Starting January 1, 2023, all Ontario private corporations will be required to maintain a register of Individuals with Significant Control. This is something that is already required by Federal corporations and certain provincial corporations (such as British Columbia), but up until now, this hasn’t been a requirement for Ontario corporations. Not sure what a register of Individuals with Significant Control is? Let’s dive in.
Who is an Individual with Significant Control (“ISC”)?
An ISC is someone who has significant control or influence over a corporation. Often, especially with smaller businesses, the business owners are also the ISCs and controlling shareholders of the corporation—but not always. “Significant Control” over a corporation typically refers to anyone that:
- Is the registered or beneficial owner of, or has direct or indirect control or direction over, any number of shares that carry twenty-five percent (25%) or more of the voting rights attached to all of the corporation’s outstanding voting shares;
- Is the registered or beneficial owner of, or has direct or indirect control or direction over, any number of shares that is equal to twenty-five percent (25%) or more of all of the corporation’s outstanding shares measured by fair market value;
- Has any direct or indirect influence that, if exercised, would result in control in fact of the corporation; or
- Is an individual to whom circumstances prescribed by regulation apply.
What is a Register of Individuals with Significant Control (“ISC Register”)?
An ISC Register (sometimes referred to as a “Transparency Register”), is a document that is created to show information on all of the ISCs of a corporation. The information that needs to be on this register is as follows:
- Full Name of the ISC;
- Latest known address of the ISC;
- Jurisdiction of Residence, for tax purposes of the ISC;
- The day that the individual became an ISC;
- The date that the individual ceased to be an ISC (if applicable);
- A description of how each ISC has significant control over the corporation (including a brief description of their interests and rights in respect of shares of the corporation;
- Any other prescribed information;
- Description of each step taken to gather the necessary information, and the date that the steps were taken for each ISC.
For certain corporations, gathering the required information can be a bit time-consuming and tricky—as in, if there is a corporation that is a controlling shareholder of your corporation, then you will need to find out who the controlling shareholder(s) are of that corporation, etc.
The ISC Register cannot list a corporation, it needs to list the controlling individuals behind all of the corporations that are controlling shareholders.
This information should be updated and confirmed at least once in a fiscal year. If there is a known change that comes up (such as change of someone’s residency), this change should be updated on the ISC Register within 15 days of the change coming into effect. Ensuring that the ISC Register gets reviewed once a year ensures that all of the necessary information is updated as needed.
Why do Ontario Corporations have to maintain an ISC Register?
The ISC Register is a way to provide more transparency over who owns or has significant influence over Ontario private corporations. This requirement helps deter money laundering and tax evasion, and also makes it easier for law enforcement to expose these issues.
The ISC Register is not public information, however, there are certain circumstances when a corporation may be asked to provide their ISC Register, and they will be required by law to do so. Corporations are asked to provide their ISC Register for:
- Law enforcement purposes;
- Tax purposes;
- Regulatory purposes.
Although there are more details regarding the ISC Register, we hope this article gives you a better understanding of what it is and why Ontario corporations will soon need to keep one. Ensuring that all of your corporate records (including your ISC Register) are in one place and up-to-date is so important for corporations. We offer a robust platform for managing and sharing your corporate records—secure and reserved for those you trust. Sign up today!
