New Reporting Requirements for Private Federal Corporations
Canada's new corporate "significant control" reporting requirements are taking effect on June 13, 2019. As a result, private federal corporations incorporated or continued under the Canada Business Corporations Act (CBCA) must maintain up-to-date records on individuals who have "significant control" over affected corporations. Because these records must be in place on or before June 13, 2019, private federal corporations may face compliance burdens as a result of this upcoming deadline.
Corporations should get ready for the new reporting requirements so that they can take the necessary steps to ensure correct records and documentation are in place ahead of June 13, 2019.
Public corporations are excluded from this reporting requirement.
The "significant control" reporting requirements were introduced in Bill C-86, which includes amendments to the CBCA to add new sections 2.1, 21.1 to 21.4, new subsection 250(4) and new paragraphs 261(1)(c.01) and (c.02). Bill C-86 received Royal Assent on December 13, 2018. This measure was initially proposed in the 2017 Federal Budget (see TaxNewFlash-Canada No. 2017-10, "2017 Federal Budget Highlights").
Finance says the new reporting requirements are intended to improve the availability of beneficial ownership information.
Who is an "individual with significant control"?
According to the new rules, individuals with 'significant control' are:
These individuals either hold an interest or right (or a combination thereof) with respect to:
Affected corporations must also keep up-to-date records with respect to:
What information must be recorded?
Affected private federal corporations must maintain a register that includes the following information for each individual with significant control of such corporation:
These records must be updated on an annual basis at the minimum. Affected private federal corporations must update their corporate registries within 15 days of becoming aware of any changes to information on their registry, or will risk penalties of up to $5,000 for non-compliance. Company directors and/or officers who are knowingly noncompliant, or provide false or misleading information risk penalties of up to $200,000 or imprisonment up to six months.
For more information, contact your KPMG adviser.
Information is current to January 22, 2019. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500.