be made public:
- date of birth
- country/countries of citizenship
- country/countries where the ISC is considered resident for tax purposes
Filing deadlines
A corporation must file this information online through Corporation Canada's website each year along with the corporation's annual return; on incorporation; within 30 days of amalgamation; within 30 days of filing a continuance under the CBCA; and within 15 days of any change made in its ISC Register.
Penalties
Corporations Canada can now dissolve a corporation that neglects to file required ISC information. It can also levy fines up to $1,000,000 and/or impose prison time up to five years, if a corporation contravenes these requirements.
Exemptions
If an ISC feels that disclosing their information poses a serious threat to the safety of an individual(s), then the ISC can apply for an exemption. Various other exemptions may apply that are specific to characteristics of the ISCs. Certain CBCA corporations are also exempt from ISC filing requirements including reporting issuers and their wholly owned subsidiaries, certain public corporations and members of prescribed classes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.