On December 13, 2018, Bill C-86, the Budget Implementation Act, 2018 No. 2, received Royal Assent. This bill brings significant changes to the Canada Business Corporations Act (CBCA) requiring corporations to keep a detailed register of information about individuals who have significant control of the corporation. These changes come into effect on June 13, 2019.
Currently, federal non-distributing corporations (“private companies”) must maintain a central securities register to record:
- the names and addresses of each person who is or has been a security holder of the corporation
- the number of securities held by each security holder
- the date and particulars of the issue and transfer of each security.
Following the changes in Bill C-86, private companies must identify individuals with “significant control” over the corporation. Individuals with “significant control” are defined as:
- The registered or beneficial owner of, or has direct or indirect control or direction over shares that carry 25% or more of the voting rights or is equal to 25% or more of the corporation’s outstanding shares.
- A person who has any direct or indirect influence that, if exercised, would result in control in the fact of the corporation
To determine individuals with “significant control” each federal non-distributing corporation will be required to maintain the New Register, which contains the following for each relevant individual:
- name, date of birth and last known address
- jurisdiction of residence for tax purposes
- date on which the individuals became or ceased to be individuals with “significant control”
- description of how the individuals qualify as individuals with “significant control”
- steps taken to identify all individuals with “significant control”
- other information to be outlined in upcoming regulations
Penalties for non-compliance upon conviction of an offence include a fine not exceeding $200,000 or imprisonment for a term not exceeding six months, or both. If you have any questions about Bill C-86 or your company’s requirements, reach out to your Account Manager at Bateman MacKay.