Beneficial ownership, corporate transparency and other updates affecting Newfoundland and Labrador corporations
Sarah Byrne and Tauna Staniland, QC
On November 16, 2021, the Government of Newfoundland and Labrador proclaimed into force Bill 24, which amends the Corporations Act, RSNL 1990, c C-36 (the “Act”). The amendments remove the residency requirements for directors and increase the transparency of beneficial ownership of corporations by placing additional record keeping requirements upon privately held Newfoundland and Labrador corporations.
With respect to the amendments to increase transparency of beneficial ownership, all corporations formed under the Act, aside from public corporations, are now required to maintain a register of individuals with significant control (“ISC Register”) which must be updated at least annually.
An “individual with significant control” over a corporation includes individuals who:
- directly or indirectly hold or control a significant number of shares; or
- have direct or indirect control or direction over a significant number of shares of the corporation, that, if exercised, would result in control in fact of the corporation.
Under the Act, a “significant number of shares” means (1) shares that carry 25% or more of the voting rights attached to all of the corporation’s outstanding voting shares; or (2) shares that represent 25% or more of all of the corporation’s outstanding shares as measured by fair market value.
The register must contain the following information about every individual with significant control:
- full name, date of birth and last known address;
- the jurisdiction of residence for tax purposes;
- the day they became, or ceased to be, an individual with significant control;
- a description of how each individual has significant control over the corporation;
- a description of each step taken to ensure the information is accurate; and
- any other prescribed information.
At least once during each financial year, a corporation must take reasonable steps to ensure that it has identified all individuals with significant control, and ensure that the information in the register is accurate, complete and up to date.
Non-compliance can result in fines of up to $200,000, imprisonment up to six months, or both, for directors, officers or shareholders. Corporations may be fined up to $5,000 for failing to maintain a register or for failing to comply with a request for information from an investigative body.
If you would like our assistance in complying with these legislative changes and preparing your ISC Register, or if you have any questions about the new disclosure requirements, please contact us at firstname.lastname@example.org. If you do not respond to this communication we will assume that you are handling compliance internally.
This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact a member of our Corporate Formation/Reorganization group.
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