North America

Earlier this month, Bill 24— with the innocuous title of a Business Corporations Amendment Act, 2019 — received second reading in the British Columbia Legislature. However, if the bill comes into force it will have far reaching compliance consequences for all private BC companies.

Each BC company will be required to establish and maintain a “transparency register” of “significant individuals” that, directly or indirectly, have substantial shareholdings in the company or the ability to exercise control or significant influence over the company. The purpose of the register is to create safeguards against the misuse of companies for tax evasion, terrorist financing, money laundering and other criminal activities.[1]

British Columbia therefore seems poised to implement its commitments under the federal/provincial Agreement to Strengthen Beneficial Ownership Transparencyby July 1, 2019. (At the federal level, comparable rules will come into force on June 13, 2019 for corporations governed by the Canada Business Corporations Act; see our Timely Disclosure article “Power and Influence: New CBCA Registration Requirements for Private Companies”).

What is a private company?

If enacted, the new legislation will apply to companies governed by the BC Business Corporations Act that qualify as “private”. A private company is not: (i) a reporting issuer in BC or another Canadian jurisdiction; (ii) a reporting issuer equivalent; or (iii) listed on a designated stock exchange (such as the TSX or the Montreal Exchange in Canada, the NASDAQ in the US, or, the London Stock Exchange in the UK to name a few examples). The class of excluded companies may be expanded by regulation.

Who are “significant individuals”?

Under the proposed legislation, private companies are required to take reasonable steps to establish and maintain an up-to-date transparency register that contains information on all “significant individuals” with respect to the company. Individuals must be listed in the register if they individually or jointly:

  • directly own, indirectly own, or indirectly control
    1. 25 percent or more of the issued shares of the company, or,
    2. shares that carry 25 percent or more of the voting rights at general meetings of the company; or,
  • have the right or ability to directly or indirectly elect, appoint or remove the majority of the company’s directors through any, or any combination, of the following:
    1. the right to elect, appoint or remove one or more of the directors
    2. indirect control of the right to elect, appoint or remove one or more of the directors
    3. the ability to exercise direct and significant influence over an individual who directly or indirectly has the right or control to elect, appoint or remove one or more directors.

Individuals would also qualify as “significant individuals” if they have interests, rights, or abilities that, combined, meet the above categories. This may be as a result of an agreement or arrangement to exercise such rights jointly or in concert (eg voting agreements), or as a result of a close family relationship (such as spouse, son, daughter or a relative of the individual or their spouse who shares the same home).

Many of these concepts may be expanded by regulations and are also not defined. They will require further clarification through regulations.

What information must be in the register?

The new transparency register must set out the following details for each significant individual:

  • Full name, date of birth and last known address
  • Whether the individual is a Canadian citizen or a permanent resident, and, if not, every country or state of which the individual is a citizen
  • Whether the individual is considered a resident of Canada for tax purposes, under the Income Tax Act (Canada) The date on which the individual became, or ceased to be, a “significant individual”
  • A description of how the person is an “significant individual”

The accuracy of register information must be verified each year. In this respect, the company must take reasonable steps to confirm that the transparency register is accurate and complete. Further, if the company becomes aware of any new or additional information at any point, the transparency register must be updated within 30 days.

Shareholders have a duty to cooperate with the company in gathering the register information and must take reasonable steps to compile and promptly provide the information requested by the company.

What duties does the company have to significant individuals?

Significant individuals must be listed in the transparency register for as long as they hold that status and for six years after they cease to be significant individuals. After that period, their information must be deleted from the register and any records in respect of the individual kept by the company for the transparency register must be destroyed. The company has a year to do so.

Private companies must also notify individuals in writing within 10 days if they have been added to the transparency register as significant individuals or that the person has ceased to be a significant individual.

If a company is unable to obtain or confirm information on a significant individual, it must record in the transparency register: the information it was unable to obtain or confirm, the steps taken to obtain or confirm that information, and any additional prescribed information.

Who has access to the transparency register?

The transparency register must be kept at the company’s records office or be accessible from the records office by electronic means. Apart from the company’s directors, the register may inspected by:

  • Federal and provincial tax authorities (such as the CRA), for tax collection and certain other purposes
  • Federal and provincial law enforcement authorities (such as the RCMP), as part of an investigation and certain other purposes
  • Certain federal or provincial regulatory authorities (such as the BC Securities Commission or the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to ensure regulatory compliance.

The information may also be shared with foreign tax, law enforcement or regulatory agencies under agreements or arrangements British Columbia or Canada have with such jurisdictions.

What are consequences of non-compliance?

Non-compliance with a number of the new transparency requirements will constitute an offence subject to a maximum fine of $50,000 for individuals and $100,000 for other persons.

For example, falsely identifying a person as a significant individual in the transparency register or falsely excluding an individual will constitute offences, as well as providing false or misleading information in the register or omitting information from the register which would make the register false or misleading. The offence provisions apply to private companies and any director or officer who authorises, permits, or acquiesces in the commission of an offence by the company. Similarly, shareholders commit an offence if they provide false or misleading information for the transparency register, or omit material facts causing the transparency register information to be false or misleading.

What will happen next?

As noted above, BC has committed to make best efforts to bring the transparency register into effect by July 1, 2019. Once Bill 24 has received Royal Assent, it will come into force by regulation. Regulations are also still required to clarify for private companies many of the interpretation and application issues raised by Bill 24.

Please check back for updates and contact Dierk Ullrich or Grant Foster if you have any questions.



  1. [1] For example, see “Bill 24, Business Corporations Amendment Act”, 1st reading, British Columbia Legislative Assembly, Official Report of Debates (Hansard), 41st Parl, 4th Sess, No 228 (2 April 2019) (Hon. C. James).



Dierk Ullrich
Partner | Co-Leader, Japan
Vancouver, BC
Grant Foster
Vancouver, BC
Cara Chu
Articling Student
Vancouver, BC

© 2017 Fasken Martineau DuMoulin LLP The content of this website may contain attorney advertising under the laws of various states.

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