Starting in June of 2019, Federally Incorporated entities in Canada will be subject to a register of individuals that have significant control over the corporation to determine the UBO, whether directly or indirectly. The pressure around the globe for more transparency and compliance with regards to tax evasion, anti-money laundering and financial crimes is rising quickly. Canada is the next country on the list and has taken steps to create legislation to stay ahead.
How does Canada define “Significant Control”? It’s an individual who’s shares equal 25% or more of the voting rights or 25% or more of market value of the company. It also defines it as having influence that would result in control of the corporation.
While this is for Federal Corporations at the moment, it is anticipated that provinces will look to adopt similar legislation for companies on the provincial level.
There are severe proposed penalties for companies that are not compliant with this legislation. The penalties and fines can be imposed on the UBO or directors of the company if not compliant.