Since June 2019, corporations established under the Canada Business Corporations Act and meet certain requirements must maintain a register of individuals with significant control (ISC).
Similar to the recently enacted Corporate Transparency Act's Beneficial Ownership Information Reporting regulation in the U.S., the ISC register aims to provide transparency into ownership and control of businesses in Canada while aiding law enforcement to expose criminal activities such as tax evasion and money laundering.
Who is considered an ISC?
Canadian law defines an ISC as an individual who owns or controls a private corporation that is incorporated under the Canada Business Corporations Act. Specifically, that individual:
- Owns, controls, or directs 25% or more of shares* individually or jointly with one or more individuals.
- Has control in fact over the corporation without owning any shares
- Meets a combination of any of these factors.
*25% or more of the shares that have the right to vote at shareholder meetings (also known as voting shares).
*25% or more of all the shares based on the fair market value of the shares.
If a corporation is unable to identify an ISC, the following information must be included in the ISC register:
- A statement confirming the corporation has been unable to identify any ISCs.
- Or that based on the set criteria, there are no ISCs over the corporation.
- A summary of the steps the corporation took to attempt to identify these individuals.
Exemptions
The following corporations are excluded from maintaining an ISC register:
- A reporting issuer under provincial securities law or a wholly owned subsidiary of such a corporation.
- A public corporation that trades its securities on a stock exchange designated by the Income Tax Act or a wholly owned subsidiary of such a corporation.
- A crown corporation or a wholly owned subsidiary of such a corporation.
Which provinces or territories have adopted ISC reporting requirements?
Below is a table listing the status of requirements relating to ISC reporting for each Canadian province and territory.
