Have you incorporated a company under Saskatchewan’s Business Corporations Act? If so, you should be aware of new and upcoming corporate law rules requiring the collection and maintenance of certain information for an “individual with significant control” over your corporation.
I say “upcoming” because as of late July, the new rules have been enacted but were not yet in force in Saskatchewan.
Taking a step back, the genesis behind these new rules is pretty far removed for our law-abiding Saskatchewan farmers. That is, the new rules are designed to provide greater transparency over who owns and controls Saskatchewan businesses with the idea that this will help law enforcement agencies expose activities such as money laundering, tax evasion and financing of terrorist activities.
The federal government and the British Columbia and Manitoba provincial governments have already amended their respective Business Corporations Acts to include similar provisions with the objective to expose illegal activities. Unfortunately, illegal activities by some again results in more complexity for everyone.
Under these new rules, a corporation is required to maintain a register of all individuals with significant control over the corporation. An individual is an “individual with significant control” if that individual:
- Is the registered owner, beneficial owner or has direct or indirect control over a “significant number of shares” of the corporation.
- Has any direct or indirect influence that, if exercised, would result in factual control of the corporation.
- Meets any other prescribed circumstances.
A “significant number of shares” of a corporation means shares that carry 25 percent or more of the total voting rights attached to all of the voting shares of the corporation or shares that are equal to 25 percent or more of all the shares of the corporation, measured by fair market value.
The information to be included in the register of individuals with significant control includes:
- The name, date of birth and latest known address of each individual with significant control.
- The jurisdiction of residence for tax purposes of each individual with significant control.
- The day on which each individual became or ceased to be an individual with significant control.
- A description of how each individual is an individual with significant control, including, as applicable, a description of the individual’s interest and rights with respect to shares of the corporation.
- Any other prescribed information.
- A description of the reasonable steps taken by the corporation, at least once during each financial year of a corporation, to ensure that it has identified all individuals with significant control over the corporation and that the information in the register is accurate, complete and up to date.
What does this mean on a more practical level? Your company will need to keep record of the additional information required for your company’s register of individuals with significant control. Everyone who has a corporation should start gathering that information and keep it current and up to date. Alternatively, if you have hired a lawyer for your corporation, your lawyer may be reaching out to you to collect this information.
Jessica Brockman is a lawyer with Stevenson Hood Thornton Beaubier LLP in Saskatoon. Contact her at email@example.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice and does not replace independent legal or tax advice.