• Ava Aslani

The New BC Transparency Register: What It Means for Your Business

As of May 1, 2020, all privately-held companies in BC will be required to create and maintain a Transparency Register, listing all “significant individuals” of the company.

The new transparency rules follow on the heels of changes made by the federal government to the Canada Business Corporations Act last year and a commitment by the federal, provincial, and territorial finance ministers to adopt safeguards to prevent the misuse of corporate entities for tax evasion and other criminal purposes such as money laundering, corruption, and the financing of terrorist activities.

Do the new rules apply to your business?

The new rules will apply to companies governed by the BC Business Corporations Act that qualify as “private” companies. This means the rules will not apply to companies that are: (i) reporting issuers, (ii) reporting issuer equivalents, or (iii) listed on a stock exchange (such as the TSX). There are also other excluded classes of companies set out in the regulations.

In short, if you operate an owner-managed or family-run company in BC, it is likely that the new rules will apply to your company.

Steps your company needs to take

1. The first step is to identify the “significant individuals” of your company. There is a detailed test set out in the legislation, but as a high-level summary, a significant individual is one who meets one of the following criteria (whether individually or jointly with others):

• they (directly or indirectly) own or control 25% of the company’s shares or 25% of the votes, or

• they have the ability to (directly or indirectly) elect, appoint, or remove directors of the company.

2. Once you’ve identified these “significant individuals”, you’ll need to gather the following information about them:

• Full name, date of birth, and last known address,

• All countries of citizenship/permanent residency,

• Whether they are a resident of Canada for tax purposes, under the Canada Income Tax Act,

• The date on which they became, or stopped being, a “significant individual”, and

• A description of how they are an “significant individual”.

3. You will then need to compile this information into a Register, along with details on the steps the company has taken to ensure that it has identified all “significant individuals”. If your company’s minute book is being maintained by a law firm, they will likely take care of this part for you.

4. Finally, you will need to keep this information updated regularly. Your company must update the information in its Transparency Register at least once a year. This means taking reasonable steps to find out if any of the information in the Register has changed and if new individuals need to be added.

In addition, your company will need to update the Transparency Register within 30 days of becoming aware of a change affecting the information in the Register (including the need to add a new individual who became a “significant individual”).

What happens if you don’t comply

The new rules establish a number of offences for non-compliance, which will apply to companies, their shareholders, directors, officers, and those acting as records offices. The ‎penalties go up to $100,000 for corporate entities ‎and $50,000 for individuals.