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Canada’s corporate landscape in 2023: more provinces implement UBO requirements
Canada began introducing Ultimate Beneficial Owner (UBO) reporting requirements in 2019 with amendments to the Canada Business Corporations Act (“CBCA”) for federally registered corporations.
Changes were enacted to provide greater transparency over who owns and controls Canadian businesses, and help law enforcement agencies expose activities like money laundering and tax evasion.
Many provinces have mirrored the requirements of the CBCA with their own legislation, along with the criteria for an individual with significant control – the threshold for reporting a UBO is 25% ownership of shares or voting rights.
Provinces that had UBO requirements going into 2023:
- Federal Canadian Corporations
- British Columbia
- Manitoba
- New Brunswick
- Newfoundland
- Prince Edward Island
- Saskatchewan
The majority of these provinces have similar UBO requirements. This includes creating and maintaining an internal register of individuals with significant control over a corporation (an “ISC Register”). The ISC Register must be reviewed at least once during each financial year and updated within 15 days of becoming aware of any changes. These ISC Registers aren’t required to be filed with the corporate registry and only need to be disclosed to the authorities under certain circumstances.
So far this year a further four provinces have joined the above group.
Provinces that have implemented UBO requirements in 2023:
- Ontario (January)
- Quebec (March)
- Saskatchewan (March)
- Nova Scotia (April)
Out of the group above, Ontario, Saskatchewan and Nova Scotia have all recently implemented UBO requirements for companies incorporated in their province. These legislations are similar to the CBCA and don’t include a public beneficial ownership registry.
Meanwhile, the UBO requirements introduced in Quebec are unique. Corporations in Quebec must disclose the individuals or companies with significant control as part of their Annual Return filing. The information submitted to the corporate registry, including name, address and type of control exercised over a corporation, will be available to the public via a search of the corporate registry. Quebec has also made these requirements applicable for all companies who carry on business in the province, whether they are incorporated or registered extra-provincially in Quebec.
Alberta, Yukon, the Northwest Territories and Nunavut haven’t implemented any UBO legislation or made any announcements on their plans for a beneficial ownership registry.
Ambiguities in the law
Further guidance on UBO requirements is required as the existing legislations are vague in multiple areas. This includes further clarification on what steps should be taken by a corporation if it doesn’t have any individuals with significant control based on the existing criteria, and what steps should be taken annually to update an ISC Register.
Currently the CBCA and many provincial legislations state only that a corporation shall take reasonable steps to create and maintain its ISC Register. Quebec’s legislation goes a step further and states that corporations must go beyond reasonable steps and instead take all necessary means to identify their ultimate beneficiaries. British Columbia’s legislation states that in the event of a corporation being unable to identify any individual with significant control, they can instead maintain a blank ISC Register with a statement that there are no individuals who qualify as a UBO.
Amendments to existing legislation and future trends
In June 2022, the federal government announced proposed amendments to the CBCA that would require federal corporations to report their UBO information and for ISC Registers to be made publicly available. This amendment has not yet received royal assent. Similarly, in May 2023, British Columbia announced its plans to launch a public beneficial ownership registry by 2025. These proposed amendments represent a general trend across Canada towards enhanced reporting requirements and publicly accessible registries.
With a number of provinces implementing new UBO reporting requirements, the majority of corporations incorporated or registered in Canada now have to either maintain internally, or disclose publicly, their beneficial ownership information. These requirements will likely be expanded on in the coming years, with beneficial ownership information becoming more accessible to the public.
Jeffrey Sayers
Senior Legal Officer, Mercator by Citco, Citco (Canada) Inc.