Ontario Companies have Greater Transparency Requirements
Updated: Apr 26
Starting January 1, 2023, the Ontario Business Corporations Act (“OBCA”) requires Ontario registered private corporations to maintain a register that details individuals who have significant control over the corporation.
Who Qualifies as an Individual with Significant Control?
The following criteria establish which individual has significant control:
An individual who owns and has direct or indirect control over shares that carry 25% or more of the voting rights; or
Has direct or indirect influence that would result in the control of the corporation.
Defining an ISC also contemplates joint ownership, which can include spouses and/or relatives, including children, if they live in the same family home. The amending legislation to the OBCA does not clarify what “direct or indirect control or influence” means and, thus, is subject to interpretation. As such, care should be taken to include those who could be considered to be able to exert significant influence, regardless of their share ownership.
What Information Must be Included in the Minute Book?
A Transparency Register must be included in the Minute Book, which includes the following information for each individual with significant control:
Name, date of birth and last known address;
Jurisdiction of residence;
The date that the individual became and ceased to have significant control;
A description of the threshold the individual meets.
The information must be updated annually and any new information must be updated within 15 days of becoming aware of it. Upon request, a corporation must make the Transparency Register accessible to the public.
What Is the Penalty for Non-Compliance?
Failure to comply with the new requirements of the OBCA may be liable for a fine of up to $5000. In addition, every director and officer who knowingly authorizes, permits or acquiesces to a failure to maintain the Transparency Register could be fined up to $200,000 and/or up to 6 months imprisonment.
If you would like assistance on complying with Ontario’s new laws for your company’s governance, reach out to us at Froese Law.