BARRISTON BRIEFS: New Rules on Record Keeping for Federally Governed Corporations
New changes to corporate registers came into effect on June 13, 2019 for all corporations governed by the Canadian Business Corporations Act. These changes will require all federally governed corporations to establish and maintain a new type of register detailing all individuals with significant control over the corporation (the ISC Register).
What is significant control?
The ISC register requirements pertains to all shareholders with significant control who own, control or direct a significant number of shares representing either:
- 25% of the voting shares or
- 25% of all of the shares based on the fair market value of the shares or
- if two or more individuals act jointly and meet the 25% threshold.
How do you comply?
At least once a year reasonable steps are to be undertaken by the corporation to ensure the ISC Register is up to date. If the corporation becomes aware of a change, they must record it within 15 days of becoming aware of the new information. Corporations are not required to disclose to the public the information contained in the ISC Register.
What is the effect of Non-Compliance?
Though potentially burdensome, non-compliance could have negative consequences. Fines and even imprisonment could be assessed against non-complying corporations and against their directors, officers and shareholders. Further, for third party transactions, like a sale of a business, representations and warranties made with respect to corporations usually deal with compliance with laws, so a review of the ISC register will likely become the norm during due diligence.
For further information on this and other corporate compliance issues, contact us. We deliver peace of mind.