Corporate Transparency

Corporate transparency, or the ability to identify the individuals who own and control a company, has increasingly become a priority for tax authorities, law enforcement, and policymakers around the world.

Corporations have long been required to maintain a "securities (share) register" in the corporation's minute book, listing out the number and class of shares issued to each shareholder, and certain contact information for that shareholder.

However, information about a shareholder does not necessarily reveal "true ownership" of a corporation. For example, a shareholder of "Corporation A" can itself be another corporation - "Corporation B". The securities register of Corporation A would not contain information about the shareholders/owners of Corporation B - who may in fact be controlling Corporation A through Corporation B.

Beneficial Ownership Register

Recent changes in the law have sought to address that information gap. From 2023 onwards, in addition to the standard securities register, private Ontario corporations now must also create and maintain a register of "individuals with significant control" (also known as a "beneficial ownership register").

Such register must include information about any individual who has registered or beneficial ownership of, or control over, at least 25% of the corporation’s shares on a votes or value basis, either individually or jointly with others.

Currently, information about such individuals that must be recorded on the register includes:

• the name, date of birth and the latest known address;
• the jurisdiction of residence for tax purposes;
• the day on which he or she became or ceased to be an individual with significant control (for example, the date on which they went above or below the 25% holding threshold);
• a description of how he or she is an individual with significant control, including a description of his or her interests and rights in respect of shares of the corporation; and
• a description of each step taken to update the information in the register - which must be done at least once during each financial year of the corporation.

Unlike information regarding directors and officers, information about the shareholders of a private Ontario corporation does not need to be made public, nor is it required to be filed with the government.

However, the beneficial ownership register must be disclosed to law enforcement officers, tax authorities, certain financial regulatory bodies, the Ontario Securities Commission, and other authorities, if a disclosure request is made in connection with an investigation into an offence or in the administration or enforcement of laws, whether or not the corporation itself is the subject of those investigations or enforcement efforts.

A corporation that without reasonable cause fails to comply with these new rules may face a fine up to $5,000. Directors and officers who knowingly record, authorize or permit the recording of false or misleading information in the register may face a fine of up to $200,000 or imprisonment for up to six months, or both. The same liability applies to any shareholder who does not respond accurately and completely to an information request from the corporation in respect of the register.

Key Take-Aways

Shareholders, directors, and officers of a private corporation should take steps to ensure their corporation’s register is accurate and complete and that they have taken reasonable steps to verify the information being provided. Those responsible for collecting and maintaining information to be included in the register should be mindful of applicable privacy and data security considerations.

Following incorporation, SkyLaunch's curated incorporation package will include the standard securities register and the beneficial ownership register that will form part of your Ontario corporation's online minute book.

Other corporate registers, such as for the directors and officers, will also be included. For more information, take a look here, here and here for what it means to be a director, officer and shareholder of an Ontario corporation.

With a SkyLaunch Membership, we will work with you to help ensure these registers are maintained and kept up-to-date.

In addition to the aforementioned personnel registers, OBCA corporations must also maintain a register of ownership interests in land. SkyLaunch's incorporation package will not initially include such a register because we believe specific legal advice from a lawyer should be sought regarding land transactions. For more information, take a look at SkyLaw's blog on this topic.

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