Legislation in British Columbia (Bill 24) includes provisions that largely mirror the federal corporate “significant control” reporting requirements. The bill received Royal Assent in May 2019.
Accordingly, affected B.C. private corporations will be required to maintain up-to-date records reporting details about “significant individuals” (that is, individuals who meet the legislated ownership threshold of those corporations). Although the federal requirements have an effective date of 13 June 2019, British Columbia's parallel rules will be implemented and made effective by regulation (and regulations have yet to be introduced).
The federal "significant control" reporting requirements were enacted in 2018. Under this change (effective 13 June 2019), private federal corporations incorporated or continued under the Canada Business Corporations Act (CBCA) are required to report details about individuals who have "significant control" over affected corporations.
In line with the federal rules, British Columbia's rules will apply to "significant individuals" who are:
These individuals either hold an interest or right (or a combination thereof) in a “significant number of shares"—namely, 25% or more of the corporation's outstanding voting shares, or 25% or more of the corporation's outstanding shares regardless of value (unlike the federal rules which use fair market value to measure whether an individual has a "significant number of shares”). A "significant individual" also includes an individual that has rights or the ability to elect, appoint or remove a majority of the company's directors.
Affected private corporations must maintain a “transparency register” that includes the following information for each significant individual of the corporation:
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 these records on an annual basis and must update their transparency registries within 30 days of becoming aware of any changes to information on their registry. Unlike the federal rules, it is the company's duty to notify individuals if they are found to satisfy the definition of a significant individual or have ceased to be one within 10 days after indication in the transparency register. If the corporation fails to comply with these requirements, it will risk penalties of up to $100,000* for non-compliance.
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 Bill 24 requirement may also face penalties of up to $50,000.
$ = Canadian dollar
Bill 24 also requires a private corporation to replace “bearer share certificates” with ordinary share certificates that include, among other things, name of person to whom the share certificate is issued; otherwise, the private corporation cannot recognize the rights that are associated with the bearer share certificate. A bearer share certificate does not record the ownership of the underlying shares when they are bought and sold.
Read a June 2019 report prepared by the KPMG member firm in Canada
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