Background
On March 29, 2023, the British Columbia Provincial Government introduced Bill 20, Business Corporations Amendment Act, 2023 (“Bill 20”). The proposed amendments to the Business Corporations Act (the “Act”) within Bill 20 include the creation of a new public corporate transparency registry to identify beneficial ownership of private companies in British Columbia.[1] The proposed legislation is aimed at curtailing the use of British Columbia private companies as vehicles for money laundering or other criminal purposes.[2] This proposed corporate transparency stems from the final report of the Commission of Inquiry into Money Laundering in British Columbia (the “Cullen Commission”) published June 3, 2022.[3] The Cullen Commission had a broad mandate to inquire into and report on money laundering in British Columbia. The final report of the Cullen Commission provided several recommendations to combat money laundering in British Columbia.
What is the Proposed Corporate Transparency Registry?
The proposed corporate transparency registry will require private British Columbia corporations to provide personal information on the beneficial owners of such corporations to the British Columbia Registrar of Companies (the “Registrar”). For the purposes of the Act, a beneficial owner is a person that holds, directly or indirectly, 25% or more of the shares of a corporation.
The proposed corporate transparency registry will require the disclosure of the following information to the Registrar:[4],[5]
- the individual’s full name, date of birth, and last known address;
- whether or not the individual is a Canadian citizen or permanent resident of Canada;
- if the individual is not a Canadian citizen or permanent resident of Canada, every country or state of which the individual is a citizen;
- whether or not the individual is resident in Canada for the purposes of the Income Tax Act (Canada);
- the date on which the individual became or ceased to be a significant individual in respect of the company;
- a description of how the individual is a significant individual;
- the individual’s social insurance number, if any;
- the individual’s tax number, if any, assigned to the individual by the Canada Revenue Agency; and
- whether the individual is incapable of managing their own affairs.
The corporate transparency registry is expected to be launched in 2025 and will include a publicly accessible component allowing anyone to search for and determine beneficial ownership of any BC private corporation.[6] Once the registry is up and running, businesses will be required to submit and confirm the foregoing information annually and any time there is a significant change in ownership or control of the Corporation.[7]
What Information Will Be Publicly Accessible?
While all information collected under the proposed amendments to the Act will be accessible by enforcement officers and other public agencies, only some of the information will be publicly accessible. Similar to the Land Owner Transparency Registry discussed in our previous Business Law blog post, the BC Government will aim to balance privacy concerns with ensuring sufficient transparency. Publicly accessible information will include the full name and year of birth of the individual, whether or not the individual is a Canadian citizen or permanent resident of Canada, and if not, every country or state of which such individual is a citizen.[8]
Penalties for Non-Compliance
The proposed amendments introduce enforcement officers tasked with ensuring compliance with the requirements of the Act. An enforcement officer will be entitled to review company records to ensure that the corporation has provided full disclosure of the required information. Non-compliance may result in an administrative penalty of up to $25,000 in the case of an individual, and up to $50,000 in the case of a person other than an individual.[9]
Government Action on Money Laundering
The proposed corporate transparency registry is the latest in a series of provincial and federal legislation aimed at countering money laundering by increasing transparency in Canada. In November 2020, the Land Owner Transparency Act (please see our earlier blog article linked above) came into force in British Columbia, requiring disclosure of personal information of beneficial owners of land owned by corporations, trusts, and partnerships in British Columbia. As of March 31, 2023, most corporations and other business entities registered to operate in Quebec are required to disclose information on their “ultimate beneficiaries” in a publicly accessible enterprise register.[10] Earlier this year, the federal government announced a beneficial ownership registry for all corporations governed under the Canada Business Corporations Act[11], as discussed in our Business Law blog post.
Next Steps
We will continue to monitor the progress of Bill 20, and will provide an update on dates for compliance, should the Act receive Royal Assent and come into force by regulation. For more information, or if you have a question about this article or the other transparency registers referenced herein, please contact a member of our Business Law Group.
[1] British Columbia Ministry of Finance, News Release, “Public registry would end hidden ownership in private businesses” (29 March 2023), < https://news.gov.bc.ca/releases/2023FIN0025-000395>.
[2] Ibid.
[3] Commission of Inquiry into Money Laundering in British Columbia: Final Report (June 2022) (The Honourable Austin F. Cullen, Commissioner) at 39, <https://www.cullencommission.ca/files/reports/CullenCommission-FinalReport-Full.pdf>.
[4] Business Corporations Act, S.B.C. 2002, c. 57. s. 119.2(2)(a)-(g).
[5] Bill 20, Business Corporations Amendment Act, 2023, 4th Sess, 42nd Parl, British Columbia, 2023, cl. 3 (first reading 29 March 2023).
[6] Ibid at cl. 11.
[7] Ibid at cl. 6.
[8] Ibid at cl. 11.
[9] Ibid at cl. 18.
[10] An Act respecting the legal publicity of enterprises, S.Q. 2010, c. 7.
[11] Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts, 1st Sess, 44th Parl, 2023 (first reading 22 March 2023).
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