New Requirements for Your Federal Corporation as of June 2019!
As of June 13, 2019, any private corporation incorporated under the Canada Business Corporations Act will have to comply with new standards designed to prevent the use of corporations for tax evasion and other criminal purposes, including money laundering, corruption and terrorist financing.
What are these changes?
Your corporation will be required to maintain a new register in its minute book, along with the registers of directors, securities and shareholders. This new register aims to identify individuals with significant control in a corporation. To determine this, the law provides for certain circumstances, including (i) a person holding 25% or more of the voting shares in the corporation’s share capital, (ii) a person holding 25% or more of the fair market value of the shares of the corporation’s share capital or (iii) a person who, without necessarily holding shares in the corporation, exercises a direct or indirect influence resulting from de facto control of the corporation.
What is the nature of your obligation?
Take reasonable steps to update the register of “individuals with significant control” at least once every fiscal year of your corporation. To this end, the register must include a description of the measures taken by your corporation to comply with these new requirements. Of course, your corporation also has a continuing obligation to record any new information it becomes aware of about an individual who has significant control over it.
Who can access this new register?
The information contained in the new register may be accessible to any of your corporation’s shareholders or creditors upon transmission of an affidavit confirming that they will use this information exclusively in connection with the corporation’s business.
What are the penalties and sanctions?
Diligence will be required in maintaining this register since the penalties for non-compliance with some of the measures provided for in the legislative amendments can go up to $200,000 and/or six (6) months’ imprisonment. In addition, these penalties may be incurred not only by the corporation’s directors and officers, but also by its shareholders who have an obligation to provide the corporation with complete and accurate information allowing the maintenance of the register.
What about corporations incorporated under Quebec law?
For the time being, these corporations are not subject to any obligation. However, it is reasonable to assume that the provinces, including Quebec, could follow suit in the near future.
We remain available for any questions, requests for additional information and/or assistance in order to adequately comply with these new provisions.
Please contact us to update your minute book!