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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
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Canada | Publication | January 5, 2024
Major changes regarding registers of individuals with significant control (ISC registers) under the Canada Business Corporations Act (CBCA) will take effect on January 22, 2024. Starting on that date:
The requirement to create and maintain a register of ISCs is not new – private CBCA corporations have been required to do so since June 2019. Public corporations and their wholly owned subsidiaries continue to be exempt from the requirement. However, when filing its annual return, an exempt CBCA corporation will have to confirm the exemption on which it is relying.
At least once during each financial year of the corporation and otherwise on the request of the Director, a CBCA corporation must take reasonable steps to ensure that all ISCs have been identified and the information in the ISC register is accurate, complete and up to date. Regulations under the CBCA provide that reasonable steps include sending a request for information to any current ISCs, other shareholders and any other person the corporation has reasonable grounds to believe may have relevant knowledge.
Since information on ISCs must now be filed at the same time as a CBCA corporation files its annual return, we recommend that the annual review be timed to correspond with the annual return filing obligation. An annual return must be filed within 60 days of a corporation’s anniversary date (the date on which the corporation was incorporated or otherwise came into existence under the CBCA), not its year end.
In addition, as of January 22, information on ISCs must be sent to the Director in the following circumstances:
The following information on ISCs will be made public on and after January 22, 2024, subject to the creation of a publicly available database:
Information on ISCs who are under the age of 18 will not be made publicly available. In addition, on application the Director may determine not to make certain information publicly available if the subject individual is incapable or making such information available would present a serious threat to the safety of the individual.
The Director may provide all or part of the information received on an ISC to any police force, Canada Revenue Agency and any provincial equivalents and the Financial Transactions and Reports Analysis Centre of Canada. The Director may also provide all the information received on ISCs to provincial government departments responsible for corporate law.
The following offences and penalties are prescribed under the CBCA in relation to ISC registers:
Offence | Party | Maximum Penalty |
---|---|---|
Failure to prepare, maintain, update, record or appropriately dispose of information. | Corporation | $5,000 |
Failure to deliver information to the Director. | Corporation |
$100,000 Refusal to issue certificate of existence Dissolution |
Failure to prepare and maintain information; failure to deliver information to the Director; failure to disclose to investigative bodies. | Director or officer of the corporation | $1 million, imprisonment for five years or both |
Recording or authorizing the recording of false or misleading information. | Director or officer of the corporation | $1 million, imprisonment for five years or both |
Providing or authorizing the provision of false or misleading information. | Director or officer of the corporation | $1 million, imprisonment for five years or both |
Failure to provide information, as a shareholder. | Shareholder | $1 million, imprisonment for five years or both |
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