The British Columbia government has extended the deadline for British Columbia private companies to create transparency registers from May 1 to October 1, 2020. This comes as welcome news to many B.C. businesses which are focusing their current efforts on coping with the COVID-19 crisis. In addition, new limited exemptions from the transparency register requirement have recently been enacted.
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In keeping with recent international efforts to increase beneficial owner transparency, the Business Corporations Act (British Columbia) was amended in 2019 to require that each British Columbia private company create and maintain a transparency register of "significant individuals" who own or control a significant number of its shares or who control the selection of a majority of its directors. These amendments will now come into force on October 1, 2020.
The amendments require British Columbia private companies to search behind registered shareholders to determine which individuals ultimately have true control of the company, whether or not those individuals are currently listed on the share register. The transparency register will not be available to the general public, however the company's directors, and certain law enforcement officials and regulators, will have access to it.
Exemptions from the Transparency Register Requirements
Public companies[1], as well as companies formed outside of British Columbia but only registered to carry on business in British Columbia, have been exempt from the requirement to keep the transparency register since the introduction of the requirement.
To address concerns about the broad sweep of companies affected by the transparency register requirements, additional exemptions have now been implemented for certain British Columbia companies that would otherwise have had to create a transparency register, and the disclosure requirement has been eliminated for certain beneficial owners within the chain of control.
Notable among these recent changes, British Columbia wholly owned subsidiaries of public companies are now exempt from the requirement to keep a transparency register. There is also a new exemption from disclosure if there is a "special intermediary"[2] in the chain of ownership of a British Columbia company. That means, with minor exceptions, that no significant individual needs to be disclosed in relation to any special intermediary that is a direct or indirect owner of, or has control of, a British Columbia company.
How to Learn More
For more information on the transparency register requirements, including who will qualify as a "significant individual" and what information about significant individuals must be disclosed in a transparency register, please see the articles: The shareholder transparency track: The British Columbia Business Corporations Act is on it, and British Columbia shareholder transparency: 2020.
What's Next?
Despite the extended deadline, British Columbia private companies should act as soon as possible to make the necessary inquiries to identify significant individuals and obtain the information about them required for the transparency register. In some cases the analysis of who must be identified on the transparency register can be complex. There are special rules for trusts, partnerships and other relationships, and for determining if disclosure is not required because of a "special intermediary" in the chain of ownership.
If your company is affected by the new transparency register requirements, Gowling WLG can help you create the transparency register so that you are in compliance by October 1, 2020. We can also help you implement procedures to update the transparency register to ensure that your company remains in compliance on an ongoing basis.
[1] Public companies include reporting issuers and companies listed on certain designated stock exchanges.
[2] Special intermediaries include, among other entities, reporting issuers, companies listed on certain designated stock exchanges, and certain credit unions, insurance companies, trust companies, and corporations owned or controlled by various governmental authorities.