Corporate Law

Author: Jennifer MacGregor-Greer

June 13, 2019, new provisions of the Canada Business Corporations Act (the “CBCA”) will come into effect that will require most private, federally incorporated corporations to maintain a register of individuals who have “significant control” over the corporation (known as a “RISC”).  This requirement is designed to provide transparency over who owns and controls a corporation, with a view to helping law enforcement agencies expose activities such as money laundering and tax evasion.

Significant Control Threshold

The RISC is different from the existing registers of shareholders and directors that are already maintained by CBCA corporations.  This new register must identify:

  • Individuals who are the registered or beneficial owners of, or have direct or indirect control or direction over:
  1. shares carrying 25% or more of the voting rights in the corporation; or
  2. 25% or more of the corporation’s shares, measured in terms of their fair market value; and
  • Individuals who have direct or indirect control or influence that, if exercised, would result in “control in fact” of the corporation.

Further, two or more individuals may each be considered an “individual with significant control” if they hold their interests or rights jointly or exercise control or direction jointly or in concert with one another.

In practice, this means that an individual may have “significant control” over the corporation, requiring that he or she be included on the RISC, even if the person holds no voting shares at all.  This may be the case, for instance, if an individual holds preferred (but non-voting) shares having significant value, or if an individual has the ability to direct the voting of shares of the corporation as a result of being at the top of a chain of corporate ownership.

As you can imagine, the ambiguity and scope of the new provisions mentioned above raises many questions for corporation owners and lawyers alike in terms application and compliance.  Corporations Canada has confirmed that it expects corporations determine the chain of ownership of its shareholders until it has identified all individuals with “significant control” or otherwise determined that there are not any such individuals with significant control over the corporation.

Information Required / Access

Information on the RISC must include the name, birth date, address and jurisdiction of tax residence of each individual having significant control, and the manner in which each individual has significant control over the corporation.

The RISC may be maintained at the corporation’s registered office, or at any other place in Canada designated by the corporation’s directors.  It must be reviewed and updated by the corporation at least annually, but must also be updated within 15 days after becoming aware of any information required to be disclosed.

The RISC not generally publicly available.  However, it may be requested by Corporations Canada at any time, and may be viewed by shareholders and creditors of the corporation, for certain limited purposes, upon application made in accordance with the CBCA.  The 2019 federal budget bill is expected to expand the list of persons having the right to inspect the RISC, including the CRA.

The Hammer

There are significant penalties associated with the failure to comply with the RISC requirements.  While the corporation itself is liable for a fine of up to $5,000 for failing to maintain the RISC or to provide investigative bodies with information they request under the CBCA, individuals associated with the corporation (directors, officers, shareholder and creditors) may be liable for a fine of up to $200,000 and/or imprisonment for up to six months for failing to provide accurate and complete information for the RISC or for participating in the corporation’s failure to maintain the RISC.


All private CBCA corporations need to be aware of these new requirements and implement a process in order to ensure ongoing compliance with these rules.   We will be working closely with our clients in this regard.

We also note that the Province of British Columbia is introducing a similar requirement for private, British Columbia incorporated companies.  However, the date on which the BC requirements will take effect has not yet been determined.

If you have any questions about these new disclosure requirements for federally incorporated corporations, or the upcoming changes applicable to British Columbia companies, please do not hesitate to contact any member of our Corporate/Commercial team.

This post is for informational purposes only and does not constitute legal advice or an opinion on any issue.