As of June 13, 2019, private companies incorporated under the Canada Business Corporations Act (CBCA) will be subject to new record keeping requirements. These CBCA amendments are part of federal efforts to increase corporate transparency in Canada and combat tax evasion, money laundering, corruption, terrorist funding and other criminal activities.
Under the new requirements, private federally-incorporated businesses must keep a register of individuals that either directly or indirectly have "significant control" over the corporation. Individuals are considered to have "significant control" if they are registered or beneficial owners, or have either direct or indirect control/direction of:
- 25% or more of the outstanding number of voting shares
- 25% of more of the outstanding shares, measured by the fair market value
An "individual" could also be multiple people who jointly own shares.
Corporations will be required, at minimum, to update this register once a year. Upon becoming aware of any information required to be included in the register, corporations must update the register within 15 days. This information includes:
- date of birth
- last known address
- jurisdiction of residence for tax purposes
- date on which the individual obtained significant control and ceased to hold significant control of the corporation
- description of how the individual has significant control
- description of steps taken to update the record
Although not available to the public, this register will be accessible to shareholders and creditors of the corporation.
Directors, officers and shareholders will be held personal liable for ensuring the corporation is complying with new requirements. Penalties for offences could be up to $200,000 in fines and/or six months imprisonment.
Regulations for these new requirements have yet to be published. For some further details and background information, please see "Behind the Corporate Veil: New Ownership Record Rules in Canada" by Gowling LLP.
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