Industry Minister Announces Plan to Launch Registry for Federally Incorporated Companies in Ottawa Next Year
Industry Minister François-Philippe Champagne announced that a new law will be implemented next year to establish a public registry that discloses the names of individuals who own a significant share of federal corporations.
The Senate banking committee has approved Bill C-42, also known as “An Act to Amend the Canada Business Corporations Act,” which is expected to become law before Christmas, as reported by Blacklock’s Reporter on October 23.
This bill, which passed unanimously in the House of Commons on June 22, mandates federally registered companies to provide the government with the names and addresses of shareholders who hold “significant control” of the corporation, specifically a minimum of 25 percent of shares.
According to Mr. Champagne, the purpose of this legislation is to prevent the misuse of Canadian corporations by individuals who evade taxes or engage in counterfeiting and organized crime. By implementing this registry, such individuals may be deterred from coming to Canada or using Canadian corporations.
Mr. Champagne expressed his satisfaction with the unanimous support the bill received in the House of Commons, highlighting its significance and seriousness.
Fines
Violating the proposed legislation may result in fines of up to $1 million and imprisonment for up to five years. The bill applies to any company incorporated under federal law, which amounts to an estimated 458,790 out of 2,951,629 businesses across Canada.
Justin Brown, senior director at Finance Canada, stated during a committee hearing on June 12 that federal incorporation constitutes less than 15 percent of all incorporations in Canada. He also noted that while the bill marks a significant step by establishing a federal registry for corporations, it still leaves out 85 percent of corporations.
Industry Canada, in a May 10 briefing note, indicated that the registry is planned to be online and searchable by keyword starting in 2025. However, Mr. Champagne informed the Senate banking committee that the registry could be operational as early as spring 2023.
When asked about the specific timeline for the system’s implementation, Mr. Champagne assured that the beginning of the year is the targeted timeframe and that the system will be ready.
Transparency International Canada, an advocacy group, emphasized the effectiveness of registries in other countries in a submission to the Senate banking committee in March. They highlighted that 108 countries have committed to publicly accessible registries, which have proven crucial in combating transnational criminal networks and foreign state actors seeking to exploit liberal democracies and conceal illicit funds.
