What is the Transparency Registry and what is my company required to do?
What is a transparency registry?
Effective October 1, 2020, any private company incorporated in the province of British Columbia will be required to maintain, as part of its records, a registry of all “significant individuals” related to that company. The registry will be known as the company’s “transparency registry”. This is a new requirement for every company.
The creation and maintenance of a transparency registry will involve the analysis of the ownership/control structure of a company held by natural persons (i.e. not by holding companies, family trusts, subsidiaries, etc.) and recording identifying information about those people in the company’s transparency registry.
Non-compliance constitutes an offence subject to a maximum fine of $50,000 for individuals and $100,000 for other persons.
Who Are “significant individuals”?
A person will be considered a significant individual and their identity disclosed in a company’s transparency registry in two different ways: 1) through the ownership of shares (owned either directly or indirectly) or their ability to control a company’s board of directors (either directly or indirectly).
- Owns at least 25% of the shares
Any person who directly or indirectly owns or controls 25% (or more) of either the total shares or the voting shares will be listed in a company’s transparency registry.
There are a variety of scenarios where a person’s identity can be disclosed in a transparency registry where they would not normally expect to appear in a company’s records. These scenarios include where a person indirectly owns or controls the required amount of shares through a holding company or other intermediary (such as a family trust). Disclosure in a company’s transparency registry can also result where two or more family members – who individually hold less than the required proportion of shares but together own more than the minimum amount of shares – are presumed to act in concert with one another. In that scenario, both family members would be listed in the company’s transparency registry.
Note that only natural persons (i.e. not companies or other legally created entities) are listed in transparency registries. This means that if shares of a company are owned by another private company, ownership and control will then be tracked back through the owning company to determine if any individuals qualify as significant individuals.
2. Controls the Board of Directors
A person can also qualify as a significant individual and be disclosed on a company’s transparency registry if they have significant direct or indirect control over a company’s board of directors.
Control over a company’s board involves having influence or power to elect, appoint or remove one or more of a company’s directors or having the ability to exercise direct and significant influence over an individual who has the right or indirect control to elect, appoint or remove one or more directors of a company. Any person who has such control must be listed in a company’s transparency registry.
How is the transparency registry created and maintained?
If a person is listed on a company’s transparency registry, the company must ensure that the registry contains the person’s full name, birthdate, last known address, citizenship, the date on which they were listed in (or removed from) the transparency registry and the reason why they were listed (or removed).
Starting October 1, 2020, companies must take reasonable steps to ensure that their transparency registries are accurate, complete and up-to-date on an annual basis. Whenever a person is added or removed from a transparency registry, a company must update its transparency registry to reflect the change within 30 days of the change being made and notify any individual who is added or removed within 10 days after making the change.
In cases where a person is removed from a transparency registry, a company must retain that person’s information for six years and then destroy those records within one year.
If a person is listed on a company’s transparency registry, the company must ensure that the registry contains the person’s full name, birthdate, last known address, citizenship, the date on which they were listed in the transparency registry and why they are listed.
Who can access the transparency registry?
As of October 1, 2020, a copy of your company’s transparency register must be kept at the company’s records office and can only accessed the company’s directors, police agencies (including the RCMP), certain tax authorities and regulators. When requested, the company’s records office must provide the requesting director or inspecting officer with access to, or copies of the transparency register.
Are there penalties for non-compliance?
It will be an offence for a private BC company to fail to take reasonable steps to comply with the obligations related to the creation, maintenance and production of a company’s transparency registry. Fines for non-compliance may be up to $50,000 for individuals and up to $100,000 for companies.
Private companies in BC and their directors should use the time remaining before October 1, 2020 to gather the information required to prepare their transparency registers and to analyze more complex ownership and control structures. Once transparency register requirements come into force, there will be no additional transitional period to put them in place.
The creation of your company’s registry may be quiet complex. At Linley Welwood, our team of corporate lawyers and staff have already started to assist companies with the creation of their transparency registries. If you would like to know more about the services we can provide to your company or if you’re worried about whether your company’s transparency registry and be completed prior to the October 1st deadline, please contract our office right away by calling 604-850-6640.