On March 22, 2023, the Canadian government introduced new legislation that could have significant implications for corporations in the country. The proposed legislation would create a beneficial ownership registry, which is intended to increase transparency and prevent the use of corporations for illicit activities. This has been in the works for some time, with the Liberal government promising to introduce such a registry in its 2019 budget. The new legislation tabled in March 2023 outlines how the registry will be implemented and enforced. Here’s what you need to know about this new development.
What is the Beneficial Ownership Registry?
Under the proposed legislation, corporations governed under the Canada Business Corporations Act would be required to disclose information about their beneficial owners to a central registry maintained by the federal government. Under existing provincial transparency legislation, a “beneficial owner” is typically defined as an individual (or combination of individuals) who ultimately owns or controls the corporation, either directly or indirectly. This includes individuals who own shares in the corporation, as well as those who have significant control over the corporation’s management or financial affairs. Based on similar transparency legislation in British Columbia, the information that would need to be disclosed typically includes the beneficial owner’s name, address, date of birth, and other identifying information.
Why is the Beneficial Ownership Registry Being Created?
The stated objective of the beneficial ownership registry is to enhance transparency and discourage the misuse of corporations for suspicious and unlawful activities. The registry will enable law enforcement and regulatory agencies to detect and investigate tax evasion, money laundering, and terrorism financing, by identifying the individuals involved in such activities. The registry is intended to promote a more secure and stable economic environment for Canada by strengthening the integrity of its corporate sector.
What are the Potential Benefits?
Proponents of the beneficial ownership registry argue that it could have several important benefits. By increasing transparency, the registry could help to prevent corporations from being used for criminal transactions, which could ultimately help to protect the integrity of the Canadian financial system and prevent harm to individuals and communities. In addition, the registry could help to level the playing field for businesses that operate within the law, as they would no longer be at a disadvantage compared to those who engage in illicit activities.
What are the Potential Costs?
Critics of the beneficial ownership registry have raised concerns about the potential costs and administrative burdens of compliance. For example, small businesses and start-ups may struggle to comply with the new disclosure requirements, as they may lack the resources to collect and report the necessary information. In addition, there are concerns that the registry could be vulnerable to data breaches or other security risks, which could expose sensitive information about individuals and businesses. 
In an effort to address some of these concerns, the government has indicated that it will provide support and guidance to businesses that need to comply with the new requirements. It has also suggested that it may provide exemptions or simplified reporting requirements for small businesses that meet certain criteria.
How will the Beneficial Ownership Registry be Enforced and What Are the Penalties?
Non-compliance with the new requirements can result in significant administrative sanctions and criminal penalties, including fines of up to $200,000 and/or 6 months of criminal imprisonment. Further, the federal registry will be implemented in a way that allows it to incorporate information held by provinces and territories which decide to participate, and the Canada Revenue Agency will also be authorized to share data with Corporations Canada to support validation and verification of the information filed by corporations.
What Happens Next?
At this time, the proposed legislation has been introduced but has not yet been passed into law. As such, there are still many details that need to be worked out, including the specific requirements for businesses and the timeline for implementation. The Liberal Party’s 2021 budget proposed a deadline to establish the beneficial ownership registry by 2025. However, the supply-and-confidence agreement signed between the Liberals and the New Democrats in 2022 required the federal government to commit to implementing the same by the end of 2023.
As the legislation moves through the legislative process, it is important for businesses and individuals to stay informed about any updates or changes to the requirements, and to seek guidance from legal professionals when necessary. By doing so, they can ensure that they are in compliance with any new requirements and can avoid any potential legal or financial risks.
For more information, or if you have a question about this article, please contact a member of our Business Law Group.
 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).
 Government of Canada, “Government of Canada Tables New Legislation to Create a Beneficial Ownership Registry” (23 March 2023), online: Innovation, Science and Economic Development Canada https://www.canada.ca/en/innovation-science-economic-development/news/2023/03/government-of-canada-tables-new-legislation-to-create-a-beneficial-ownership-registry.html.
 Canada Business Corporations Act, R.S.C. 1985, c. C-44.
 Business Corporations Act, S.B.C. 2002, c. 57.
 Land Owner Transparency Act, S.B.C. 2019, c. 23.
 Supra, note 1.
 Government of Canada, “Beneficial Ownership Transparency,” online: Open Government https://open.canada.ca/en/beneficial_ownership_transparency.
 CPA Canada, “Beneficial Ownership Transparency Report” (28 May 2020), online: CPA Canada https://www.cpacanada.ca/en/news/accounting/the-profession/2020-05-28-beneficial-ownership-transparency-report.
 Supra, note 2.
 Rachel Aiello, “Liberals introduce legislation to create a corporate ownership registry” (22 March 2022), online: CTV News https://www.ctvnews.ca/politics/liberals-introduce-legislation-to-create-a-corporate-ownership-registry-1.6324701.