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Coming into force of Bill C-42

Bourassa Boyer nouvelle disposition Loi C 42 SiteWeb 1200x628 EN v2.1 - Coming into force of Bill C-42

COMING INTO FORCE OF AN ACT TO AMEND THE CANADA BUSINESS CORPORATIONS ACT AND TO MAKE CONSEQUENTIAL AND RELATED AMENDMENTS TO OTHER ACTS TO IMPROVE TRANSPARENCY WITH RESPECT TO THE BENEFICIAL OWNERSHIP OF CANADIAN CORPORATIONS

On January 22, 2024, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts (the “Act“) came into force to provide additional assistance to authorities countering money laundering and tax evasion, among other things. This Act introduces significant amendments to the Canada Business Corporations Act (the “CBCA“) to make it mandatory to disclose to Corporations Canada the identity of individuals with significant control (the “ISC“) over a corporation governed by the CBCA and to make public certain information relating to those individuals with significant control.

Since June 13, 2019, private corporations governed by the CBCA are required to create and maintain a Register of Individuals with Significant Control (the “RISC“), as further detailed in the Newsletter published by our firm on June 12, 2019, on this subject: https://bourassaboyer.com/en/new-transparency-requirement-for-corporations-under-the-canada-business-corporations-act/. This RISC was not available to the public, which is amended by the Act.

As a reminder, the CBCA defines an individual with significant control as a natural person who, directly or indirectly, individually or in concert with others:

  • Holds a significant number of shares (i.e., 25% of the voting or participating shares based on the fair market value of the shares);
  • Controls or manages a large number of shares;
  • Has a significant influence on the corporation without necessarily holding a significant number of shares; or
  • Enjoys any combination of these factors.

As of January 22, 2024, the following information will have to be provided to Corporations Canada for each individual with significant control (subject to certain exemptions under the Act):

  • Full legal name;
  • The start date and end date of the significant control;
  • Description of the significant control;
  • Residential address and, if applicable, address for service;
  • Date of birth;
  • The country(ies) of residence for tax purposes; and
  • The country(ies) of citizenship.

Most of the information provided will be made public by Corporations Canada, except for information of a confidential nature, such as date of birth, country of residence for tax purposes, citizenship and, if applicable, residential address for any person who has opted to have his or her service address (business address) published with Corporations Canada. Notwithstanding the above, law enforcement authorities and certain investigative agencies will have access to all information about individuals with significant control over a corporation.

Information relating to individuals with significant control over a corporation must be filed with Corporations Canada:

  • Annually, at the same time as the annual report is filed;
  • Within 15 days of a change in the RPCI; and
  • Upon incorporation or within 30 days of the date shown on the Certificate of Amalgamation or Certificate of Continuance.

Administrative penalties may be applicable in the event of non-compliance with the new provisions of the Act, including:

  • Corporations Canada’s refusal to issue a Certificate of Compliance;
  • Administrative dissolution of the corporation;
  • The corporation could be convicted of an offence and be liable for a fine of up to $100,000 (previously $5,000); and
  • Directors and officers of the defaulting corporation could be liable for a fine of up to $1,000,000 and imprisonment for up to 5 years (previously $200,000 and 6 months).

For more information on the subject, we invite you to consult the following link: https://ised-isde.canada.ca/site/corporations-canada/en/individuals-significant-control.

Cautionary statement

This Newsletter is a simplified summary of the Act and the CBCA relating to persons with significant control, prepared for the purpose of providing general information. Each case should be analyzed in detail according to all the criteria of the laws and regulations in force. In addition, the Act and the CBCA provide the government with the authority to prescribe, by regulation, other terms and conditions relating to these changes. It is therefore important to remain watchful about legislative and regulatory changes that may occur in the coming months.

We invite you to contact us if you would like us to assist you in your efforts to create the RPCI required for the corporations in your corporate group concerned or for the disclosure to Corporations Canada of the information contained in such RPCI in accordance with the new measures announced.