Few amendments have been made to the Canada Business Corporations Act ("CBCA") since it was originally adopted in 1975. The CBCA has undergone some amendments in 2018 and, more recently, Bill C-86 proposed amendments the CBCA in respect to the keeping of corporate records of private corporations. This bill received Royal Assent on December 13, 2018 and the amendments will finally come into force on June 13, 2019 .
These new provisions were inspired by the noble purpose of preventing "the misuse of corporations and other legal entities for tax evasion and other criminal purposes, such as money laundering, corruption and the financing of terrorist activities" .
A new concept is therefore added to the CBCA, that is, the notion of "individual with significant control" ("IWSC"). It is actually a person (or group of people) with a significant control of a company, whether it be legal or factual control over a significant number of shares. A significant number of shares is defined as 25% or more of the outstanding voting shares of the Corporation, or 25% or more of the fair market value of all outstanding shares of the Corporation.
Private companies will henceforth be required to keep a record of IWSC. This register must include, for each IWSC, the following information:
- name, date of birth and last known address;
- jurisdiction of residence, for tax purposes;
- the date on which a IWSC acquired that qualification, or ceased to have it;
- a description of how the significant control over the corporation applies, including, where applicable, a description of the rights or interests in the shares of the corporation;
- any other prescribed information; and
- a description of each step taken in order to keep the information in the register accurate, complete and up-to-date.
At least once in each fiscal year, the company must take the necessary steps to keep the register up-to-date.
Another interesting feature is that the company will have to withdraw the information contained in the register no later than one year after the sixth anniversary of the date on which an IWSC lost this qualification, but subject to any other time limit applicable under another federal or provincial law.