Advancing Corporate Transparency in Canada: Legislation Proposed for a Federal Beneficial Ownership Registry for Corporations
Background
The Government of Canada has proposed legislative amendments to the Canada Business Corporations Act (CBCA) to create and implement a publicly accessible beneficial ownership registry of federally incorporated companies. The proposed legislation making the amendments was introduced as Bill C-42, which underwent a First Reading in Parliament on March 22, 2023. The proposed legislation has not yet been passed into law, as it is still undergoing the legislative process.
What are the changes proposed by the legislation?
Under the proposed legislation, the Canadian Government will require federal corporations to disclose information on the beneficial owners of the corporation. It will also create a registry containing the details of the beneficial owners of the corporation available for public access, including the beneficial owner’s name and residential address or address for service. In addition, the registry will be implemented in a way that will allow for the Canada Revenue Agency to share data with the Government of Canada to validate and verify the information reported by federal corporations of its beneficial owners.
What is the rationale behind the beneficial ownership registry and the amendments?
The rationale behind the Government of Canada’s proposed legislation is to prevent money laundering, terrorist financing, tax evasion and tax avoidance from occurring in Canada. The intention is to use transparency as a means to deter illicit activities involving corporations by making information available to the public of individuals who have significant control of a corporation.
What are the penalities for non-compliance?
Failure to comply with the reporting requirements of the proposed legislation in connection with the beneficial ownership registry can result in penalties to corporations and individuals of up to $200,000 and imprisonment for six months.
How may this affect you?
Although the legislation has not yet come into effect and has not yet been enacted, federal corporations can anticipate the possibility of a requirement to submit information on the beneficial owners of the corporation to the federal government. Staying informed on updates and on changes in corporate compliance requirements can reduce the risk of potential legal and financial challenges.
If you wish to obtain further particulars regarding the proposed legislation and its possible implications, we recommend that you seek legal advice.
You can reach out to Wilson Rasmussen LLP’s corporate department if you would like assistance with any corporate matter.
By Jason Sangha and Douglas Zorrilla
A Cautionary Note
The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.