The legal, regulatory and compliance landscape in Canada has changed, and will likely continue to change, for corporations, their shareholders and their advisors.

As of June 13, 2019, the Federal Business Corporations Act (Canada) (the “CBCA”) was amended to require all CBCA corporations, other than public companies, to maintain an “Individual with Significant Control Register” that includes the name of each person who is an “Individual with Significant Control” (“ISC”) of the CBCA corporation, in addition to each ISC’s birthdate, address, tax jurisdiction, the reason that he/she is an ISC and certain other information.

While only a minority of Canada’s business corporations are incorporated under the CBCA, Canada’s provincial and territorial governments have agreed to introduce similar provisions into their respective equivalents of the CBCA, with British Columbia and Manitoba being the first provinces to introduce the necessary legislation.

Provincially, Bill 24 (i.e. the British Columbia Business Corporations Amendment Act) proposes to introduce a beneficial ownership register for companies organized under the British Columbia Business Corporations Act (“BCBCA”). On May 1, 2019, Bill 24 passed second reading and it is expected to come into force sometime in 2020. If the amending legislation comes into force, all BCBCA private corporations[1] will be required to maintain a Transparency Register, with information similar to that required under the CBCA, for those persons who are deemed to be a “significant individual”.

The CBCA, Federal Corporations and their Shareholders

In brief, the key aspects of the CBCA legislation, include:

1)          A requirement that CBCA corporations, other than public companies, maintain an ISC Register that includes the name of each person who is an “Individual with Significant Control” (“ISC”), in addition to each ISC’s birthdate, address, tax jurisdiction, the reason that he/she is an ISC and certain other information.

2)          A two-part test for deciding if an individual is an ISC:

  • Does he or she have a 25% interest in the corporation – under either a “votes” or “value” test, as defined; or
  • Does he or she have “influence” that, if exercised, would give him or her “control in fact” of the corporation.

3)          Provisions governing access to the ISC Register and use of the information by those who are entitled to access (such access being primarily limited to Corporations Canada, the CRA, provincial tax authorities, police forces, other investigative bodies and the corporation’s shareholders and creditors). It should be noted, that the ISC Register is not a public document.

4)          Requirements relating to the regular and timely updating of ISC Register information.

5)          Fines (up to $200,000) and prison sentences (up to 6 months) for directors and officers who authorize, permit or acquiesce in a corporation’s failure to maintain a compliant ISC Register. Shareholders are subject to the same fines and prison sentences should they fail to answer ISC Register-related questions from the corporation to the best of their knowledge and in a timely manner (N.B. directors and officers are presumably unlikely to be liable for deficiencies in the ISC Register caused by an uncooperative shareholder, if a reasonable process is followed). There are also fines (up to $5,000) and prison sentences (up to 6 months) for shareholders and creditors who misuse information obtained from the ISC Register.

There are a number of additional significant principles embodied in the new CBCA, two of which are, “Indirect control or direction” and “jointly or in concert”, which can be summarized as:

1)          “Indirect control or direction” could, for example, exist when the individual sits at the top of a chain of corporate ownership and is able to control how an intermediate entity votes its own shares in the CBCA corporation.

2)          In the case of a joint holding of interests or rights in the corporation that meets the 25% Interest Test, all individuals who are joint holders will generally be considered ISCs. In the case of an agreement or arrangement between one or more individuals, under which individuals agree to exercise any rights that they hold in the corporation “jointly or in concert”, and those rights collectively meet the 25% Interest Test, all individuals who are party to the agreement will generally be considered ISCs. (The term “jointly or in concert” is not specifically defined in the CBCA, although interpretations of the term in other legal contexts may be of

Like the Central Securities Register required under s. 50 of the CBCA, the ISC Register may be kept at the corporate registered office or any other place in Canada that the board designates. The information in the ISC Register does not need to be submitted to Corporations Canada or any other agency, other than when it is requested in accordance with the new law.

Shareholders of private CBCA corporations are legally required, on request, to provide the corporation with information required in the preparation and maintenance of its ISC Register. On receiving a request for such information, shareholders are required to reply accurately and completely, to the best of their knowledge, “as soon as feasible” (an expression that is not defined).

As to the form of the ISC Register, there is no prescribed format.  The Corporations Canada Guidance indicates that a physical ledger, a database and a spreadsheet would each be acceptable.  The ISC Register must provide the following information about each ISC:

1)          Name;

2)          Date of birth;

3)          Address;

4)          Jurisdiction of residence for tax purposes;

5)          Date that the individual became an ISC;

6)          Date that the individual ceased to be an ISC, if applicable; and

7)          Explanation of why the person is considered an ISC, including a description of his or her interests and rights in the corporation’s shares.

Situations in which a corporation is unable to identify any ISCs are to be dealt with in future regulations.

Inspection of the ISC Register will be by a Director under the CBCA, who must be provided with any information that he or she requests out of the ISC Register and Shareholders and creditors of the corporation on application (which includes filing an affidavit). In addition, Bill C-97 (the 2019 federal budget bill) is expected, when passed, to broaden the inspection rights to include:

1)          Any police force;

2)          The Canada Revenue Agency and its provincial counterparts; and

3)          Other investigative agencies (to be prescribed in future).

It should be noted, that significant restrictions are placed on the rights of shareholders, creditors, police forces and the CRA with respect to accessing or using information on the ISC Register, and that there is no provision under the amendments for public access to the ISC Register.

The amendments set out specific penalties with respect to the new provisions.

Finally, a corporation that fails to maintain the ISC Register in accordance with the requirements, or which fails to provide an investigative body with the information that it requests under the legislation, is liable to a fine of up to $5,000.

The BCBCA, Provincial Corporations and their Shareholders

While the underlying legislative intent is similar, as between the enacted amendments to the CBCA and the proposed BCBCA amendments, there are certain dissimilarities in terminology and effect.

While the CBCA utilizes the “Individual with Significant Control” definition, the BCBCA focuses on the “significant individual”.  The differing legislative language is more than a distinction without a difference. 

As an example of that, a “significant individual” under the BCBCA is an individual who if, individually or jointly with others, directly or indirectly owns or controls:

1)          more than 25% of the issued shares of the company; or

2)          issued shares of the company that carry 25% or more of the rights to vote at general meetings; or

3)          has the right or ability (directly or indirectly) to elect, appoint or remove directors of the company or the ability to “significantly influence” an individual who has such a right or ability to elect, appoint or remove directors.

The regulations to these provisions (still not available, at the time of writing this article), may well include further guidance on how individuals who are not shareholders, may qualify as an individual with “significant influence” over a company.

As with the CBCA, a company must take reasonable steps to maintain a Transparency Register. The Transparency Register must set out the following information, on each significant individual:

1)          the individual’s full name, date of birth and last known address;

2)          whether the individual is a Canadian citizen or permanent resident of Canada;

3)          if the individual is not a Canadian citizen or permanent resident of Canada, every country or state of which the individual is a citizen;

4)          whether the individual is resident in Canada for the purposes of the Income Tax Act (Canada);

5)          the date on which the individual became or ceased to be a significant individual;

6)          a description of how the individual is a significant individual; and

7)          prescribed information, if any.

Within 30 days after becoming aware of any new information, the company has an obligation to update the Transparency Register.  It must also conduct an annual review, to confirm that the information is accurate, complete and up to date.

If a company has no significant individuals, the Transparency Register must contain a statement explaining that fact. If a company is unable to obtain or confirm some of the required information, the Transparency Register must contain the information that was obtained, and a summary of steps taken to obtain the missing information.

Again, as with the CBCA requirements, a shareholder has a duty to respond to a request by the company to provide information.

The BCBCA and the CBCA provisions relating to inspection and obtaining copies of the Transparency Register are similar; however, unlike the CBCA, shareholders and creditors of BCBCA companies will not have the right to inspect the Transparency Register.

It should also be noted, that the BCBCA amendments will provide for certain new offences. It will be an offence for a BCBCA company to do the following, in relation to its Transparency Register:

1)          identify an individual as a significant individual if that person is not a significant individual;

2)          exclude an individual who is a significant individual; or

3)          include information that is false or misleading in respect of any material fact, or omit information, if the omission makes the information false or misleading.

The fines under the BCBCA are also materially different to those provided for under the CBCA, in that:

1)          a person other than an individual, can be held liable for a fine of not more than $100,000; or,

2)          in the case of an individual, to a fine of not more than $50,000.


We hope that this review of the CBCA and the BCBCA, as it relates to share ownership transparency, Transparency Registers and the related disclosure obligations, has been helpful to our readers.  We shall be providing further commentary, blog posts and newsletters to our clients, over the foreseeable future, to keep you abreast of these developments.

If you would like to discuss any aspect of the matters covered in this article, please contact our firm at (604) 688-4900, or email Paul S.O. Barbeau at or Morgan Best at

[1]        BCBCA corporations, other than reporting issuers and their equivalents, publicly-listed corporations and corporations within specified classes)