Effective October 1, 2020, private companies in BC are required to take reasonable steps to maintain a transparency register that contains certain details on all “significant individuals” in respect of the company. These new requirements are enacted as amendments to the Business Corporations Act and amendments to the Business Corporations Regulation. These amendments were designed “to end hidden ownership of companies in British Columbia and to help crack down on illegal activities”.[1]
The rules for determining the significant individuals in respect of a company are complex, but the rough criteria to remember are that the register must include individuals who, directly or indirectly, hold 25% or more of the shares or have the right to appoint a majority of the directors.
A company’s central securities register and articles can provide much of the information you need to determine who the significant individuals are, according to the new requirements. In cases where a company has another corporation, partnership, trust, agent or personal or other legal representative as a shareholder or right holder, those shareholders must be contacted to determine who the significant individuals are. Where there is a long chain of intermediaries, some individuals could appear to be quite distantly connected to the company, yet still have sufficient control to be considered a significant individual.
Only the directors of the company, officials or employees of a tax authority or regulator, police officers, or other “inspecting officials” have a right to inspect the register. Failure to properly maintain the register can result in fines of up to $100,000.
Importantly to the clients who DGW serves, section 47(1)(j) of the Regulation provides an exemption for companies that are “wholly owned by one or more Indigenous nations as defined in section 1 of the Land Owner Transparency Act”. “Indigenous Nation” is defined in that Act to include bands under section 2(1) of the Indian Act.
The staff at DGW Law have gained significant experience creating transparency registers in preparation for the October 1 deadline. Our team of experienced lawyers and support staff can help you determine your company’s significant individuals and can maintain your company’s transparency register through changes into the future.
Contact us today if you have any questions or require help.
[1] https://www2.gov.bc.ca/gov/content/employment-business/business/bc-companies/bearer-share-certificate-transparency-register