Changes in British Columbia

Amendments introduced to the Business Corporations Act (British Columbia) (BCBCA) will create a new, public registry for corporate beneficial owners in an attempt to ensure that private companies in British Columbia (BC) are not being used for money laundering or other criminal purposes.

BC’s Expert Panel on Money Laundering in Real Estate report identified disclosure of beneficial ownership as the “single most important measure that can be taken to combat money laundering.”

The proposed new public register will expand on the existing requirement for private BC companies, incorporated under the BCBCA, to identify their beneficial owners and keep a list of these individuals in their corporate records. The registry is expected to be launched in 2025. Once it is operational, affected companies will be required to submit and confirm their information once per year and any time there is a significant change in ownership or control.

The centralized BC registry will provide law enforcement and other authorities with more efficient and timely access to information and will give them access without the need to go directly to individuals for their corporate records. Through enabling the sharing of information, BC is setting up a foundation to support the establishment of a multi-jurisdictional beneficial ownership registry that can act as a single hub for corporate beneficial information.

Regulations under the Canada Business Corporations Act

In our previous Insight, we discussed the new requirements imposed by Bill C-86, Budget implementation Act 2018, No. 2 (the Act), as they relate to the creation of an individual with significant control (ISCs) registry. While some of the requirements and interpretation of how to identify individuals with significant control were outlined in the Act when it came into force, there were certain details that were either not clear or yet to be determined by way of a regulation. Since the Act came into force, stakeholders indicated that the statutory amendments did not provide enough guidance and that more clarity was needed on how to apply the provisions. Stakeholders believed that a lack of explicit directions on how to apply some of the statutory amendments could result in the provisions being applied inconsistently. As such, on May 4, 2023, the regulations related to the Act (the Regulations) providing stakeholders further directions with respect of meeting the requirements regarding ISCs came into force. The Regulations discuss the following:

1. reasonable steps a company is to take to update its register of ISCs;
2. prescribed steps if a company is unable to identify any ISC; and
3. excluded classes of companies.

Reasonable steps to update register

The Act had not included details as to what “reasonable steps” were to update the register annually. As such, the Regulations have expanded on what these “reasonable steps” maybe. These “reasonable steps” include sending a request for information at least once a year to (a) any ISCs currently in the register to request confirmation or updates to their information, (b) to all shareholders of the company asking them to confirm if they have become an ISC and requesting the required information from them if they have become an ISC and (c) to any other person that the company has reasonable grounds to believe may have relevant knowledge regarding an ISC or any person who may have relevant knowledge regarding such person.

Steps to take when unable to identify an ISC

The Act contemplated that a company shall take the prescribed steps if it was unable to identify an ISC. However, it did not state what those prescribed steps were. The Regulations contemplate, in further detail, what companies are required to do when there are no ISCs, including the addition of a statement to that effect to the register, or that there are no individuals with significant control and outlining the steps taken by the company to attempt to identify any ISCs.

Excluded classes of companies

Under the Act, the following companies were exempt from the Act’s obligations, namely: (a) reporting issuer or an “émetteur assujetti” under an act of the legislature of a province relating to the regulation of securities, (b) those listed on a designated stock exchange and (c) a member of prescribed class. It was not clear what a “member of a prescribed class” was and whether any wholly owned subsidiaries of public companies were captured by this exception. As such, the Regulations provide clarity around what other federally incorporated businesses are excluded from having to create and maintain an ISC, including reporting issuers under provincial legislation and their wholly owned subsidiaries, publicly traded companies whose securities are traded on a stock exchange and their wholly owned subsidiaries and Crown corporations and their wholly owned subsidiaries.

We will continue to monitor any further amendments to these Regulations that may provide further guidance for stakeholders as they prepare and maintain the ISC register. If you have any questions or need assistance, please contact Daniela Acevedo, Diana Nakka, James Côté, or another member of our Corporate group.