Updated: Jan 22, 2021
One of the most pressing issues in the current legal landscape and perhaps the most difficult to address at both the provincial and federal levels has been the issue of money laundering, tax evasion and terrorist financing. In response to these issues, the recent amendments to the British Columbia Business Corporations Act (BCA) introduced corporate registries for the beneficial owners of companies which mimic the amendments in its federal counterpart, the Canada Business Corporations Act. This post will give a brief overview of the new legislative framework and the requirements it places on corporations.
What does the Transparency Registry require?
The BCA requires that all private companies create and maintain a transparency register which contains certain information on the significant individuals of a company. A significant individual is a person who meets one or more of the following:
(a) 25% or more of the issued shares in the company, whether indirect or direct control or ownership;
(b) 25% of voting shares, whether indirect or direct control or ownership; and
(c) rights and abilities that allow for the election, appointment or removal of the majority of directors of the company.
For each significant individual, the following information is required:
(a) full name, date of birth and last known address;
(b) whether or not the individual is a Canadian citizen or permanent resident of Canada;
(c) if the individual is not a Canadian citizen or permanent resident of Canada, where they are a resident;
(d) whether or not the individual is a Canadian resident for tax purposes under the Income Tax Act;
(e) the date on which the individual became a significant individual; and
(f) specification as to how the individual is a significant individual.
The company has an obligation to review this information annually and update it as needed. This obligation goes hand in hand with the shareholder’s responsibility to make available such information. In the event that it is found that there are no significant individuals in a company, there must be a statement to this end in the transparency register. Failure to comply with the new registry rules can result in fines up to $50,000 for individuals and up to $100,000 for corporations.
The transparency register must be kept at the company’s record offices but it is accessible by public officials. Public officials could include members or employees of the provincial police forces, the Ministry of Finance of BC, the Canada Revenue Agency and the Law Society, among others.
The new BCA requirements became effective as of October 1, 2020. Preparing the information required can be time consuming but maintaining an accurate and up to date transparency register will help avoid any potential penalties. Connect with Kickstart Law today if you have any questions or concerns regarding the new legislative amendments.