The government of British Columbia is making changes to the Business Corporations Act that will require all private companies to create and maintain a transparency register. Private companies are generally companies that are not publicly traded and those that have fewer than 50 shareholders. The company, its directors and officers, and its shareholders all have legal responsibilities regarding the transparency register.
A company’s transparency register must list the company’s “significant individuals” and must contain prescribed personal information about the significant individuals. Transparency registers must be in place by May 1, 2020. A company commit an offence if it fails to keep its transparency register up to date. Directors and officers also commit an offence if they allow the company to commit an offence regarding the transparency register. The fines for non-compliance are up to $50,000 for individuals and $100,000 for other persons.
The definition of “significant individual” is lengthy, but in essence, it means any person who directly or indirectly:
- controls, is the registered owner of, or is the beneficial owner of:
- 25% of the company’s issued shares; or
- 25% of the company’s issued shares that carry rights to vote at general meetings; or
- can elect, appoint, or remove the majority of the company’s directors.
Additionally, if two or more individuals together can meet the above criteria, then those individuals are each a “significant person” if they are associates or if they have an agreement to exercise their rights together. An associate is:
- a person’s partner;
- a trust or estate in which the person has a substantial interest or for which a person serves as a trustee or similar role;
- a person’s spouse or child; and
- a person’s relative living in the same home as the person.
To stay on the good side of the law, companies need to:
- create a transparency register and keep it at their records office;
- take reasonable steps to maintain the transparency register;
- every year, send a letter to the company’s shareholders asking for the prescribed information or getting confirmation from the shareholders that the information has not changed; and
- within 10 days of adding an individual to the transparency register, send that individual a notice setting out this fact and any prescribed information.
This general information provides a high-level overview of the legislative changes and is not legal advice. Regulations may also affect what is required for the transparency changes. As of the writing of this article, not all of these requirements are in effect. If you have specific questions about your situation, then talk to your lawyer.
The legislative provisions effecting these changes is available online here:
More information about the changes can be found here: