On May 17, 2019, Bill 24 Business Corporations Amendment Act, 2019 (the Amendment Act) received royal assent in the British Columbia legislature. The Amendment Act introduces amendments to the British Columbia Business Corporations Act (BCBCA) which will require private companies organized under the BCBCA to prepare and maintain a transparency register of information about significant individuals.
In an earlier blog post, we wrote about similar amendments recently made to the Canada Business Corporations Act. You can read about those amendments here.
Obligations of Companies and Shareholders
The Amendment Act will require private companies to take reasonable steps to maintain a transparency register containing accurate, complete and up-to-date information about significant individuals. Specifically, the transparency register must contain the following information for each significant individual:
Full name, date of birth and last known address;
Whether or not the individual is a Canadian citizen or permanent resident of Canada or, if not, a list of every country of which the individual is a citizen;
Whether or not the individual is a resident of Canada for tax purposes;
The date on which the individual became or ceased to be a significant individual;
A description of how the individual meets the definition of a significant individual; and
Any further information that may be required by regulation.
In addition to the obligation to take reasonable steps to obtain the required information, private companies must also review the register annually and update the register throughout the year as new information becomes available. Private companies may send requests for information to shareholders at any time and, upon receipt of such requests, shareholders must take reasonable steps to compile and promptly provide the requested information. If a company is unable to confirm some or all of the required information, then the register will need to reference the information that could not be confirmed and the steps taken by the company to obtain such information.
Individuals will be deemed to be significant individuals for purposes of the transparency register if:
They directly or indirectly own, or indirectly control:
25% or more of the issued shares of the company; or
Shares that carry 25% or more of the voting rights of the company, or
They are able to exercise rights or influence, directly or indirectly, that would result in the election, appointment or removal of the majority of the company’s directors.
Access to Transparency Register
The transparency register must be held at the company’s records office and remain available for inspection by prescribed officers. Such information will be available only to directors and officials conducting tax, regulatory or law enforcement investigations.
Offences and Liability
Under the Amendment Act, it will be an offence for private companies to not take reasonable steps to (i) identify significant individuals, (ii) obtain and record information about such individuals and (iii) maintain and review such records on an ongoing basis. Further, any director or officer of a private company who authorizes, permits or acquiesces to the commission of such offences or any shareholder who provides false or misleading information to a private company may be held personally liable. Liability for such offences is limited to a fine of up to $50,000 for individual offenders and $100,000 for other persons.
The key provisions in the Amendment Act will come into force by regulation. We expect there to be a transition period to allow companies to contact shareholders and develop compliance procedures.
DISCLAIMER: This post is intended to convey general information about legal issues and developments as of the date above. It does not constitute legal advice and must not be treated or relied on as such.