Jonathan Vroom
Since 2019, private federal business corporations (a “Corporation”) have been required to create and maintain individuals with significant control registers (the “ISC Registers”). Effective as of January 22, 2024, Corporations are now required to file that information with Corporations Canada, and some of it will be made available to the public.
What is an ISC Register?
In an effort to fight tax evasion, money laundering, and terrorist financing, in 2019 the Canada Business Corporations Act(the “CBCA”) made it mandatory that all Corporations implement and maintain an ISC Register.
The purpose of the ISC Register is to increase corporate transparency by requiring Corporations to disclose any Individual with Significant Control over the Corporation. Individuals with Significant Control can be defined as an individual with any of the following interests or rights, or any combination of them:
- An individual who has “control in fact” of the Corporation, meaning an individual who has the ability to control the Corporation’s economics, operations, and the day-to-day management of the Corporation through indirect or direct influence;
- An individual who is the beneficial or registered owner of, or has indirect control or direction over, 25% or more of the outstanding shares of the Corporation, measured by their fair market value; or
- An individual who is the beneficial and registered owner of, or has indirect control or direction over, a number of shares carrying at least 25% of the outstanding voting rights of the Corporation.
This means that any individual who is either a registered shareholder, a beneficial owner, has indirect or direct control or direction over the shares of the Corporation, or who has joint ownership or control over the shares of the Corporation is required to be listed as an Individual with Significant Control on the Corporation’s ISC Register.
For each Individual with Significant Control, the ISC Register must now contain the following information:
- full legal name;
- date the individual became or ceased to be an Individual with Significant Control;
- description of the individual’s significant control over the Corporation;
- residential address of the individual;
- address for service of the individual;
- date of birth of the individual;
- country (or countries) where the individual is considered a resident for tax purposes; and
- country (or countries) of citizenship
What information will be made publicly available?
Previously, ISC registers of Corporations were not public information, and Corporations were only required to disclose the information to the police and tax agencies on certain grounds. However, with the coming into force of Bill C-42, An Act to Amend the Canada Business Corporations Act on January 22, Corporations are now required to file the information contained in their ISC Registers, and some of that information will be made available to the public.
The following information from a Corporation’s ISC Register will be made publicly accessible on the Corporations Canada website, meaning members of the public will be able to search and obtain the following information for each Individual with Significant Control:
- full legal name;
- residential address;
- address for service (if provided by the individual);
- dates the individual became or ceased to be an individual with significant control; and
- description of the individual’s significant control
Individuals with Significant Control who do not wish to have their residential address become publicly accessible information should provide an address for service to be included in the ISC Register. If an address for service is provided by an individual, the residential address of the individual will not be made publicly available.
The requirement to make public the information of Individuals with Signification Control is exempt in certain circumstances, such as for Individuals with Significant Control who are under 18 years of age.
When to file
Bill C-42’s implementation now requires that Corporations file the information contained in their ISC Registers:
- Upon incorporation, after amalgamation, or after continuance (import) to the CBCA;
- On an annual basis along with the Corporation’s annual return; or
- Within 15 days after an update to a Corporation’s ISC Register.
All Corporations are subject to the new ISC Register requirements, and those that are exempt will need to file an annual confirmation of their exemption.
Failure to Comply
It is an offence for any Corporation to contravene the new reporting and filing obligations. Any contravention of the filing requirements are punishable by up to $100,000 or imprisonment of not more than six months or both for contravening without reasonable cause. Knowingly contravening the reporting requirements can be punishable by up to $1,000,000.00 or a term of imprisonment of not more than five years, or both.
Not sure how these new requirements affect your business, or need help with preparing, reviewing, or filing your ISC Register with Corporations Canada? Please contact us and we would be happy to assist you with navigating these new requirements.
