Only around 10 percent of businesses in Canada are legally obliged to disclose ownership details to the federal government, says a Department of Industry briefing note. Ninety percent of companies are registered within their home province or territory and are not covered by the legislation.
The vast majority of Canadian businesses, therefore, are exempt from federal disclosure of ownership, and a proposed bill seeks to amend that, according to documents obtained by Blacklock’s Reporter.
“Approximately 87 percent of corporations are incorporated at the provincial and territorial levels,” said the May 10 briefing note Beneficial Ownership Information. “Strong collaboration and engagement with provincial and territorial governments are vital to establish a coordinated national strategy that prevents regulatory arbitrage and loopholes.”
Cabinet’s proposed Bill C-42, “An Act to Amend the Canada Business Corporations Act,” stipulates that federally registered companies be compelled on an annual basis to submit the names and addresses of individuals holding “significant control”—a minimum of 25 percent of shares—under threat of $1 million fines and five years imprisonment.
The information would be made publicly available and listed on a federal website beginning in 2025.
“What our bill asks for is, who is the human, the natural person at the very end of the chain who is actually exercising control?” Mark Schaan, senior assistant deputy industry minister, testified on June 12 at the Commons industry committee. “If that person is exercising greater than 25 percent of control, that is whose name appears.”
In its note, the department acknowledged that the registry is limited without input from the provinces.
“The government is working diligently to ensure the registry is scalable to allow access to data held by provinces and territories,” said the note. “Corporate law is a shared responsibility.”
Several provinces, including British Columbia, Saskatchewan, Manitoba, Quebec, Nova Scotia, and Prince Edward Island, have passed or proposed similar legislation.
Bill C-42 passed through the Commons on June 22 and is pending in the Senate.
“Incorporation is a shared jurisdiction in Canada and federal incorporation is less than 15 percent of all incorporations in Canada,” Justin Brown, senior director with the Department of Finance, earlier told the industry committee. “This bill would represent an enormous step by implementing a federal registry for corporations.”
The briefing note stated that a national registry would curb illegal activity and monitor offshore speculation.
“The Government of Canada is committed to protecting Canadians against money laundering and terrorist financing, deterring tax evasion and tax avoidance and making sure Canada remains an attractive place to conduct business,” it said.
Several countries have successfully implemented public registries, said Transparency International Canada in a March 22 submission to the Senate banking committee.
“These registries have become more urgent as transnational criminal networks and foreign state actors seek to exploit liberal democracies and hide dirty money,” it said. “Currently 108 countries have made commitments to publicly accessible registries.”
