Bill Requiring Federally Registered Companies to Disclose Ownership Structure Approved by Committee

Bill Requiring Federally Registered Companies to Disclose Ownership Structure Approved by Committee
The Canadian flag flies near the Peace Tower on Parliament Hill in Ottawa in a file photo. Adrian Wyld/The Canadian Press
Isaac Teo
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The Commons industry committee has approved a cabinet bill that will mandate federally registered corporations to disclose their ownership structure in an effort to combat money laundering and terrorist financing.

Bill C-42, an Act to Amend the Canada Business Corporations Act, would require federally registered companies to make available the names and addresses of individuals holding “significant control” of the companies in a public registry annually.
“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?” said Mark Schaan, senior assistant deputy industry minister, when he testified before the committee on June 12, as first reported by Blacklock’s Reporter.

“If that person is exercising greater than 25 percent of control, that is whose name appears.”

The committee, which completed its study on the bill’s clauses, presented its amendments to the House of Commons on June 14.

Several witnesses who appeared before the committee on June 12 said the bill is not without its limitations.

“This is a federal initiative that will only apply to a small percentage of companies in Canada given that most are incorporated under provincial laws,” said RCMP Superintendent Denis Beaudoin.

“To avoid leaving vulnerabilities that can be exploited by illicit actors, beneficial ownership transparency must be addressed across Canada as a whole to be useful. Otherwise criminals will simply use a province that doesn’t have a registry.”

‘Weakness Link’

According to official estimates, there are a total of 458,790 companies federally registered among the 2,951,629 businesses nationwide, as reviewed by Blacklock’s Reporter.

Justin Brown, senior director with the Department of Finance, said federal incorporation accounts for “less than 15 percent of all incorporations” in the country although “incorporation is a shared jurisdiction in Canada.”

“This bill would represent an enormous step by implementing a federal registry for corporations. However there remain 85 percent of corporations that would not be covered,” Brown told the committee.

Conservative MP Brad Vis agreed with the witnesses.

“One of the big challenges I think everyone around this table has recognized is the undeniable fact that most corporations in Canada are not registered with the federal government,” he said.

“When we break it down with significant thresholds, the number of companies that would be included in this is actually quite small.”

James Cohen, executive director of Transparency International Canada, an anti-corruption organization, said Bill C-42 was a first step to fighting corporate crimes.

“The crooks are going to go where the weakest link is,” he said. “This is why this has to be a harmonized approach. It’s not just a federal approach.”