Increasing Transparency Requirements For Federal Companies: Bill C-42’s Proposed Amendments

If you have a corporation governed by the Canada Business Corporations Act (the “CBCA”), there are proposed increased transparency requirements that you should be aware of.

Since June 2019, the CBCA has required corporations to keep a register of individuals with significant control (an “ISC Register”).[1] Individuals with significant control include anyone who, either by themselves or in combination with another individual:

1. owns, controls, or directs a significant number of shares
2. has significant influence over the corporation without owning any shares; or
3. has any combination of any of these factors.

The purpose of the ISC Register was to provide transparency with respect to who owns and controls Canadian businesses, and to assist law enforcement agencies in exposing fraudulent activities such as money laundering.

On March 22, 2023, Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts (“Bill C-42”), was introduced in Parliament, proposing amendments to the CBCA that, if implemented, will further increase the transparency requirements for federal corporations.[2]

Proposed Amendments to the CBCA

If enacted, Bill C-42 will make certain information contained in the ISC Register available to the public. In particular, the proposed amendments include:

• expanding the list of required information that a federal corporation must collect for each ISC Register, including the name, birthday, address, and citizenship of each individual;
• making certain information about individuals with significant control available to the public, including their name, address, and share ownership;
• requiring corporations to submit information to be included on an ISC Register at least annually, and whenever a change in control occurs; and
• increasing and broadening the consequences of non-compliance.

Conclusion

Bill C-42 received its first reading on March 22, 2023, and its second reading is in progress. If implemented, the proposed changes will expand the disclosure requirements for corporations under the CBCA considerably and make certain information available to the public.

If you have questions about the current requirements for federal companies or these proposed amendments, please contact Rebecca Dickson at [email protected] or by phone at 250-869-1194.

Rebecca Dickson is an associate lawyer at Pushor Mitchell practicing primarily in the areas of business and securities law. Rebecca has experience advising both provincial and federally incorporated companies with respect to corporate compliance, purchases and sales of business and other corporate/commercial matters.

Marina Nichols is a summer student at Pushor Mitchell and is completing law school at Thompson Rivers University. Marina completed her undergraduate degree in Management at the University of British Columbia Okanagan.

[1] See: https://ised-isde.canada.ca/site/corporations-canada/en/individuals-significant-control;

[2] See: https://www.parl.ca/legisinfo/en/bill/44-1/c-42;