In the world of corporate governance, transparency, and accountability are crucial. The new requirement for CBCA businesses to file information on individuals with significant control (ISC) marks a significant step towards increased transparency and accountability in the corporate sector.
Effective from January 22, 2024, federal businesses incorporated under the CBCA will be mandated to disclose and document ISC information.
By documenting ISC information, corporations can help prevent illicit activities and ensure that their operations align with regulatory standards. This regulatory change, coupled with potential amendments under Bill C-42, highlights the commitment of Corporations Canada to create a more transparent and responsible business environment.
Individuals with significant control:
Individuals with Significant Control are those who possess substantial influence or control over a corporation. They may own a significant number of shares, possess decision-making power, or have the ability to exercise control over the corporation’s operations or financial affairs. Identifying and documenting ISC is crucial for promoting transparency, preventing illicit activities like money laundering and tax evasion, and ensuring corporate accountability.
Table of Contents:
- Individuals with significant control
- What are the purposes of ISC?
- Who can be an ISC
- The ISC register.
- Information to be filed.
- Who needs to file the ISC information:
- When you need to file ISC
- How to file ISC Information:
- Filing ISC Information Using RegiCorp
- What happens if a corporation does not file its ISC information with Corporations Canada?
- What to do if there are no ISCs
- Who is excluded from creating and maintaining an ISC register
- Who can access an ISC register?
What are the purposes of ISC?
Since June 2019, the Canada Business Corporations Act has required most corporations to keep a list of people who have significant control (ISC) over the company. This list makes it clearer who owns and runs Canadian businesses. It helps the police find and stop crimes like money laundering and tax evasion, which are big problems worldwide. The main goal of this ISC rule is to make businesses more open and honest and to help fight these global issues.
Who can be Individuals with Significant Control (ISC)?
Individuals with Significant Control (ISC) are typically those who:
- Own or control 25% or more of a corporation’s shares by vote or value.
- Have significant influence over the corporation without necessarily owning shares.
What is ISC register?
The ISC register is a mandatory document for corporations, which includes:
Identification of ISCs: Lists individuals who either directly or indirectly own more than 25% of the corporation’s shares or have significant influence over the corporation’s decisions.
Personal Details: Provides personal information of ISCs, such as names and addresses.
Share Ownership Details: Details the nature and extent of the share ownership or control each ISC has in the corporation.
Date of ISC Status: Records the date when an individual became or ceased to be an ISC.
Updating Information: Requires regular updates to reflect any changes in the significant control of the corporation.
This register helps in increasing corporate transparency and aids in preventing financial crimes.
ISC Information to be filed:
There are two types of information needs to file with corporation Canada:-
- Information that will be made public.
- Information that will not be public.
Corporations Canada mandates the collection of specific information on individuals with significant control, including:
Full name and contact information: The complete legal name, address, and contact details of the ISC.
Nature of control: A detailed explanation of the nature and extent of control exerted by the ISC.
Date of birth and nationality: Personal information required for verification purposes.
Relationship to the corporation: The relationship between the ISC and the corporation, whether through share ownership, employment, or other connections.
Date the individual became an ISC and ceased to be an ISC: The date when the individual became the ISC and if ceased, the date of cease.
Address for service: if address of service is provided, If not provided the address of service residential address will be made public.
Date of Birth of an ISC: Birth date of an ISC never be public
Country of Citizenship: The country of an ISC will not be made as public record.
Residential Address: Residential Address of ISCs never be public if an Address for service is provided. Otherwise, Residential address will be made public automatically.
Who needs to file the ISC information:
Starting January 22, 2024, corporations registered under the Canada Business Corporations Act (CBCA) must file information about their Individuals with Significant Control (ISC) to Corporations Canada.
Individuals in key management positions within these corporations are usually responsible for ensuring the ISC information is collected and filed accurately. They also need to keep a copy of this ISC information with their other company records.
Only a few CBCA corporations are exempt from this requirement. However, even these exempt corporations must file a document confirming that they are excluded from this obligation.
When you need to file ISC:
Specific times or circumstances under which corporations are required to submit information about their Individuals with Significant Control (ISC). This typically includes:
Annual Requirement: Corporations usually have to file ISC information on an annual basis. Specially, at the same time as filing your annual return.
Upon any Changes: If there are changes in the ISC details (like a change in the individuals with significant control or their level of control), corporations need to update and file this information within 15 days of recording the change in their ISC register.
On Formation of the Corporation: When a new corporation is incorporated under the CBCA, it must file initial ISC information.
Amalgamation, and Continuance: You must file your ISC information within 30 days of the date on Certificate of Amalgamation or on the Certificate of Continuance
As Requested by Regulatory Authorities: Sometimes, regulatory bodies may request updated ISC information, which corporations must provide within a specified timeframe.
How to file ISC Information:
Filing ISC (Individuals with Significant Control) information involves a specific process, which can be generally summarized as follows:
General Process for Filing ISC Information:
Collecting Information: Gather details of all individuals with significant control over the corporation. This includes names, addresses, and the nature of their control (like share ownership percentage).
Completing the Required Forms: Fill out the forms or documents required by the regulatory body, ensuring all ISC information is accurate and up-to-date.
Submission: Submit the completed forms along with any required documentation to the appropriate regulatory authority, which in Canada is typically Corporations Canada.
Record Keeping: Keep a copy of the submitted information in the corporation’s records and update it as changes occur.
Filing ISC Information Using RegiCorp:
RegiCorp is You one-stop place for all your corporation needs. As an online platform our all services are online. You can file your ISC information easily by using RegiCorp Website form and get your copy in email in less than 1 hour. The process to file ISC information as below:
Visit our website: First visit our website and go to “Filing ”menu and click “ISC Information Filing” from drop down that is specifically designed for ISC filings.
Enter ISC Details: Input the information of each ISC, including personal details and the nature of their control. RegiCorp may have fields and prompts to guide you through this process.
Review and Confirm: Double-check all entered information for accuracy. RegiCorp’s Agent will also check the information after your submission.
Submit: Once all information is confirmed, submit the form with payment.
Receive Confirmation: After submission, you should receive a confirmation from RegiCorp, which you can save for your records.
Automatic Record Updating: RegiCorp may offer features to automatically update your digital records with the filed information.
Using a platform like RegiCorp simplifies and streamlines the process, making it more efficient and reducing the likelihood of errors. It’s important to note that the specific steps and features may vary depending on the actual system used for filing.
What happens if a corporation does not file its ISC information with Corporations Canada?
If a corporation doesn’t file its ISC information with Corporations Canada, it could face:
- Refusal of a Certificate of Compliance: The corporation might be denied this important document.
- Risk of Administrative Dissolution:
- If not filed upon incorporation.
- If not filed within 30 days after amalgamation or continuance.
- Dissolution for Not Filing with Annual Return: The corporation could be dissolved for failing to include ISC information in its annual return.
- Criminal Penalties: There’s a risk of being charged with an offence, with fines up to $100,000.
What to do if there are no ISCs:
Actually, all corporations have ISCs and can identify them. Like if you are the only one owner that means you are the only ISC in this corporation. But in a small number of company can be found in this unusual situation. If a corporation finds it has no ISCs or can’t identify any, they should:
- Recognize the Situation: Acknowledge that:
They have no ISCs (e.g., all individuals own less than 25% of shares).
They can’t identify any ISCs (e.g., due to insufficient information).
- Document in ISC Register: Include in the register:
- A statement confirming that no ISCs are identified, or they can’t be identified.
- A summary of efforts made to try and identify these individuals.
Who is excluded from creating and maintaining an ISC register:
Certain corporations are not required to create and maintain an ISC register. These exemptions are because their ISC information is already accessible through other legal channels or they are government-owned. The excluded corporations are:
- Reporting Issuers under Provincial Securities Law: Corporations that are reporting issuers, as defined by provincial securities laws, and their wholly-owned subsidiaries.
- Public Corporations Listed on Designated Stock Exchanges: Corporations whose securities are traded on stock exchanges specified by the Income Tax Act, and their wholly-owned subsidiaries.
- Crown Corporations: Corporations that are Crown corporations, which are government-owned entities, and their wholly-owned subsidiaries.
Who can access an ISC register:
Access to an ISC (Individuals with Significant Control) register is typically limited to specific groups for privacy and security reasons. The parties who can access it usually include:
Corporate Directors: Members of the corporation’s board of directors have full access to the ISC register.
Certain Officers: Designated officers within the corporation, who are responsible for managing the company’s records, may also have access.
Shareholders and Creditors: Under certain conditions, shareholders and creditors of the corporation can request and be granted access to the register.
Regulatory Bodies: Government agencies and regulatory authorities can access the ISC register for compliance checks and investigations.
It’s important to note that access is governed by specific rules and regulations, and those seeking access may need to meet certain criteria or follow specific procedures.
Your bank may also ask you for ISCs information about who controls your corporation. In this case, simply show them your ISC register as proof of who owns and controls your business.
FAQs on Individual with Significant Control (ISC)
What is an Individual with Significant Control (ISC)?
An Individual with Significant Control is someone who owns or controls 25% or more of the shares or voting rights in a corporation, or has significant influence over the corporation without owning shares directly.
Why are corporations required to maintain an ISC register?
Corporations are required to maintain an ISC register to increase transparency in corporate ownership and control, helping to prevent financial crimes like money laundering and tax evasion.
Who can access the ISC register of a corporation?
Access to the ISC register is typically limited to the corporation’s directors, certain officers, shareholders and creditors under specific conditions, and regulatory bodies for compliance purposes.
Are all corporations required to create an ISC register?
Most corporations are required to create and maintain an ISC register, but there are exceptions, such as reporting issuers under provincial securities law, public corporations listed on designated stock exchanges, and Crown corporations.
What happens if a corporation does not comply with ISC regulations?
Non-compliance with ISC regulations can result in penalties, including fines, administrative actions like dissolution of the corporation, and potential criminal charges.
How often should the ISC register be updated?
The ISC register should be updated regularly, especially when there are changes in significant control or ownership, and at least annually as part of the corporation’s regular reporting process.