Are you a privately held federal corporation? New amendments to the CBCA require private corporations to record all individuals with “significant control” over the corporation.
By June 13, 2019, certain private corporations incorporated under the Canada Business Corporations Act (the “CBCA“) will be required to prepare and maintain a register (the “ISC Register“) of each individual with “significant control” over the corporation (an “ISC“). It is expected that the provinces and territories will implement similar requirements at a later time.
The new requirements impact all CBCA corporations, except reporting issuers and corporations listed on a designated stock exchange. Additional exemptions may also be made under the regulation from time to time.
What are the new requirements?
Each CBCA corporation that is not exempt must prepare and maintain a register of all ISCs. Individuals will be considered to have “significant control” over a corporation if the individual:
- has direct or indirect control or direction over, or is a registered or beneficial owner of, at least 25% of all the outstanding shares measured by fair market value or voting rights. This also applies to joint ownership or joint control;
- has direct or indirect influence that could result in de facto control of the corporation. Although “influence” is not defined, it appears that individuals other than shareholders may be considered ISCs. For example, if an individual has influence that could result in de facto control by way of a financing agreement or purchase agreement, this individual should be recorded on the register; or
- falls under prescribed circumstances.