Chances are, if you own an interest in a corporation, you’re familiar with the importance of transparency. The Canada Business Corporations Act, RSC 1985, c C-44, has long imposed rigorous disclosure requirements for Canadian corporations regulated by the federal government to ensure transparency and accountability. Still, recent amendments to the Act have made disclosure requirements for Canadian corporations regulated by the federal government even more stringent.

In this blog post, we’ll cover frequently asked questions about federal corporation disclosure requirements for ISCs, including how the recent changes impact your existing disclosure requirements. 

Federal vs. Provincially-Regulated Corporations

Before covering federal corporation disclosure requirements, it’s important to clarify that corporations may be incorporated federally or provincially. As a result, different corporations may be subject to different requirements. For federally regulated corporations, the Canada Business Corporations Act, RSC 1985, c C-44 guides their operations, while provincially-regulated corporations are subject to Ontario’s Business Corporations Act, RSO 1990, c B. 16

Why are there different options for incorporating federally vs. provincially? The primary reason is jurisdiction. For example, if your corporation exclusively does business in Ontario, it makes the most sense to incorporate provincially. But if your corporation does business across Canada, you’ll likely choose to incorporate federally. 

For more information on the differences between federal and provincial corporations, read our blog post, Canada Corporation vs. Ontario Corporation: What’s the Difference?

Federal Corporation Disclosure Requirements for “ISCs”   

For the past few years, federally regulated corporations have been required to track details relating to all individuals with “significant control” in the corporation. These individuals with significant control are known as “ISCs.” 

Who is an “ISC”? 

ISCs are defined in the Canada Business Corporations Act, RSC 1985, c C-44, as one of the following: 

  • Individuals who own, control, or direct 25% or more shares (including beneficial owners) or 
  • Individuals who have direct or indirect influence over the corporation such that, if exercised, would result in control in fact of the corporation. 

Why Did the Government Amend the ISC Disclosure Requirements? 

By expanding on federally regulated corporate disclosure requirements, the federal government aims to increase transparency regarding the owners and controllers of Canadian corporations. These changes will also help law enforcement track and combat money laundering and tax evasion in the country.

What Information Must Be Disclosed Relating to ISCs? 

For some time, federally regulated corporations have been required to prepare and maintain a register of ISCs that provides the following information regarding each ISC: 

  • Name
  • Date of birth
  • Last known address
  • Jurisdiction of residence for tax purposes
  • The day the individual became or ceased to be an ISC
  • A description of how the individual qualifies as an ISC

With recent changes to the Canada Business Corporations Act, RSC 1985, c C-44 on January 22, 2024, however, federally regulated corporations must also provide the following: 

  • Citizenship
  • Residential address (instead of “last known address”) 
  • Address for service (if it has been provided to the corporation) 

Who is Exempt from the ISC Disclosure Requirements? 

Only some federally regulated corporations must create and maintain an ISC register. Notably, Crown corporations, public corporations that trade their securities on a stock exchange, and reporting issuers under provincial securities law (and wholly-owned subsidiaries of these corporations) are exempt from the ISC disclosure obligations. 

Where Does ISC Disclosure Information Go? 

Corporations must provide Corporations Canada with information regarding their ISCs on an annual basis (alongside their annual return) and maintain their own ISC registry. Additionally, corporations must provide Corporations Canada with updated ISC information within 15 days after they are made aware of a change of information. 

Can the Public Access Federal Corporation Disclosure Information for ISCs? 

Beyond requiring corporations to provide additional information regarding their ISCs, the recent changes to the Canada Business Corporations Act, RSC 1985, c C-44, require that certain information regarding ISCs be made available to the public. This requirement includes each ISC’s name, address for service (if provided to the corporation) or residential address (if an address for service has not been provided), and the day on which they became or ceased to be an ISC. 

If an ISC does not want the public to have access to this information, the new requirements allow them to apply to the Director for an exemption to keep their information private. To successfully obtain an exemption, the ISC must satisfy the Director that making their information available would prevent a serious threat to the ISC’s safety. Exemptions may also be granted where the ISC is incapable, the ISC’s information must be kept confidential under a legislative requirement, or other prescribed circumstances apply. 

When Must Corporations Update Their ISC Register? 

Federally regulated corporations must ensure that they are taking reasonable steps to identify all ISCs and ensure the information is – and remains – accurate and up-to-date. As a result, the Canada Business Corporations Act, RSC 1985, c C-44, requires corporations to audit their register at least once during the year or at the request of the Director. Additionally, if a corporation becomes aware of any discrepancies in their register, they must ensure the register is updated within 15 days. 

How Long Must a Corporation Retain Information on Its ISC Register? 

Corporations do not need to keep information regarding ISCs indefinitely. Rather, corporations must dispose of ISC personal information within one year after the sixth anniversary of the day that individual ceased to be an ISC. 

What Happens if a Corporation Does Not Comply With the Federal Disclosure Requirements for ISCs? 

If a federally regulated corporation fails to comply with their ISC disclosure obligations, they could face the following: 

  • Fines of up to $100,000; 
  • Fines of up to $1,000,000 and/or a prison term not exceeding 5 years for directors and officers who knowingly authorize, acquiesce or permit a corporation to fail to prepare and maintain their ISC register or otherwise meet disclosure obligations and
  • Corporate dissolution (where Corporations Canada determines this is an appropriate penalty). 

Therefore, federally regulated corporations must understand the federal disclosure requirements for ISCs and meet their disclosure obligations. If you have questions about ISC disclosure obligations or how recent changes to the Canada Business Corporations Act, RSC 1985, c C-44 impact those obligations, speak with an experienced business lawyer today. 

Contact Tierney Stauffer LLP’s Business Lawyers for Expert Guidance on Business Law Issues

At Tierney Stauffer LLP, our team provides comprehensive, forward-thinking, and practical advice to corporations of all sizes. From real estate to licensing and business succession, our lawyers support corporations at all stages with their goals. To speak with an experienced business lawyer about your corporate needs, call us at 1-888-799-8057 or contact us online today.   


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