Since October 1, 2020, private companies in British Columbia must follow Part 4.1, section 119 of the Business Corporations Act.
Since October 1, 2020, private companies in British Columbia have been required, pursuant to Part 4.1, section 119 of the Business Corporations Act (the "Act"), to prepare and maintain a transparency register to disclose the name of each individual who is considered a significant individual in relation to the company in question and to disclose additional information about each such significant individual including their birthdate, address, citizenship, tax jurisdiction and a description of how that individual is a significant individual (the "Disclosed Information").
An individual can be considered a significant individual by meeting one or more of the following criteria:
- having an interest or right, or combination thereof, in a significant number of shares, greater than 25% or more of the total number of issued shares, as listed on the central security register (an "Interest"); or
- having the right or ability, or combination thereof, to elect, appoint or remove a majority of directors – 25% or more of the shares with voting rights.
In assessing whether or not one is a significant individual, an analysis of whether an Interest is held jointly or whether rights or abilities attaching to the Interest are exercised in concert with others pursuant to an agreement or understanding must be undertaken as each member of a group of Interest holders who together exercise ownership or control over an Interest are significant individuals and must be reported as such.
The holder of an Interest could be a registered owner of shares, that is the named shareholder on the Central Securities Register ("CSR"), a beneficial owner of the shares who may not be named on the CSR, or an individual who is legally entitled to receive benefits of property from the shares.
The British Columbia government has created a website to fully explain Part 4.1, Section 119 of the Act, to assist with the determination of whether someone is a significant individual and to provide a greater context to the transparency registry requirements.
On March 29, 2023, the Legislative Assembly of British Columbia introduced Bill 20, the Business Corporations Amendment Act, 4th Session, 42nd Parliament, British Columbia, 2023 ("Bill 20") and proposed amendments to the Act, including the creation of a new public transparency register to identity ownership of private companies in British Columbia. This new corporate transparency register is expected to commence and go live in 2025 and will be publicly accessible to allow any one to search a private company in British Columbia and obtain certain information about the significant individuals associated with the company. a news release issued by the Ministry of Finance provided that the "registry will follow similar privacy practices as the Land Owner Transparency Register ("LOTR"), and select only information will be available to the public".
Bill 20 proposes that the publicly accessible information in respect of a private company being limited to an individual's full name, year of birth and citizenship and, similar to LOTR, the information described will not be available until 90 days after the date of filing.
Once this new registry is launched private companies will be required to file annually and any time there are changes in ownership or control of a company which results in changes to the significant individuals of the company Bill 20 includes the requirement that a private company take necessary steps to maintain a transparency register and file with the British Columbia Registrar the requisite information from the corporate transparency register, as the case may be, within:
- 6 months after the date the company is recognized or restored;
- 15 days after the date of the company becomes aware of any information changes in the transparency register; or
- annually within the prescribed period.
Bill 20 further amends the Disclosed Information of each significant individual by requiring the following additional information for each significant individual:
- the significant individual's social insurance number, if any;
- the significant individual's tax number, if any, assigned to the individual by the Canada Revenue Agency; and
- reporting if a significant individual is incapable of managing the individual's own affairs.
Bill 20 reduces the number of days from 30 to 15 that a private company has to update the transparency register upon becoming aware of changes.
Bill 20 amendments also include the creation of Part 11.1 "Registrar's Transparency Register and division 3.3 – Administrative Penalties" that provides for the creation of enforcement, enforcement officers and administrative penalties for non-compliance with the Act. Enforcements officers are to be allowed to inspect private company records and ensure that the transparency register fully discloses the required information. Penalties for non-compliance are up to $25,000 for individuals and $50,000 for other than individuals.
As the Bill 20 amendment are still pending, private companies should review their transparency registers to ensure the information complies with the current legislation and to prepare for the upcoming amendments. Preparation would include:
- ensuring that the corporate transparency register complies with all current requirements of each significant individual;
- reviewing the CSR to ensure ownership information disclosed is complete, accurate and current;
- updating post-ownership changes; or changes to beneficiaries of trusts; and
- noting the steps taken to confirm the information is still current and valid, including any address updates of significant individuals.
If any significant individuals are also directors of a private company, section 127 of the Act, requires a company to file with the Registrar of Corporations within 15 days after a change in its directors or in the prescribed address of any of its directors, a notice of that change.
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.
