The Canadian government has implemented policies designed to improve corporate transparency. For the past four years, all federally mandated legal entities governed by the Canada Business Corporations Act (CBCA) have created beneficial ownership information (BOI) reports on all individuals with significant control (ISC).
Beginning in January 2024, the government amended those reporting requirements. Under the new mandate, all CBCA-governed corporate entities must file beneficial ownership information (BOI) reports with Corporations Canada to remain in compliance with the nation’s updated corporate transparency laws.
What is the beneficial ownership rule in Canada?
Beneficial owners are also known as ISCs in Canada. A shareholder becomes an ISC by owning, controlling, or directing at least 25 percent of shares in a corporate entity as an individual shareholder or through joint ownership with like-minded shareholders.
All corporate entities registered with the CBCA have had to maintain BOI records of ISCs for the past four years. Similar to efforts in the United States — which has enacted its own efforts to increase corporate transparency — Canadian regulators are using registered BOI data to improve oversight while investigating suspicious white-collar crimes.
How does the new law update BOI reporting requirements?
Under the direction of Industry Minister Francois-Philippe Champagne, the Canadian government has conducted a two-year audit of the CBCA. The goal was to make amendments that improved corporate transparency and would assist the government in cracking down on illegal corporate activities.
The culmination of those efforts resulted in the new BOI reporting requirements. CBCA-registered business entities have voluntarily maintained records of all ISCs. Under the new requirements, those records must be filed directly with Corporations Canada, which will make some of that information available to the public through online searches.
When must Canadian entities file ISC reports?
Corporations Canada has outlined three expectations for all CBCA-governed corporate entities. Those expectations, as reported by Canadian Lawyer Magazine, are as follows:
- Newly registered corporate entities must file ISC reports on the day of incorporation
- New reports must be submitted within 30 days of amalgamation with another corporation
- Updated reports must be provided within 15 days of any changes to beneficial ownership
Entities registered with the CBCA before January 1, 2024, will have until January 1, 2025, to file their ISC reports. Established entities have extra time, partly because many are multinational corporations with shareholders in multiple jurisdictions. Gathering, processing, and filing all that data will take time, and the federal government understands those challenges.
Minister Champagne argues that the new reporting requirements are in the country’s national interests. All submitted BOI data will be secured within an ISC database to, in the government’s words, “strengthen the safety and economic interests of Canadians.”
When will the new ISC database be operational?
While the reporting requirements are determined, it will take some time before the ISC database is fully operational. The government anticipates that the database will be fully operational over the next calendar year.
The federal government will partner with the provinces and territories to establish secure access to beneficial ownership information for all qualified Canadians. Quebec is the only province that requires registered entities to file secure ISC reports, while British Columbia will begin collecting beneficial ownership data in 2025.
How to prepare your ISC reports for Corporations Canada
The government has afforded Canadian entities time to gather information on their beneficial owners. But why run out the clock and risk scrambling to submit information at the last minute? Instead, your legal and compliance teams can get an early start on the reporting requirements by leveraging technology to streamline the data collection process.
Entity management software streamlines the process of filing and reporting entity management data, which includes information about shareholders and individuals with significant control. Platforms like MinuteBox are intuitive systems that use guided templates to help your legal and compliance teams build detailed minute book records, shareholder ledgers, and beneficial ownership reports.
The intuitive nature of the platform is invaluable to legal and compliance teams. It’s a modernized solution to entity management, enabling teams to complete minute book management in a fraction of the time. Say goodbye to traditional workflows and welcome the benefits of modern entity management.
Additionally, you can use the platform’s Corporate Transparency Register to follow all the reporting requirements of Corporations Canada. Simply use the platform’s guided widgets to build detailed shareholder ledgers. Once you’ve uploaded your list of shareholders, the platform will distinguish a comprehensive list of beneficial owners segmented from minority shareholders.
Once the data is in the platform, all the hard work to comply with Corporations Canada is over. All you need to do from here is wait for the appropriate filing deadline and provide your ISC reports directly to the federal government.
Prepare your legal entity for the next step of beneficial ownership reporting. Join the MinuteBox revolution today, and stay ahead of the game while maintaining compliance.
