New Reporting Requirements for Individuals with Significant Control in Federal Businesses
With the anticipated enactment of Bill C-42, businesses incorporated under the Canada Business Corporations Act (CBCA) can expect significant changes to the way they disclose information on Individuals with Significant Control (ISC). These changes are expected to come into effect on January 22, 2024, and they represent a significant stride towards increased transparency in corporate governance. In this article, we will delve into the key aspects of these new reporting requirements and their implications for businesses and individuals.
Who is an ISC?
An ISC is defined as someone who owns or controls a corporation. This individual (i) owns, controls, or directs 25% or more of the voting shares of the business individually, jointly or in concert with one or more individuals, (ii) has control in fact over the corporation without owning any shares, or (iii) meets a combination of any of these factors.
What to File?
Under the proposed regulations, businesses incorporated under the CBCA will be required to file the following information about their ISCs with Corporations Canada:
- The full legal name of the ISC
- The date the individual became an ISC
- The date they ceased to be an ISC, as applicable
- A description of the ISC’s significant control, detailing ownership of specific percentage of shares
- The address for service, if provided
- The residential address if no address for service is provided
It is important to note that while some of this information will be made public, key details such as the ISC’s date of birth, citizenship, residential address, and tax residency will remain confidential. Individuals who are concerned about the public disclosure of their ISC information can request an exemption from the Director of Corporations Canada to prevent the release of ISC-related information to the public. The Director may grant this request if:
- The Director reasonably believes that making it available presents or would present a serious threat to the safety of the individual; or
- The Director is satisfied that
- the individual is incapable;
- the information is to be kept confidential under subsection 27(8) of the Conflict of Interest Act or a similar provision of an Act of the legislature of a province; or
- prescribed circumstances apply to the individual (as may be specified by the Director).
It is important to note that if the directors and officers of a corporation provide false or misleading information in the ISC register, they may be held liable to a fine up to one million dollars or to imprisonment up to five years, or both.
When to File
Businesses are required to submit ISC information to Corporations Canada at various points in their corporate life cycle. This includes filing the ISC information during the incorporation process, when submitting an annual return, within 15 days of any changes made to their ISC register, within 30 days following an amalgamation, and after a continuance (import) to a federal jurisdiction. These mandatory filings ensure that Corporations Canada maintains an accurate and up-to-date record of those who exert significant influence within the business, promoting transparency and compliance with corporate regulations.
These proposed reporting requirements under the CBCA reflect a positive step toward greater transparency in corporate governance. While they necessitate additional effort from businesses, the benefits of enhanced accountability and public disclosure can lead to more trust and credibility for corporations. As Bill C-42 progresses through the legislative process, it will be interesting to see how these changes impact the corporate landscape in Canada. Stay tuned for more updates on this important development.
If you need support meeting your legislative obligations or preparing your ISC Register, or have queries about the proposed disclosure requirements, please contact us at firstname.lastname@example.org.
 Bill C-42, s. 1(1).
 Corporations Canada, “Individuals with significant control – File your information”. https://ised-isde.canada.ca/site/corporations-canada/en/individuals-significant-control-file-your-information
 Bill C-42, s. 21.303(3)
 Conflict of Interest Act (S.C. 2006, c. 9, s. 2)
 Bill C-42, s. 21.4(5)