New Shareholder Register Requirements for Private Canadian Corporations
29 Jul 2019
Beginning June 13th, 2019, any federally incorporated private corporation is required per the Canada Business Corporations Act (CBCA), to create and maintain a new type of shareholder register. This will not apply to public corporations. The new register, in addition to the shareholder and director registers, will provide information with respect to individuals who hold significant control in the respective corporation.
The new rules are aimed to provide more clarity over those individuals whom own and control the corporation, in order to identify money laundering or tax evasion schemes.
An individual with significant control (ISC), is an individual who:
- owns a significant number of shares
- controls or directs a significant number of shares
- has significant influence over the corporation, or
- has a combination of any of these factors.
A significant number of shares is:
- 25% of the voting shares, or
- 25% of all the shares based on the fair market value of the shares.
An individual could also be considered an ISC if they own or control a significant number of shares with one or more individuals. In this situation, the corporation would be required to record each individual in the new register.
The ISC register must include the following information about each ISC, and be kept at the respective corporation's registered office in the minute book. Any changes to the register must be recorded within 15 days of the particular change.
- date of birth
- last known address
- jurisdiction for tax purposes
- date on which the individual acquired significant ownership or control
- date on which the individual ceased to have significant ownership or control
- description of how the individual meets the definition of significant control
The government, shareholders, and/or creditors of the corporation could request access to the ISC register. Shareholders are obligated by the CBCA to respond to any requests by the corporation to provide information. If a corporation does not meet these new obligations, the directors and/or shareholders could be subject to penalties.
Due to the new requirements, private corporation shareholders are advised to work with an experienced professional to identify any individuals with significant control over the corporation, record the individuals' information in the ISC register, and update the register regularly.
For more information on the matter, please contact us.