Business Owners: Have you heard about the new mandatory Transparency Register? By Sam Varing
Effective October 1, 2020, BC’s Ministry of Finance has announced that every private company incorporated under the B.C. Business Corporations Act must maintain a transparency register.
The transparency register requires some key information about the shareholders that are considered “significant individuals” of a company, including details such as:
- the individual’s full name, date of birth and address;
- whether or not the individual is a Canadian citizen or permanent resident;
- if the individual is not a Canadian citizen or permanent resident, every country of which the individual is a citizen;
- whether the individual is resident in Canada for purposes of the Income Tax Act (Canada);
- the date on which the individual became or ceased to be a significant individual of the company; and
- a description of how the individual is a significant individual.
A significant individual is an individual who:
- directly or indirectly owns or controls 25% or more of either the shares of a company or the votes at a general meeting; or
- has the right to elect or appoint a majority of the directors of the company.
The determination of a significant individual can be straightforward if the registered shareholder is an individual who directly owns shares in their personal name. However, ownership can also be in the form of a beneficial interest in shares or an indirect control of the shares. In such cases, it can become more difficult to ascertain the significant individual behind the registered owner.
With these new changes, companies have a duty to take reasonable steps to create, maintain and update a transparency register of significant individuals. Further, at least once every financial year, companies must also take reasonable steps to ensure that information contained in their transparency register is accurate, complete and up to date.
The new requirement to maintain a transparency register effective October 1, 2020 flows from B.C.’s commitments under an agreement made in December 2017 among Canada’s provincial and federal Finance Ministers to combat money laundering and terrorist financing. The transparency register will need to be kept at a company’s records office, or if kept at another location it must be available electronically for inspection and copying at the company’s records office.
A transparency register may be inspected by taxing authorities, RCMP/police officers or government regulators for certain defined purposes. Currently the intention is not for the transparency register to be a publically searchable document.
Baker Newby LLP’s corporate department will be contacting B.C. companies that we are the registered and records office for to assist with the preparation of the transparency register.
Please note that the above is intended for informational purposes only and does not constitute legal advice or create a solicitor-client relationship. Baker Newby LLP would be pleased to assist with any legal advice required in relation to your specific situation.