As of June 13, new rules under the Canada Business Corporations Act will require that a register of individuals with "significant control" of a corp be maintained. Are you ready?


Bill C-86, the Second 2018 Budget Bill, which received Royal Assent on December 13, 2018, included changes to the Canada Business Corporations Act which may begin to affect these discussions. The Bill sets out a criterion for identifying individuals who have significant control over a corporation. It also sets out a requirement for corporations that meet certain criteria to keep a register of these individuals

For these purposes an individual may have significant control over a corporation if the individual has any of the following interests or rights, or any combination of them, in respect of a significant number of shares (more than 25% of voting rights or value) of the corporation:

  • the individual is the registered holder;

  • the individual is the beneficial owner; or

  •  the individual has direct or indirect control or direction over.

A group of two or more individuals whose joint holdings meet these criteria are considered to be an individual with significant control.

Also, an individual who has any direct or indirect influence that, if exercised, would result in control in fact of the corporation would be considered to have significant control. The legislation also provides that other prescribed situations may result in an individual having significant control.

Directorsshareholders and creditors of the corporation may, on application, be able to access the register.

Failure to comply with the requirements to maintain a registry may be subject to a $5,000 penalty. A director or corporation who “knowingly authorizes, permits or acquiesces” in not fulfilling this requirement or who provides false or misleading information in the registry may be subject to a fine of up to $200,000 and/or imprisonment of up to six months.

This requirement will come into force six months after Royal Assent, that is June 13, 2019.

For further information see Video Tax News Monthly Tax Update Newsletter, Issue No. 449.