B.C.’s new corporate transparency rules are effective May 1, 2020
As of May 1, 2020, certain private corporations in British Columbia must maintain up-to-date records on "significant individuals" who meet specified corporate ownership thresholds. The province is now set to largely mirror the Federal "significant control" corporate reporting requirement rules.
These rules were originally included in a provincial bill which received Royal Assent in May, 2019. However, the effective date for B.C.'s new rules was only recently set by British Columbia's Order in Council No. 533, dated October 24, 2019. The Order also adds additional regulations to the rules which include certain relevant definitions to terms, such as "control", "indirect control" and "chain of intermediaries".
Under the rules, affected B.C. private corporations will have to track the following information for each of the corporation's "significant individuals" in a new transparency register:
As well, these individuals either hold an interest or right in 25% or more of the corporation's outstanding voting shares, or 25% or more of the corporation's outstanding shares (regardless of value).
A "significant individual" also includes an individual with the rights to elect, appoint or remove a majority of the company's directors.
If the corporation determines that there are no individuals who are significant individuals in respect of the company, the transparency register must contain a statement setting this out.
Affected private corporations must update their records on significant individuals yearly. They must update their transparency registries within 30 days of becoming aware of any changes to information on their registry. B.C.'s new rules also include a duty to notify individuals whether they are a significant individual or have ceased to be one. Non-compliant corporations risk penalties of up to $100,000.
Shareholders of a private corporation must take all reasonable steps to respond to a private corporation's request for information to maintain its transparency register. Individuals who are non-compliant with this requirement may also face penalties of up to $50,000.
Canada's federal "significant control" reporting requirements were enacted in 2018 and took effect on June 13, 2019. Under these rules, private federal corporations must also report details about individuals who have "significant control" over affected corporations.
For more information, contact your KPMG advisor.
Information is current to November 5, 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.