Effective January 22, 2024, all federally incorporated companies must file information on “individuals with significant control” (“ISC”) pursuant to new requirements under the Canada Business Corporation Act (the “CBCA”). This new mandate aims to provide greater transparency on ownership and control of Canadian businesses and to help identify and reduce the facilitation of illegal activity, such as money laundering and tax evasion through Canadian corporations.

What constitutes “significant control”?

An ISC is someone who owns or controls a corporation. More specifically, the “significant control” threshold is met when an individual[1]:

• Owns, controls, or directs 25% or more shares individually, jointly or in concert with other individuals;
• Has control “in fact” over the corporation without owning any shares; or
• Any combination of the above factors.

For example, if an individual owns less than 25% of the shares in a federal corporation, but that individual has sufficient influence over a family member who is a significant shareholder of the corporation, then that individual is deemed to have control “in fact” over the corporation is therefore considered an ISC.

If a corporation has shareholders that are partnerships, trusts, or other corporations, additional analyses may be required to determine which individuals are considered ISCs. For example, if a trust owns or controls 25% or more of a corporation’s shares, an individual exercising control over such trust is considered an ISC of the corporation. In the case of a trust, individuals in control of a trust may include the trustee, beneficiaries, or any individual who has the authority to influence the management of the trust.

What is an ISC Register?

An ISC Register is a record that contains information about each ISC of a corporation, including[2]:

• Full legal name;
• Date of birth;
• Country (or countries) where the ISC is considered a tax resident;
• Address for service;
• Residential address;
• The day the individual became an ISC;
• The day the individual stopped being an ISC; and
• A description of the ISC’s significant control.

The ISC Register for a corporation is typically maintained with its corporate records and should be updated at least once each financial year.

When and how must you file?

All businesses incorporated pursuant to the CBCA are required to file information regarding ISCs and keep a copy of their ISC Register with their other corporate records[3].

A small number of exemptions to the filing obligations exist; a federally incorporated corporation may be excluded from the filing obligation if it is a:

• Reporting issuer under provincial securities law;
• Public corporation that trades its securities on a stock exchange designated by the Income Tax Act;
• Crown corporation; or
• Wholly owned subsidiary of any of the foregoing[4].

Corporations must file the information in their ISC Register through the Online Filing Centre on Corporation Canada’s website, which can be found here.

• Existing corporations: filing must occur annually, alongside the corporation’s annual return, and within 15 days of any changes in the ISC Register. On the Online Filing Centre, this can be completed under “File annual return”.
• Incorporation of a new corporation: filing must occur within 30 days after incorporation or amalgamation and within 30 days of filing a continuance into the federal jurisdiction[5]. This can be completed on the Online Filing Centre under “Incorporate.”

Information filed to Corporations Canada will be available online as a publicly accessible registry. This registry of beneficial owners of Canadian companies will be searchable, free of cost, and may eventually be scaled out to provinces and territories.

ISC information likely to become public includes:

• Full legal name;
• Address for service;
• The day the individual became an ISC; and
• A description of the ISC’s significant control.

Importantly, if no address for service is provided, the public register will list the ISC’s residential address. As such, if an ISC does not want their residential address made public, it is crucial that they provide an address for service.

What about Ontario corporations?

A similar amendment came into effect under the Ontario Business Corporations Act (the “OBCA”), on January 1, 2023. Like the CBCA requirement, Ontario corporations are required to prepare and maintain a register of ISCs[6].

However, under the OBCA, an ISC Register is referred to as a “transparency register,” and there is no filing requirement. The OBCA simply requires the transparency register to be maintained at the corporation’s registered office or any other location designated by its directors and updated annually and within 15 days of any changes to the ISCs[7].

What does this mean for you?

If you are a federally incorporated Canadian corporation and do not fall within one of the exemptions mentioned above, failure to maintain and timely file the ISC Register can result in directors or officers of corporations facing imprisonment for up to five years or fines up to $1,000,000. Corporations may also face fines of up to $1,000,000 and potential dissolution. To ensure your filings are accurate and complete, consider whether any particular individual may be considered an ISC. If your corporation has “parents” or “subsidiaries,” it may not always be clear whether indirect shareholders are ISCs; it is advisable to speak to your lawyer before the January 22, 2024 filing deadline.