New Reporting Requirements for Ontario Corporations

On January 1, 2023, updates to the Business Corporations Act (Ontario) (OBCA) will be coming into force, requiring all private Ontario corporations to maintain a register of all the individuals holding “significant control”. This is a well anticipated change to the OBCA as federally incorporated private entities have been required to maintain this register since 2019. Not only do these requirements come as an effort to increase corporate transparency, but they also serve to aid regulators determine where the ultimate control of a corporation lies.

Who has “significant control” in my corporation?

The updated requirements set out three circumstances where someone will be deemed to hold “significant control”

1. Control through shareholding: regardless of the number of shares held, any individual who is the registered or beneficial owner of 25% or more of the voting rights, or fair market value shares of the corporation is considered to hold “significant control”
   • Two or more individuals may be deemed to qualify together as one holder of “significant control”. This applies where these individuals either jointly or as “related persons” (as defined by the OBCA) hold 25% or more the voting rights, or the fair market value shares of the corporation
2. Control in fact: any individual who has direct or indirect ability to affect change if their influence is exercised is deemed to have “significant control” of the corporation.
3. Control through prescribed circumstances: through a specified set of circumstances, an individual can be deemed to hold “significant control” However, these circumstances are yet to be published.

What should I include in the register?

Every private Ontario corporation will be required to report the details below for every individual with “significant control”:

1. Name, date of birth and address;
2. Jurisdiction of residence for tax purposes;
3. The day on which they became (and ceased to become) an individual of “significant control”;
4. Description of how they are an individual with “significant control”;
5. Any other prescribed information (to be set out at a later date); and
6. A description of the steps taken to identify this individual as one with “significant control”.

This register is required to be updated on an annual basis, or within 15 days of any changes to the above information.

Will the register be accessible by the public?

It is an understandable concern that individuals deemed to hold “significant control” would not want their personal information to be available to the public. As it stands, the register will not be accessible by public. However, under the OBCA, certain circumstances may give power to law enforcement (i.e. as part of an investigations), tax officials, and financial regulators to access this register.

What happens if I don’t maintain this register?

Under the OBCA, failure to comply with the requirements coming into force on January 1st 2023 will be subject to a fine of not more than $200,000 or imprisonment of not more than 6 months, or both.

If you have any questions about how these changes apply to your Ontario corporation, or if you’re looking for assistance in maintaining the register, please contact us