On November 4, 2021, Bill 43 was introduced in Ontario, titled the Build Ontario Act. This Bill amends the Ontario Business Corporations Act (the “OBCA”) to require private corporations to prepare and maintain a register of individuals with significant control over the corporation.
The term “individuals with significant control over a corporation” is defined as: someone who controls, directly or indirectly, and/or is the registered or beneficial owner of:
• (a)any number of shares that carry 25% or more of the voting rights attached to all of the corporation’s outstanding voting shares; or
• (b)any number of shares that is equal to 25% or more of all of the corporation’s outstanding shares measured by fair market value.
Important to recognize is that “an individual” can be comprised of two or more individuals with significant control if (i) an ownership interest or right in respect of shares is held jointly by those individuals; or (ii) a right in respect of shares is exercised jointly or in concert by those individuals.
In terms of the disclosure required by same individuals, the following information will be required by the new section 140.2 of the OBCA:
• (a) the individual’s name, date of birth and 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 the individual is an individual with significant control, including, as applicable, a description of the individual’s interests and rights in respect of shares of the corporation;
• (e)any other prescribed information; and
• (f)a description of each step taken under new subsection 140.2(3) of the OBCA.
Fines for non-compliance with this new legislative update in Ontario seem to range from $5,000 – $200,000.
Navigating the relevance and applicability of legislative updates on your privately held small business can be complicated. However, as even the potential fines dictate, it is an exercise that is certainly worthwhile.
Graphene Business Law has strong knowledge and experience with the various corporate legislative updates that regularly occur in Ontario. You may contact Graphene by filling out the booking tool on our web page graphenebusinesslaw.ca, or sending a direct inquiry to info@graphenebusinesslaw.ca . You may also text us at 647-466-5985.
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This blog post does not constitute legal advice, and does not create a solicitor-client relationship between author and reader.