As of October 1, 2020, private companies incorporated under the BC Business Corporations Act (“Act”) are required to maintain and prepare a Transparency Register. This requirement came into effect to assist with the fight against financial crime.
Register Requirements
The Register requires a company to list each “significant individual” who directly or indirectly:
- owns or controls 25% or more of the shares or votes of a company; and
- who has a direct or indirect right or ability to elect, appoint or remove the majority of the directors of a company.
Depending on how the shares of the company are held and knowing who has direct or indirect rights or abilities to elect, appoint or remove a majority of the directors, the ascertainment process of a “significant individual” can be easy or quite challenging.
Ascertainment of a Significant Individual
Shareholding: an individual who has an interest, right, or a combination of each, in a significant number of shares of a company is a significant individual if he/she has (i) an interest as a registered owner of one or more of the company’s shares; (ii) an interest as a beneficial owner of one or more of the company’s shares; and (iii) indirect control of one or more of the company’s shares (s. 119.11(2)(a) of the Act).
Furthermore, a significant individual owning a “significant number of shares”, means the individual owns either of the following:
- 25% or more of the issued shares in a company;
- issued shares of the company that carry 25% or more of the rights to vote at general meetings.
(s. 119.11(1) of the Act)
Rights or Abilities: You would need to look at the extent of the individual’s control (rights or abilities) and ask if the individual has the ability to elect, appoint, or remove a majority of the directors of a company: (i) directly; (ii) indirectly; or (iii) exercising influence over an individual who has such a right (s. 119.11(2)(b) of the Act)
The Company’s Duty
The company has a duty to prepare, maintain and update a register that:
- lists all significant individuals
- contains key information about each individual that is accurate and up to date (see key information below); and
- files the Register once a year.
Key Information
The company will need to state the following for the significant individual:
- Full name, date of birth and address
- How and when the individual became a significant individual
- Whether an individual is a Canadian Citizen or Permanent Resident, and if not, state his or her country of citizenship
- State whether the individual is a resident of Canada for tax purposes
Inspection of the Register
The following have the right to access the register:
- Officer or Director of the Company
- Tax Authorities
- RCMP/Police
- Certain Regulators (ex:BC Securities Commission)
Compliance
Non-compliance with the Act is an offence carrying fines up to $50,000 for individuals and $100,000 for others.
Please note that this information is intended for informational purposes only. It does not constitute legal advice or create a solicitor-client relationship. For more information or assistance contact our office to speak with a lawyer directly.
