Bearer Share Certificate Elimination & Transparency Register
In response to COVID-19 the Ministry of Finance has extended the effective date of the transparency register requirements to October 1, 2020.
As part of government’s commitment to end hidden ownership of companies in British Columbia and to help crack down on illegal activities, the Business Corporations Amendment Act, 2019 (Bill 24), amends the Business Corporations Act to:
- Fully eliminate pre-existing bearer shares in B.C. companies by requiring the possessor to exchange bearer shares for registered shares before exercising any of the rights, and
- Require B.C. private companies to create and maintain a transparency register listing the significant individuals of the company.
Both measures are intended to help companies and, in some cases authorities, identify the actual individuals (i.e., natural persons) who own and control B.C. private companies.
Bearer Share Certificates
Bearer share certificates are share certificates that do not state the name of the owner of the shares. The owner of a bearer share certificate is whoever physically possesses the certificate and that person holds all the rights specified on the certificate. Because bearer share certificates are not registered, they can hide the identity of the true owner of the shares of a company.
Although the Business Corporations Act requires all share certificates to include the name of the person to whom they have been issued, there was no requirement to replace or convert pre-existing bearer shares.
Effective May 16, 2019, all companies must convert bearer share certificates to registered share certificates before any rights associated with the certificates can be exercised. Rights may include, but are not limited to: voting, dividend, share equity, etc. If a shareholder tries to exercise their rights under a bearer share certificate, the company must refuse to recognize those rights until it converts the bearer share certificate into a registered share certificate that complies with section 57 of the Business Corporations Act.
- What is the transparency register?
- How does it work?
- What to do if the transparency register is requested to be viewed?
A transparency register is a list of information on a company’s significant individuals.
A transparency register is specific only to private companies incorporated in B.C. and will be held in each company’s own records office. The public will not have access to the transparency register. Only current directors of the company, law enforcement and specific inspecting officials will have access, subject to certain rules.
Effective October 1, 2020, amendments to the Business Corporations Act will require private businesses in B.C. to keep and maintain transparency records of beneficial owners, including individuals who have direct or indirect control of the company or its shares. Information collected includes full legal name, date of birth, citizenship and last known address.
Companies need to contact their shareholders to compile the required information. Companies can request that their shareholders provide information for the transparency register at any time. Shareholders have a duty to take reasonable steps to gather the requested information and to send it to the private company promptly.
Once a company determines that someone is a significant individual, the company will have to notify that person.
Companies will keep their transparency register up-to-date. Companies must make updates to their transparency register within 30 days of receiving new or different information.
Companies that are unable to obtain or confirm information from shareholders (for set-up and/or updating) must record all reasonable steps and efforts taken to gather the required information.
Each company will keep the following information about every significant individual:
- full name, date of birth and last known address
- if they are a Canadian citizen or permanent resident of Canada
- if they are not a Canadian citizen or permanent resident of Canada, every country or state of which they are a citizen
- if they are a resident in Canada for the purposes of the Income Tax Act (Canada)
- the date when they became or ceased to be a significant individual in the company
- a description of how they are a significant individual
- Current directors of the company
- Police force in BC
- The Royal Canadian Mounted Police
- Tax authority of BC
- The Canada Revenue Agency
- The British Columbia Securities Commission
- The BC Financial Services Authority (formerly FICOM)
- The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), and
- The Law Society of British Columbia
Companies Not Governed by the B.C. Business Corporations Act
Legal entities not governed by the B.C. Business Corporations Act, including B.C. societies and cooperatives are not required to create and maintain a transparency register.
Extra-provincial companies that are registered to do business in B.C., but are incorporated outside B.C. (e.g., companies incorporated in another province or federally), are also excluded from the B.C. transparency register requirement. It is recommended that you consult the legislation in your home jurisdiction to find out if your company is required to complete a similar transparency register in that jurisdiction.
B.C. public companies, like companies traded on a stock exchange, are not required to create and maintain a transparency register. These companies already have additional rigorous reporting requirements with other regulatory bodies, including the B.C. Securities Commission, the Registrar of Companies and any stock exchange on which the company’s shares are listed.
The following types of companies have also been excluded from the transparency register requirements:
- Companies that are a wholly owned subsidiaries of a public corporation
- Trust companies as defined in the Financial Institution Act
- Insurance companies as defined in the Financial Institution Act
- Government corporations as defined in the Financial Administration Act
- Companies that are wholly owned subsidiaries of a special act corporation1
- Companies incorporated or wholly owned by a municipality or regional district
- Companies that operate an independent school in British Columbia
- Companies converted under the School Act
- Companies that are wholly owned by one or more Indigenous nations
If your company is one of the above, you are not required to create and maintain a transparency register. Please see the Business Corporations Regulation for details.
1 A special act corporation is a corporation that is incorporated under its own federal or provincial statute rather than under a corporate law of general application such as the Business Corporations Act.