TRANSPARENCY REGISTER FOR BC PRIVATE COMPANIES

Frequently Asked Questions

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This page is targeted at privately-owned B.C. companies for which BTM Lawyers LLP acts as the records office. It sets out answers to commonly asked questions about the B.C. government’s requirements for creating and maintaining a “Transparency Register” identifying the “significant individuals” of the company. It is based on information about forthcoming legislative requirements and is believed to be accurate and complete at the time of writing. However, this is general information only and is subject to change, so we cannot guarantee its accuracy and completeness. Please consult a lawyer to determine how these transparency requirements may apply to your particular company’s circumstances based on the latest available information.

Commonly Asked Questions

1. Is this mandatory?

Yes. Effective October 1, 2020, the B.C. government will require most B.C. private companies to create and maintain a Transparency Register containing certain prescribed information about the significant individuals of the company, as a result of recent amendments to B.C.’s Business Corporations Act and Business Corporations Regulation (the “Act”). Unless your organization falls under one of the exemptions, it will be required under the Act to have a Transparency Register in place at its records office as of October 1, 2020. Otherwise, you risk penalties for non-compliance.

2. What is a Transparency Register?

Similar to the Central Securities Register (“CSR”) which lists a company’s registered shareholders, a Transparency Register is a record of a company’s beneficial owners, including individuals who have direct or indirect control of the company or a significant number of its shares. The individuals that must be listed on the Transparency Register are called the “significant individuals” of the company, and the Transparency Register must include the following information for each significant individual:

  • full name, date of birth and last known address;
  • if they are a Canadian citizen or permanent resident of Canada;
  • if they are not a Canadian citizen or permanent resident of Canada, every country or state of which they are a citizen;
  • if they are a resident in Canada for the purposes of the Income Tax Act (Canada);
  • the date when they became or ceased to be a significant individual in the company; and
  • a description of how they are a significant individual.

3. Who exactly is a significant individual?

Someone is a significant individual if they are a natural person (human being) who satisfies any one or more of the following tests by meeting any one or more of the following criteria (or any combination thereof):

Test Criteria Example
Shares Test

You have a “significant number of shares” in the company (i.e. 25% or more of the total issued shares or shares that carry 25% or more of the voting rights at general meetings)

You are the “registered owner” of the shares You are listed as a shareholder in the Central Securities Register
You are the “beneficial owner” of the shares Another registered owner holds the shares in trust for your benefit
You have “indirect control” of the shares You control an intermediate entity or person with a significant number of shares[1]
Rights Test

You have the right to elect, appoint, or remove a majority of the directors of the company

Your share rights allow you to elect, appoint, or remove the directors You own more than 50% of the voting shares or have special rights under a shareholders’ agreement or the articles
You have “indirect control” of the right to elect, appoint, or remove the directors You control an intermediate entity or person with those rights
You have the ability (under an agreement or arrangement) to exercise “direct and significant influence” over another individual who has the above rights or indirect control[2] Your written consent is required (under a shareholders’ agreement) for major company decisions, such as the composition of the board of directors
Relationship Test

Your own plus one or more other individuals’ combined interests, rights, or abilities meet the above criterion

Your interests or rights are “held jointly” with one or more other individuals Four siblings with a beneficial interest in a significant number of shares held in trust by their parent
You exercise (under an agreement or arrangement) any of the above interests, rights, or abilities jointly or act “in concert with” one or more other individuals[3] You and one or more other shareholders have agreed (under a shareholders’ agreement) to combine your votes on critical company decisions
You are “associates” with one ore more other individuals with whom you are deemed to act in concert Your spouse, child, or other relative who lives at the same home address

[1] For a discussion about “control,” see below under “What if my company has shareholders who are not individuals?”

[2] Note: persuasion or influence because of moral authority, family relationship, or economic dependence is not sufficient to meet the “direct and significant influence” test. There must be a legally binding or enforceable agreement or contract providing the ability to influence, in a very direct way, another person’s decision-making.

[3] Note: requiring consensus for decisions but still allowing each shareholder to make a decision based on what they believe is best for the company is not sufficient to meet the “acting in concert” test. There should be a legally binding or enforceable agreement or arrangement creating a situation where individuals set aside their independent interest to act on the direction of a “controller.”

4. Is my organization exempt?

Most B.C. private companies will be required to have a Transparency Register in place as of October 1, 2020. Exempt from the new requirements are:

  • reporting issuers (i.e. public companies that can be traded on a stock exchange);
  • wholly owned subsidiaries of public corporations or special act corporations (i.e. those incorporated under their own federal or provincial statute rather than under corporate law of general application such as the Act);
  • extraprovincial companies (i.e. companies incorporated outside of B.C. but registered to do business in B.C.);
  • companies converted under the B.C.’s School Act or that operate independent schools in B.C.;
  • certain companies defined under B.C.’s Financial Institutions Act (i.e. trust companies, insurance companies, and government corporations); and
  • legal entities not governed by the Act (e.g. B.C. societies and cooperatives, strata corporations, and federal corporations incorporated under the CBCA).

If you believe your organization is exempt, we recommend that you seek legal advice to determine whether similar transparency requirements may apply under other applicable legislation (e.g. transparency requirements for federal companies are set out in the CBCA).

5. What does BTM require from me?

In order to avoid penalties for non-compliance, non-exempt companies are required to disclose any significant individuals. We ask that you provide our Significant Individual Questionnaire to all of the shareholders listed in your CSR. Please contact us to request a current CSR or corporate summary, and notify us as soon as possible if your CSR or corporate summary require updating.

Please ensure that each of your company’s shareholders and anyone else who may be a significant individual of the company returns their completed questionnaire to us at their earliest convenience and, in any case, by no later than August 1, 2020. There are two ways to submit the questionnaire:

  1. Fill out our online form; or
  2. Download and fill out the PDF questionnaire and return via email to [email protected]

Adhering to this will allow us to review your questionnaire(s) and generate a Transparency Register for your company by the October 1, 2020, deadline. Please note the following (if applicable to your company):

  • If your shareholders include spouses, parents and children, or other relatives who share the same home address: those individuals are deemed to “act in concert” and their interests should be combined for the purpose of determining whether they are significant individuals. Please specify their relationship in section 3 of the questionnaire and ensure that each of them submits their own questionnaire. Parents should fill out the questionnaire for any significant individuals who are minors (including minor beneficiaries of discretionary trusts, unless their beneficial interest is conditional on the death of another individual).
  • If your shareholders include a corporation, partnership, agent, trustee, or personal or other legal representative: any natural persons who in turn control or direct that intermediary entity or person should also complete the questionnaire. This means that further investigation may be required to identify the individuals who need to receive the questionnaire (as there may be several such persons who are not listed on your company’s CSR). For further details, please refer to the section below titled “What if my company has shareholders who are not individuals?” or contact us for assistance to determine who else may be required to complete the questionnaire.
  • If we are the records office for more than one of your companies: your shareholders and any other significant individuals will be required to complete a separate questionnaire for each company, as each company will require its own Transparency Register.

Based on the responses to the questionnaire, we will be in touch if we determine that there are any other significant individuals who are required to complete the questionnaire.

6. What if my company has shareholders who are not individuals?

Only a natural person can be a significant individual for the purpose of the Transparency Register. If one or more of the shareholders who own a significant number of your company’s shares is an “intermediary” entity or person such as a corporation, partnership, agent, trustee, or personal or other legal representative, then the following natural persons who indirectly control your company through their direct control of that intermediary will be significant individuals who are required to be listed on your company’s Transparency Register:

Intermediary Who has control? Example
Corporation Anyone who has the right to elect or appoint a majority of the corporation’s directors Someone who owns over 50% of the voting shares of that corporation or has special rights of election/appointment under the articles or a shareholders’ agreement
Partnership All of the partnership’s partners Limited partners and limited liability partners
Agent The principal of that agent Someone who has the power to direct how the agent exercises the rights attached to the shares
Trustee of trust Anyone who has the power to direct how the trustee exercises the rights attached to the shares Beneficiaries of the trust (and possibly the settlor of the trust, depending on the terms of the trust instrument)[1]
Personal or other legal representative Anyone who has the legal authority to direct how the representative exercises the rights attached to the shares or who has the ability to regain control of the voting rights A represented person who kept the legal authority to direct an attorney exercising share rights on their behalf under a power of attorney
Chain of intermediaries Anyone who controls the first intermediary in that chain (provided control is maintained throughout the chain) The sole shareholder of a holding company with a wholly owned subsidiary that owns a significant number of shares in the company

Please contact us if you require assistance determining who those significant individuals may be or whether the intermediary is exempt.

[1] Note: all beneficiaries are listed in the Transparency Register so long as the trustee holds at least 25% of the shares, including beneficiaries of discretionary trusts and minor beneficiaries of trusts. However, beneficiaries do not have to be listed if their beneficial interest is conditional on the death of another individual.

7. Who will have access to the Transparency Register?

A Transparency Register is specific only to private companies incorporated in B.C. and will be held in each company’s own records office. The public will not currently have access to the Transparency Register. However, the Ministry of Finance is also evaluating the possibility of a government-maintained, publicly accessible registry of company beneficial ownership.

For the time being, only current directors of the company, law enforcement, tax authorities, and regulators will be able to view the Transparency Register. Specifically, the following officials will be entitled to inspect the Transparency Register:

  • current directors of the company;
  • police force in B.C.;
  • the Royal Canadian Mounted Police;
  • tax authority of B.C.;
  • the Canada Revenue Agency;
  • the British Columbia Securities Commission;
  • the BC Financial Services Authority (formerly FICOM);
  • the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC); and
  • the Law Society of British Columbia.

Upon receiving satisfactory identification from an inspecting official, we will be required to provide them with access to the Transparency Register between 9:00 a.m. and 4:00 p.m., Monday through Friday (except holidays). This could include providing copies of the Transparency Register for a nominal fee.

8. Will there be any further requirements after my Transparency Register is set up?

Yes. Once your Transparency Register has been generated, further duties are imposed on companies and/or records offices to:

  • update the information in the Transparency Register on an ongoing basis and within 30 days of becoming aware of any changes (e.g. updates to a significant individual’s information, or the addition or removal of a significant individual due to a share allotment, transfer, or redemption, a shareholders’ or other agreement, etc.);
  • notify individuals who become or cease to be significant individuals in respect of the company within 10 days of that occurrence;
  • keep information and records for at least six years after recording that an individual has ceased to be a significant individual, upon the expiry of which all information and records relating to that individual must be deleted from the Transparency Register and destroyed within a further period of one year;
  • conduct an annual review within two months of the anniversary date of the company in order to confirm the accuracy and completeness of the Transparency Register (after October 1, 2020, we will be conducting an annual review of your Transparency Register when we send out your annual maintenance package);
  • maintain the security of the Transparency Register; and
  • provide prompt access to inspecting officials and the company’s directors, subject to certain requirements under the Act.

9. Why is this necessary?

According to the B.C. government, this is part of a commitment to end hidden ownership of companies in B.C. and crack down on illegal activities, by helping companies, and in some cases authorities, identify the actual individuals (i.e. the natural persons behind holding companies, trusts, etc.) who own and control B.C. private companies.

The new requirements follow a broader trend towards corporate transparency, as similar requirements for federally incorporated private corporations came into force in 2019, as a result of recent amendments to the Canada Business Corporations Act (the “CBCA”).

10. What if my company or its shareholders fail to comply?

Shareholders must promptly send the company information requested for the purposes of maintaining its Transparency Register. Several new offences have been established in relation to the Transparency Register, and the penalties for shareholders, directors, officers, or other persons who commit those offences include fines of up to $50,000 for individuals, and $100,000 for corporate entities.

A shareholder may commit an offence if they fail to promptly send to the company information requested for the purposes of maintaining its Transparency Register, or if they knowingly, or as a result of a failure to exercise reasonable diligence, send information to the company which is false or misleading or omits any material fact.

A company may commit an offence if it fails to take reasonable steps to confirm that the required information is accurate, complete, and up to date within two months of the anniversary date of its recognition each year, if it becomes aware of any new or different information and fails to record same in the Transparency Register within 30 days, or if it fails to delete information from its Transparency Register and destroy related records within one year after the sixth anniversary of the date on which an individual has ceased to be a significant individual. It may also commit an offence if it incorrectly identifies or excludes significant individuals, includes false or misleading information about significant individuals, or omits information about significant individuals from the Transparency Register. Any director or officer of the company who knowingly, or as a result of a failure to exercise reasonable diligence, authorizes, permits, or acquiesces in the commission of such offences may also be considered to have committed an offence.

11. How much will all of this cost?

As your records office, it is our obligation to inform you of the new requirements. While these requirements may aid the government and inspecting officials as a result of greater corporate transparency, significant time will be required for companies and records offices to review corporate records, advise companies and shareholders of their obligations, collect information, verify significant individuals, and complete the initial set-up.

We have attempted to streamline this process in order to minimize the financial impact on our corporate clients, but this will require cooperation from your shareholders and other significant individuals, who we ask that you kindly ensure return their completed Significant Individual Questionnaires to [email protected] or submit the form online at www.btmlawyers.com/tr by no later than August 1, 2020. We will provide you with a single reminder prior to October 1, 2020, and annually at the time we perform your annual maintenance.

For companies with straightforward ownership structures (i.e. all shares are held personally and directly controlled by the natural persons listed in the CSR of the company) we will process the information provided and generate the Transparency Register for a flat fee of $200 (all-inclusive of taxes and disbursements) per company for which we act as the records office. This fee will be billed at the time the Transparency Register is generated, and assumes that all shareholders and significant individuals submit their responses in a timely manner and with no or minimal further investigation or guidance.

For companies with more complex ownership structures (i.e. the significant individuals differ from the shareholders listed in the CSR and/or include one or more intermediaries) and those requiring further investigation, guidance, or document review, we are happy to assist. Please keep in mind that additional fees will apply at our corporate lawyers’ hourly rates whenever further investigation or guidance is required, including if we must review trust instruments, holding company records, shareholders’ agreements, or other documents in order to generate your Transparency Register. The current hourly rates of corporate lawyers in our office range from $250 to $450 per hour, plus taxes and disbursements.

As a result of the increased time, administrative cost, and potential liability associated with maintaining corporate records on an annual basis, there will also be a nominal increase to our annual maintenance fee from $395 to $410 (all-inclusive of taxes and disbursements) effective as of October 1, 2020. As a courtesy to our existing clients, we will not be increasing annual maintenance fees prior to October 1, 2020, when the Transparency Register requirements come into effect.

12. Where do I go if I have further questions?

Please refer to our website at www.btmlawyers.com/tr and visit the Ministry of Finance website for more information about the Transparency Register.

Should you have any further questions or concerns, please contact Jeremy Davis of our office via telephone at 604-937-1166 or via email at [email protected].

Please note that we will be reviewing Significant Individual Questionnaires and generating Transparency Registers on a rolling basis (first-come, first-served) leading up to October 1, 2020. Due to the high volume of clients that we anticipate will be submitting responses and inquiries, it may take longer than usual to respond to your queries, and we appreciate your patience in that regard as we work to bring your company into compliance with the B.C. government’s new transparency requirements.