Bill C-86: What it Means for Your CBCA Corporation Bill C-86 institutes a long list of amendments to several Federal statutes, including the Canada Business Corporations Act (“CBCA”), and officially comes into force on June 13th, 2019. What does this mean for your corporation? Prior to these amendments, the CBCA required only federally-registered corporations to maintain a general securities register under s. 50(1). As of June 13th, however, all privately controlled corporations governed by the CBCA will be required to maintain a detailed securities register of individuals with “significant control” over the corporation. An individual with “significant control” is someone who is the registered/beneficial owner of, or someone who has direct or indirect control over, a “significant number of shares” of the corporation, being either ownership of 25% or more of the corporation’s outstanding voting shares, or ownership of any number of shares equal to 25% or more of the corporation’s outstanding shares measured by fair market value. “Significant control” also includes an individual who has any direct or indirect influence that, if exercised, would result in control in fact of the corporation, and anyone to whom “prescribed circumstances” (to be defined by future regulations) apply. Two or more individuals who jointly own a “significant number of shares” can be considered jointly an individual with “significant control over the corporation.” The register of individuals with “significant control” must provide the following information with respect to each such individual: (a) the individual’s names, date of birth and the last known address; (b) the individual’s jurisdiction of residence for tax purposes; (c) the day on which the individual became or ceased to be an individual with significant control; (d) a description of how each individual has significant control over the corporation; and (e) any other prescribed information [to be explained in future regulations] The Bill also includes several other requirements regarding the proper maintenance of the “significant control” register. Improper maintenance of this register is an offence punishable on summary conviction and may result in a fine of up to $5000. Any director or officer of a corporation who knowingly records, provides, authorizes or acquiesces in the provision of false or misleading information in this register is liable on summary conviction to a fine of up to $200,000 or imprisonment of up to 6 months, or both. The corporation’s shareholders or creditors, as well as the Canadian government, may request access to the information contained in the significant control register which, if provided, may be used only for matters relating directly to the affairs of the corporation. Finally, it is also likely Ontario legislation, at some point in the future, will mirror these new Federal amendments, as the Finance Minister of each province has agreed to “pursue legislative amendments” that strengthen the transparency of corporate ownership. If you would like more information on these amendments, or would like legal advice to ensure your corporation follows these new requirements, please contact elisabeth.colson@devrylaw.ca or at (416) 446-5048. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Corporate LawMay 9, 2019June 13, 2020
Erase Every ‘Shall’? In many English speaking jurisdictions, the term “shall” is deemed to be somewhat ambiguous for the simple reason that it appears to make reference to discretion rather than obligation. In an attempt to look at its meaning precisely, consider Canadian corporate legislation as set out in the Canada Business Corporations Act which states, “A corporation “shall” set out its name in legible characters in all contracts, invoices, negotiable instruments”. In law school, aspiring lawyers are overwhelmed with “shalls” in statutes and contracts and as a result, “shall” still remains the word that makes legal instruments obviously clear. However, in actual fact, one may argue that it indicates quite the contrary. There has been a notable amendment to the Interpretation Acts of at least three Canadian provinces (British Colombia, Alberta and Manitoba) which states that “must”, is to be interpreted as imperative, eliminating any contradiction with the use of “shalls”. This solution is not commonly acknowledged by other government agencies even though there is insufficient evidence, mainly in the form of case law, to cast doubt on the effectiveness of replacing “shall” with “must” to establish obligation. This approach may offer more consistency and less vagueness. Legal writing should be precise and, in a ideal world, offer little to no room for dispute. Yet, in corporate contract circumstances, it is common practice to ensure that the obligation of each party is reflected in any agreement, in what should be deemed incontestable. Therefore, the intended consequence must be made ultimately clear to avoid scrutiny. With that being observed, it may be fair to determine that the preferences of legal professionals lean towards the unambiguous “must” – imposing clarity and a legal obligation. A corporate lawyer is an essential part of your contract review and negotiation process to ensure that any agreement entered into accurately reflects the desired intent. Contact Elisabeth Colson of Devry Smith Frank LLP for experienced corporate assistance, at elisabeth.colson@devrylaw.ca or at (416) 446-5048. “This article is intended to inform. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Corporate LawApril 30, 2019May 22, 2021