In response to COVID-19, the Ministry of Finance extended the effective date of the requirement to create and maintain a “Transparency Register” to October 1, 2020. Previously, private, non-distributing companies created under the British Columbia Business Corporations Act (“BCBCA”) were required to comply with the requirement effective May 1, 2020.
As we reported in November 2019, the purpose of the Transparency Register is to identify the beneficial owners of a company, including individuals who have direct or indirect control of the company or its shares.
The Transparency Register must be kept at the company’s records office or at an otherwise accessible location. Information within a Transparency Register may be disclosed to the directors of the BCBCA company, government tax agency officials, police and other government regulatory authorities.
The Transparency Register must provide information on all “significant individuals” related to the company, including:
- date of birth;
- last known address;
- citizenship status for tax purposes;
- date on which the individual became or stopped being a “significant individual” within the company; and
- how the individual falls within the definition of “significant individual”.
A “significant individual” who must be listed on the Transparency Register is defined as someone who:
- owns at least 25% of the company’s shares;
- owns shares that equate to at least 25% of the company’s voting rights;
- has rights or an indirect ability to elect, appoint or remove the company’s director(s).
If the “significant individual” is a non-individual entity, such as a company or trust, then the individuals who control that entity must be listed on the Transparency Register.
The amendments to the Regulation define the “control” of different types of non-individual entities as follows:
- a person controls a corporation if the person has a right to elect or appoint a majority of the directors of the corporation;
- a person controls a partnership if the person is a partner in the partnership;
- a person controls an agent if the person is the principal of the agent;
- a person, corporation, partnership or agent controls a trustee if they have the power to direct:
- how the trustee exercises any rights attached to the shares of a private company;
- how the trustee exercises the right to elect, appoint or remove directors of a private company; and
- how the trustee is to exercise control over a non-individual entity;
- a person , corporation, partnership or agent controls a personal or legal representative if they have the power to direct
- how the representative exercises any rights attached to the shares of a private company;
- how the representative exercises the right to elect, appoint or remove directors of a private company; and
- how the representative is to exercise control over a non-individual entity.
If there are no individuals who are “significant individuals”, then the Transparency Register must contain a statement setting this out.
Failing to comply with the proposed requirements to create and maintain a Transparency Register may mean the imposition of fines. BCBCA companies may be liable to a fine up to $100,000, while individuals may be fined up to $50,000.
Please contact one of our lawyers in our Corporate/Commercial Practice Group if you have any questions or wish to discuss the creation and maintenance of Transparency Registers, complying with the new legislation and their implications for your company.