CBCA disclosure requirements in force as of June 2019
Amendments to the Canada Business Corporations Act (CBCA) that require a company to disclose the identity of its shareholders may lead to more businesses incorporating provincially, Toronto business lawyer Anton Katz tells AdvocateDaily.com.
Bill C-86, which received Royal Assent late last year, will come into force on June 13, 2019. Corporations governed by the Act will be required to maintain a register of all individuals with significant control, states the government’s website.
According to the bill, “significant control” is defined as any number of shares that carry 25 per cent or more of the voting rights attached to all of the corporation’s outstanding voting shares or any number of shares that is equal to 25 per cent or more of all of the corporation’s outstanding shares measured by fair market value.
In addition, the register must include:
- the names, the dates of birth and the latest known address of each individual
- the jurisdiction of residence for tax purposes
- the day on which each person became or ceased to be an individual with significant control, as the case may be
- a description of how each person has significant control over the corporation, including, as applicable, a description of their interests and rights in respect of shares
- any other prescribed information
“At least once during each financial year of the corporation, the corporation shall take reasonable steps to ensure that it has identified all individuals with significant control over the corporation and that the information in the register is accurate, complete and up-to-date,” the bill states. Corporations that fail to comply are subject to a fine not exceeding $5,000.
Katz, principal of Anton M. Katz Barrister & Solicitor, says certain companies can incorporate under the Ontario Business Corporations Act (OBCA) or the CBCA. While both Acts require corporations to disclose directors and officers, Bill C-86 will now require federal corporations to maintain a register of shareholders and beneficial owners.
“This change could be viewed as quite intrusive as some people like to keep that kind of information private,” Katz says.
He says those clients looking to incorporate — and have a choice between the provincial and federal regimes — may find this change to be an important consideration.
“They may want to incorporate provincially if that’s an important consideration for them,” Katz says. “I think for many it will be.”
“However, it remains to be seen if the OBCA will adopt similar disclosure requirements.”