Beginning January 1, 2023, the Business Corporations Act, R.S.O. 1990, c. B.16 (“OBCA”) requires all private Ontario corporations to prepare and maintain a Register of Individuals with Significant Control (hereafter the “Register”).
The Test for Significant Control
An individual (a natural person) will be considered an individual with significant control (hereafter “ISC”) of the Corporation if they meet either of the following tests:
- The individual holds a 25% or greater interest (directly or indirectly) in the Corporation, either by votes or by fair market value; and/or
- The individual has direct or indirect influence that, if exercised, would give him or her “control in fact” of the Corporation.
What Information is Required for the Register?
The Register must record the following information for each individual:
- name, date of birth and last known address;
- jurisdiction of residence for tax purposes;
- the date on which the individual became or ceased to be an ISC;
- a description of how the individual is an ISC (including a description of the ISC’s rights and interests in respect of the Corporation’s shares); and
- any other information that may be required under future regulations.
When Does the Register Need to be Updated?
The Register must be reviewed and, if necessary, updated to reflect changes in a Corporation’s ISCs or their required information at least once during each financial year. If new information is discovered, it must be recorded in the Register within 15 days of the date on which the Corporation becomes aware of it.
Who Will Have Access to the Register?
Other than described below, the Register is not made publicly available.
Only the following entities may make requests to access a Corporation’s Register:
- the Executive Council;
- police forces;
- tax authorities of Ontario and Canada; and
- certain specified regulators, including the Ontario Securities Commission, the Financial Services Regulatory Authority of Ontario and the Financial Transactions and Reports Analysis Centre of Canada.
What are the Penalties for Failure to Comply?
The Corporation may be liable for fines of up to $5,000 for failing to comply with any of the requirements to prepare and maintain a Register, respond to inquiries, or meet disclosure obligations under the legislation.
Directors and Officers of the Corporation may be liable for fines of up to $200,000 and/or up to 6 months imprisonment for knowingly authorizing, permitting or acquiescing in a Corporation’s failure to perform any of its duties relating to the creation, maintenance or disclosure of the Register, whether or not the Corporation has been prosecuted or found guilty.
Shareholders of the Corporation may be liable for fines of up to $200,000 and/or up to 6 months imprisonment for knowingly failing to reply to the Corporation’s Register requests.
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