New corporate record requirements for federal companies – Register of Individuals with Significant Control

New corporate record requirements for federal companies – Register of Individuals with Significant Control

By Sarah Tremblay, CPA, CA, GGFL Director of Standards

As of June 13, 2019, amendments to the Canada Business Corporation Act (CBCA) will impose more stringent record keeping requirements on federally incorporated businesses to improve corporate transparency and help combat money laundering.

Federal corporations will now be required to create and maintain a register of Individuals with Significant Control (ISC Register).

The ISC Register must include information about individuals who own, control, or direct a significant number of shares of the corporation, or otherwise have significant influence over the corporation.

The CBCA defines ‘significant control’ as anyone with 25% or more of the voting shares, or of the fair market value of the shares.

All federal corporations are currently required to maintain a shareholders’ register listing the corporations, trusts, and/or individuals who own the shares of the company.

The register of individuals with significant control will go a step further to see through entities such as holding companies and family trusts to the individual persons who ultimately control those shares.

The amount of time and additional information required to meet the new requirements will largely depend on the complexity of a company’s corporate structure.

Failure to meet the new requirements could result in penalties to the company, its directors, officers or shareholders.

The new measures do not require a company to submit this additional information unless asked to do so.  It is, however, important that corporate records – including the ISC Register- are complete and up to date.

GGFL encourages business owners to work with their corporate lawyer to properly maintain corporate records.

For corporations or corporate groups with more complex corporate structures, you or your lawyer may require assistance from GGFL to evaluate which individuals have significant control.

Further information and resources, such as a template register, are available on the Corporations Canada website http://corporations.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs08216.html.