Register of individuals with significant control CORPORATIONS CANADA Register of individuals with significant control

AGENDA Objectives and corporations affected Defining ISC and ISC Register Access to the ISC Register and penalties Regulations and guidance materials Feedback Note: Any information provided by Corporations Canada is not intended to be a substitute for legal advice.

OBJECTIVES CBCA corporations are required to create and maintain a Register of individuals with significant control (ISC Register) Knowing who controls a corporation Increases transparency of who owns or controls corporations Assists investigative bodies in exposing activities, like money laundering and tax evasion Helps Canada meet its international obligations

CORPORATIONS AFFECTED Budget Implementation Act, 2018, No. 2 (Bill C-86) made amendments to the CBCA obligations that apply to all CBCA corporations, except reporting issuers corporations listed under a designated stock exchange as defined by the Income Tax Act Amendments in force on June 13, 2019

DEFINING ISC AND ISC REGISTER

W HAT IS AN ISC An individual who directly or indirectly owns at least 25% of voting shares Holds shares on behalf of beneficial owner D Registered shareholders A B C Shareholdings 25% 20% 45% A, C and D are ISCs Corporation One class of voting shares

W HAT IS AN ISC (cont’d) An individual who directly or indirectly owns at least 25% of all shares measured by fair market value Where there are more than one class of shares An individual who has direct or indirect control or direction of at least 25% of voting shares or of all shares measured by fair market value An individual who has any direct or indirect influence that would result in control in fact of the corporation

One class of voting shares W HAT IS AN ISC (cont’d) Two or more individuals who jointly hold an interest described in 1 to 4 or have an agreement to exercise those rights jointly Agree to act jointly Registered shareholders A B C D E D and E are ISCs Shareholdings 20% 20% 20% 20% 20% Corporation One class of voting shares

ISC REGISTER Document that contains the required information about individuals who have significant control over the corporation Name, date of birth and last known address Jurisdiction for tax purposes Date on which the individual became and ceased to be an ISC Description of how the individual meets the definition of significant control Register is to be kept with the other corporate records Model template is available

STEPS TO CREATE AN ISC REGISTER Corporation contacts its registered shareholders and asks for information so that it can determine who is an ISC Corporation determines who else it may need to contact for information After determining who is an ISC, the corporation records their information in the Register

REASONABLE STEPS TO MAINTAIN Corporations must take reasonable steps once a year to update the information in the ISC Register  Contact ISCs and ask if their information has changed  Contact registered shareholders who are not ISCs and ask for information so that it can determine who is an ISC  After determining if there are any new ISCs or if there is a change in the information in the Register, the corporation records that information

ACCESS TO THE ISC REGISTER AND PENALTIES

ACCESS TO THE ISC REGISTER Corporations must provide any information requested by Corporations Canada Shareholders and creditors can access the information with an affidavit and restrictions on the use of the information The public does not have access to the information

ACCESS TO THE ISC REGISTER – INVESTIGATIVE BODIES (PROPOSED) Budget Implementation Act 2019 No. 1 (Bill C-97) was tabled April 8, 2019 – not yet approved by Parliament Provides investigative bodies* with warrantless access to the ISC Register when information is needed for investigative purposes related to offences in the Schedule to the CBCA Corporations receiving a request must respond as soon as feasible * Investigative bodies are defined to be any police force, or CRA and its provincial equivalents

DIRECTORS AND OFFICERS PENALTIES CORPORATION DIRECTORS AND OFFICERS SHAREHOLDERS Offence Fails to meet the ISC Register requirements without reasonable cause Fails to meet request from investigative body Knowingly: Fail to prepare and maintain the ISC Register or meet request from investigative body Allow false or misleading information to be recorded in the ISC Register Allow false or misleading information to be provided to any person or entity Knowingly fail to meet their obligations regarding the ISC Register Fines Up to $5,000 Up to $200,000 Imprisonment N/A Up to 6 months

REGULATIONS AND GUIDANCE MATERIAL

REGULATIONS No regulations will be in place for June 13, 2019 There is regulatory authority that allows us to: Identify a class of corporations that would be exempt from having to create and maintain an ISC Register Set out steps to take if a corporation is not able to identify any ISCs Prescribe the form of the Register Set out steps for updating ISC Register

GUIDANCE MATERIAL Guidance material primarily targets small private corporations trying to meet their obligations without professional help 70% of corporations fall under this category Initial information is available on the website Information will be added and modified as project progresses, and based on feedback

FEEDBACK We would welcome feedback and suggestions on guidance already released http://corporations.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs08216.html additional material that could assist your client corporations in meeting their obligations what regulations could help. To reach us: IC.corporationscanada.IC@canada.ca