Part II: Amendments to the Canada Business Corporations Act: Penalties for Offences and Director’s Compliance Powers

On January 22, 2024, amendments to the Canada Business Corporations Act (“CBCA”) that were included in the Budget Implementation Act, 2022, No. 1 (“BIA”) came into effect. The CBCA amendments implement additional and broader penalties for offences where CBCA corporations fail to comply with the filing requirements related to Individuals with Significant Control (“ISCs”).

This article will summarize the broadened penalties for offences and the additional compliance powers provided to Directors appointed under the CBCA respecting ISCs. Our previous article released on February 21, 2024, summarized the various CBCA information gathering and filing requirements including the new filing requirements for ISCs, when and what to file, and what type of information will be made available to the public.

Additional or broadened application of penalties for offences

A CBCA corporation that does not file its ISC information with Corporations Canada may be subject to administrative and criminal sanctions. For example:[1]

• A Certificate of Compliance for the CBCA corporation may be refused;
• The CBCA corporation may be administratively dissolved if it has not filed its ISC information upon incorporation or within 30 days of the date on the Certificate of Amalgamation or on the Certificate of Continuance;
• The CBCA corporation may be administratively dissolved for not filing its ISC information along with its annual return; or
• The CBCA corporation may be found guilty of an offence and liable on summary conviction to a fine not exceeding $100,000.

Further, directors or officers of a CBCA corporation who knowingly contravene the requirements to keep accurate ISC registers and disclose as required, commit an offence (this includes knowingly authorizing, permitting, or acquiescing). A shareholder commits an offence if the CBCA corporation requests information regarding ISCs and the shareholder knowingly does not comply. The penalty for an offence has increased to a fine of up to one million dollars, or imprisonment of up to five years, or both.[2]

Additional compliance powers provided to the Director appointed under the CBCA

The amendments will also provide the Director with additional powers, such as:

• Providing all or part of the information received from a register of ISCs to an investigative body (including the Canada Revenue Agency and any police force), the Financial Transactions and Reports Analysis Centre of Canada, any prescribed entity, a provincial corporate registry, or a provincial government department or agency that is responsible for corporate law in that province;[3]
• Making inquiries of any person relating to compliance with the CBCA, and may, as part of any inquiry, require the person to provide any records or other documents or information;[4]
• Requesting information updates to a corporation’s register of ISCs;[5] and
• Issuing a certificate of dissolution or refusing to issue a certificate of compliance if a corporation does not comply with its ISC filing obligations.[6]

Overall, the amendments to the CBCA are part of a wider push for greater corporate transparency, which has been cited as an ongoing international concern. As a G7 and G20 country and a member of the Financial Action Task Force, Canada has committed to implementing standards on beneficial ownership and corporate control transparency which is reflected by these CBCA amendments.

If you have any questions, any of the lawyers from our Corporate Commercial Law Group would be happy to discuss.

For more information on the Amendments to the CBCA, please see our related article, Part I: Amendments to the Canada Business Corporations Act: Transparency Reporting Requirement.

For additional background on individuals with significant control reporting requirements under the CBCA, please review our firm’s previous articles on individuals with significant control (from 2019),[7] transparency trends (from 2021),[8] and proposed amendments under Bill C-19 (from 2022)[9].