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Governance Amendments To The CBCA: What Private Companies Need To Know – Corporate Governance


All corporations governed by the Canada Business Corporations Act
(“CBCA”) will soon be required to comply with more
stringent record-keeping requirements as part of the
government’s commitment to implementing an accessible public
registry for greater corporate transparency. Bill C-19, passed as
the Budget Implementation Act, 2022, received
Royal Assent on June 23, 2022. This act creates
substantial changes to the CBCA
, among other
statutes.

Since 2019, private CBCA corporations have been required to
maintain a register of shareholders with significant control of the
corporation (“ISC Register“).
Significant control, as defined in section 2.1(1) of the CBCA,
refers to an individual who owns, controls, or directs a
significant number of shares; has significant influence over the
corporation without owning any shares; or has a combination of any
of these factors. A significant number of shares is defined as 25%
of the voting shares of the corporation, or 25% of all the shares
based on the fair market value of the shares. The ISC Register must
be stored at the corporation’s place of business and be made
accessible to certain regulatory authorities when requested. With
the pending amendments to the CBCA, corporations will be required
to file their ISC Register with the Director (as defined in the
CBCA) annually and to notify the Director of any new changes within
15 days.

Amendments Introduced by Bill C-19

The new provisions added to section 21 read as follows:

21.21 (1) A corporation to which section 21.1
applies shall

(a) on an annual basis, send to the Director
the information in its register of individuals with significant
control over the corporation, in the form and within the period
that the Director fixes; and (b) within 15 days
after the day on which it records information under subsection
21.1(3), send the information to the Director, in the form that the
Director fixes.

Sending of information – certificates issued

(2) On or after the date shown on a certificate
referred to in section 8, subsection 185(4) or 187(4), a
corporation to which section 21.1 applies shall send to the
Director the information referred to in paragraphs 21.1(1)(a) to
(f) in relation to individuals with significant control over the
corporation, in the form and within the period that the Director
fixes.

Provision of information by Director

21.301 The Director may provide all or part of
the information received under section 21.21 to an investigative
body referred to in subsection 21.31(2), the Financial Transactions
and Reports Analysis Centre of Canada or any prescribed entity.

Effect of the Amendments

The newly amended provisions will require non-exempt
corporations to submit their ISC Register to the Director annually
and within 15 days of any new information1 recorded by
the corporation. Non-exempt corporations must also submit their ISC
Register to the Director upon the issuance of a certificate of
incorporation, amalgamation, or continuance. The addition of
section 21.30 will grant the Director authority to share any
information from the ISC Register with the Financial Transactions
and Reports Analysis Centre of Canada or any future entity referred
to in subsection 21.31(2).

Per section 21.1(7) of the CBCA, the following corporations are
exempt from the above requirements: corporations that are (a) a
reporting issuer or an émetteur assujetti under an Act of
the legislature of a province relating to the regulation of
securities; (b) listed on a designated stock exchange, as defined
in subsection 248(1) of the Income Tax Act; or (c) a member of a
prescribed class.

Next Steps

These amendments to the CBCA, part of the government’s push
for greater corporate transparency and a strengthened anti-money
laundering regime, will affect all private CBCA corporations.
Similar transparency rules exist or are expected to come into force
in British Columbia, Ontario, Québec, Manitoba,
Saskatchewan, Prince Edward Island, and Newfoundland and Labrador,
as well as in many OECD member states. At this time, however, it is
unknown when exactly these provisions will come into force and what
compliance period will be granted to existing corporations.

Corporations Canada has previously prepared a prescribed form for documenting the required information
and a guideline on maintaining an ISC Register. Corporations may
wish to use and review these tools in the interim as a guide for
compliance while we determine how this new framework will be
implemented.

Per section 21.1(3), if the corporation becomes aware of
any information that must be kept under section 21.1(1) as a result
of the “reasonable steps” taken, this must be added to
the database. This information includes:

(a) the names, the dates of birth and the latest known
address of each individual with significant control;

(b) the jurisdiction of residence for tax purposes of each
individual with significant control;

(c) the day on which each individual became or ceased to be an
individual with significant control, as the case may be;

(d) a description of how each individual is an individual with
significant control over the corporation, including, as applicable,
a description of their interests and rights in respect of shares of
the corporation;

(e) any other prescribed information; and

(f) a description of each step taken in accordance with subsection
(2).

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



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