Commencing January 1, 2023, all private corporations in Ontario are required to maintain a register of individuals with significant control over the corporation. The register is referred to as the Transparency Register.

The purpose of the Transparency Register is to increase transparency around corporate ownership and control. It also helps to assist law enforcement in targeting tax evasion, money laundering and other illicit activities.

As a brief and general overview, each private corporation is to maintain a register which sets out all individuals who have significant control, such as shareholders owning more than 25% of the corporation, or beneficiaries of shares held in trust which comprise more than 25% ownership, or anyone who can exert control or influence over the corporation, even if they are not shareholders or do not meet the 25% rule.

The details of the new legislation are set out below.

Individuals with Significant Control

Pursuant to section 1.1 of the Ontario Business Corporations Act (OBCA), an individual with significant control is an individual:

• who has any of the following interests or rights, or any combination of them, in respect of a significant number of shares of the corporation (25% or more of the voting shares or 25% of the outstanding shares measured by fair market value)
  • The individual is a registered holder of the shares
  • The individual is the beneficial owner of the shares
  • The individual has direct or indirect control or direction over the shares
• who has any direct or indirect influence that, if exercised, would result in control in fact of the corporation
• to whom prescribed circumstances apply

Joint Ownership or Control – s.1.1(4)

Two or more individuals are each considered to be an individual with significant control over the corporation if, in respect of a significant number of shares of the corporation:

• An interest or right, or a combination of interests or rights, is jointly held by the individuals;
• A right, or combination of rights is subject to an agreement or arrangement under which the right or rights are to be exercised jointly or in concert by those individuals;
• An interest or right, or a combination of interests or rights is held by those individuals, each of whom is, with respect to the others, an individuals described as a “related person”; or
  • A “related person” being a spouse, son or daughter of that person or any relative of the person or of the person’s spouse, other than the persons spouse, son or daughter, who has the same home as the person
• Any other interest or right, or combination or interests or rights, is held by those individuals in such manner as may be prescribed

“Control in Fact” – s.1.1(5) and 1.1(6)

In order to determine whether an individual has direct or indirect influence that, if exercised, would result in control in fact of the corporation, the following should be considered:

• all of the factors that are relevant in the circumstances; and
• the relevant factors shall not be limited to, and need not include, whether the individual has a legally enforceable right or ability to effect a change in the board of directors of the corporation, or its powers, or to exercise influence over the shareholder or shareholders who have that right or ability.

When the corporation and the individual are dealing with each other at arm’s length and the influence is derived from an agreement or arrangement, the purpose of which is to govern the relationship between the corporation and the individual regarding the manner in which a business carried on by the corporation is to be conducted, the corporation shall not be considered to be controlled, directly or indirectly in any manner whatever, by the individual by reason only of that agreement or arrangement. The types of arrangements include:

• franchise;
• licence;
• lease;
• distribution;
• supply;
• management; or
• similar agreements or arrangements.

The Transparency Register – s.140.2

The Transparency Register shall contain the following information of each individual with significant control over the corporation:

• the name, date of birth and latest known address;
• the jurisdiction of residence, for tax purposes;
• the day on which the individual became and ceased to be an individual with significant control, as the case may be;
• a description of how each individual is an individual with significant control, including, if applicable, a description of their interests and rights in respect of shares of the corporation; and
• any other prescribed information.

At least once during the financial year of the corporation, reasonable steps shall be taken to ensure that it has identified all individuals with significant control over the corporation and that the information in the register is accurate, complete and up to date. The register must include a description of each step taken.

If the corporation becomes aware of any information that must be included in the Register, either as a result of steps taken to determine such information or through any other means, the corporation shall record the information in the Register within 15 days of becoming aware of it.

If the corporation requests such information from shareholders, the shareholders shall promptly and to the best of their knowledge, reply accurately and completely.

The need for the Transparency Register does not apply to a corporation:

• that is an offering corporation;
• that offers its securities to the public and is subject to an Act of the legislature of a province relating to the regulation of securities;
• whose shares are listed on a designated stock exchange within the meaning of subsection 248(1) of the Income Tax Act;
• that is a wholly-owned subsidiary of the previously described corporations; or
• that is a member of a prescribed class.

Disposal of Personal Information – s.140.2(6)

Within one year after the sixth anniversary of the day on which an individual ceases to be an individual with significant control over the corporation, the corporation shall dispose of any personal information that it has recorded in the register.

Disclosure of the Transparency Register – s.140.3

A corporation may receive a request for disclosure of its Register of individuals with significant control. Such requests may be for the following purposes:

• law enforcement purposes;
• tax purposes; or
• regulatory purposes.

Disclosure for law enforcement purposes includes assisting with an investigation into an offence under a law of Ontario or Canada, or providing information contained in the Register to a law enforcement agency outside Ontario to assist that agency with a law enforcement proceeding provided that the assistance is authorized under an arrangement, written agreement, treaty or law of Ontario or Canada.

An official of the government of Ontario or Canada who is responsible for administering or enforcing a law of Ontario or Canada that provides for the imposition or collection of a tax, royalty or duty may request the Register for the purposes of administering or enforcing such law that provides for the imposition or collection of a tax, royalty or duty or providing information contained in the Register to officials of a jurisdiction outside Canada to assist in the administration or enforcement of a law of that jurisdiction that provides for the imposition or collection of a tax, royalty or duty.

A regulatory body may request disclosure of the register for the purpose of administering or enforcing a law for which the regulatory body is responsible, assisting another agency in Canada in the administration or enforcement of a law that is similar to a law for which the regulatory body is responsible, or providing information contained in the register to an agency outside Canada to assist in the administration or enforcement of a law that is similar to a law for which the regulatory body is responsible. A regulatory body for these purposes includes:

• The Commission
• The Financial Services Regulatory Authority of Ontario continued under the Financial Services Regulatory Authority of Ontario Act, 2016
• The Financial Transactions and Reports Analysis Centre of Canada established under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada)
• A prescribed public officer, corporation, agency or other entity whose authority to regulate is based on a law of Ontario or Canada

The Minister may authorize a person to make any inquires the person considered necessary with respect to the enforcement of the above.

Offences – s.258.1

Offence	Fine
The corporation, without reasonable cause, fails to prepare and maintain a register of individuals with significant control	Up to $5,000
The corporation fails to respond to any request for disclosure of the register under section 140.3	Up to $5,000
A person, without reasonable cause, fails to respond to inquiries by the Minister	Up to $5,000
Directors or officers of the corporation who knowingly authorize, permit or acquiesces in the contravention of s.140.2, 140.3 or 140.4 by the corporation	Up to $200,000 or imprisonment for a term of not more than six months
Directors or officers of a corporation who knowingly records or knowingly authorizes, permits or acquiesces in the recording of false or misleading information in the register of the corporation	Up to $200,000 or imprisonment for a term of not more than six months
Directors or officers of a corporation who knowingly provides or knowingly authorizes, permits or acquiesces in the provision to any person or entity of false or misleading information in relation to the register of the corporation	Up to $200,000 or imprisonment for a term of not more than six months
Every shareholder who fails to provide requested information	Up to $200,000 or imprisonment for a term of not more than 6 months