EU’s judicial consideration of corporate transparency sides with protecting privacy: Implications for BC’s LOTA

Many jurisdictions are enacting legislation requiring public disclosure of the identity of beneficial owners of real property and maintaining that information in publicly accessible registries. In British Columbia, as of November 30, 2022, beneficial and other indirect owners of numerous categories of interests in land in British Columbia had to complete filings pursuant to the Land Owner Transparency Act in a provincial government registry that include the disclosure of personal information. 

In the United Kingdom, the UK Companies House maintains the “Register of Overseas Entities” and requires overseas entities that own land or property in the UK to declare their beneficial owners and/or managing directors. The registry recently came into effect and there is a January 31, 2023, deadline for such entities who already own or lease land or property in the UK to complete their filings.  

The EU has established the Anti-Money Laundering Directives (AML Directives), which are designed to ensure member states provide public access to information contained in beneficial ownership registries. There are legitimate concerns whether there are sufficient safeguards in these regulatory regimes for protecting personal data against abuse, and in November 2022, the Court of Justice of the European Union (CJEU) issued a preliminary ruling regarding a challenge to the EU AML Directives. 

CJEU decision

In its November 22, 2022, decision, the CJEU found invalid certain provisions of the AML Directives. The ruling concerned a Luxembourg national law adopted in 2019 in furtherance of the AML Directives that established a Register of Beneficial Ownership (RBO) that required personal information of beneficial owners of registered entities held in the RBO be entered and retained in the RBO, some of which information is accessible by the general public via the internet.

In rendering its decision, the CJEU found that the relevant disclosure requirements under the AML Directives constitute serious interference with the fundamental rights with respect to private life and protection of personal data guaranteed by the Charter of Fundamental Rights of the European Union (the EU Charter). While acknowledging public access to information of beneficial owners is suitable for attaining general interest objectives regarding the AML Directives, the CJEU decided that making the information available in a public database does not provide sufficient safeguards for protecting personal data. The information contained in the public register is potentially accessible by an unlimited number of persons, and once the information is obtained, it may be retained and further disseminated.

The European Commission and the Luxembourg authorities have indicated their willingness to work with the CJEU’s ruling. It remains to be seen whether or how the infringing legislation will be tailored to address privacy and security concerns. For now, Luxembourg and a number of other European jurisdictions have suspended or closed their online registries. 

Land Owner Transparency Act (British Columbia)

In British Columbia, the Land Owner Transparency Act (LOTA) requires the disclosure of personal information for beneficial and other indirect owners of numerous categories of interests in land in BC. The disclosed information is held in a registry (LOTR) developed and operated by the BC Land Title and Survey Authority, which is a provincial registry of land interests, rather than a corporate registry. Identifying information of disclosable persons held in LOTR is partially accessible by the public although LOTA, like the AML Directives, permits applications to omit personal information from public disclosure in limited circumstances. 

In spite of certain similarities between the LOTA and the AML Directives regarding public access to personal information, it remains a question whether a court in BC would find that LOTA infringes the relevant sections of the Canadian Charter of Rights and Freedoms (the Charter) and, if so, whether any such infringement would be found to be justified. 

Unlike the EU Charter, the Canadian Charter does not explicitly recognize protection of personal data as a fundamental right, although Canadian courts have recognized that privacy is a quasi-constitutional right that should not be interfered with lightly. In addition, BC’s privacy laws – notably the Freedom of Information and Protection of Privacy Act, which applies to government and the broader public sector – specifically authorize the collection, use and disclosure of personal information where such collection, use or disclosure is expressly authorized under an act.  

As of this update, we are not aware of any BC judicial or regulatory decision that has considered the privacy implications of LOTA. Further, the Information and Privacy Commissioner for BC whose mandate is to, among other things, comment to government on legislation that has implications for privacy protection and the unreasonable invasion of individual privacy, has not publicly commented on or otherwise taken issue with LOTA.

The separate developments in the EU (with the CJEU’s decision and EU legislators reconsidering their approach to such transparency legislation) and in the UK and Canada (with the introduction and implementation of new bills and enactments) raise important questions for the reconciliation of corporate and real estate transparency and the need for reasonable protection of personal data and information. Given such developments, it remains to be seen how international standards and best practices for transparency and public access to personal information will evolve over time.