The Business Corporations Amendment Act, 2020 (Saskatchewan)[1], which amends The Business Corporations Act (Saskatchewan), creates additional requirements for corporations to track and maintain certain information about “individuals with significant control”.
“Individual with Significant Control”
The amendments set out new rules for establishing if an individual is an “individual with significant control” over a corporation. Under the new rules, an individual has significant control over a corporation if that individual:
- Is the registered owner, beneficial owner or has direct or indirect control over a significant number of shares of the corporation;
- Has any direct or indirect influence that, if exercised, would result in factual control of the corporation; or
- Meets any other prescribed circumstances.
The new rules also set out certain circumstances where two or more individuals with joint rights or ownership of shares are deemed to be considered an individual with significant control over a corporation.
“Significant Number of Shares”
The new rules define a “significant number of shares” of a corporation to mean:
- Shares that carry 25% or more of the total voting rights attached to all of the voting shares of the corporation; or
- Shares that are equal to 25% or more of all the shares of the corporation, measured by fair market value.
Record Keeping
The new rules update the record-keeping requirements of a corporation by requiring the corporation to keep a register of individuals with significant control, and sets out the categories of information that must be included with the register, including:
- The name, date of birth and latest known address of each individual with significant control;
- The jurisdiction of residence for tax purposes of each individual with significant control;
- The day on which each individual became or ceased to be an individual with significant control;
- A description of how each individual is an individual with significant control, including, as applicable, a description of the individual’s interest and rights with respect to shares of the corporation;
- Any other prescribed information; and
- A description of the reasonable steps taken by the corporation, at least once during each financial year of a corporation, to ensure that it has identified all individuals with significant control over the corporation and that the information in the register is accurate, complete and up to date.
Distributing corporations and any other prescribed class of corporation are exempt from the requirements to maintain a register of individuals with significant control.
A corporation must update its register within 15 days of becoming aware of a new individual with significant control that is not contained in the register, or any other changes to the information that is required to be included in the register.
At the request of the corporation, shareholders are required to provide the information outlined above. Six years after an individual ceases to be a person with significant control, a corporation will be required to dispose of that individual’s personal information.
Disclosure of Information
The new rules allow the Director of Corporations (Saskatchewan) to require a corporation to disclose information from its register of individuals with significant control. The new rules do not set out any parameters as to the circumstances under which the Director of Corporations (Saskatchewan) may require such disclosure. Nor do the rules indicate how the Directors of Corporations (Saskatchewan) may ultimately use such information.
Shareholders and creditors of a corporation will be allowed to access the register of individuals with significant control by sending an affidavit to the corporation. The information obtained by the shareholders and/or creditors of the corporation may only be used in connection with the following:
- Influencing the voting shareholders;
- Making an offer to acquire securities of the corporation; or
- Other matters relating to the affairs of the corporation.
Failure to Comply with New Rules
Under the new rules, it is an offence if a corporation fails to comply with the requirements to maintain a register of individuals with significant control.
Under the new rules, it is also an offence for any director of officer of a corporation who authorizes or takes part in:
- A contravention of the requirement to prepare and maintain a register of individuals with significant control;
- The recording of false information in a register of individuals with significant control; or
- The provision of false or misleading information to any person in relation to a register of persons with significant control.
It is also an offence for shareholders who contravene the requirement to provide the information to a corporation noted above.
Going Forward
You may wish to reach out for professional advice to discuss compliance with the new corporate law rules. Our firm would be happy to assist in this regard.
Jessi Brockman
STEVENSON HOOD THORNTON BEAUBIER LLP
500-123 2nd Avenue S, Saskatoon, SK S7K 7E6
Telephone: 306-244-0132
Email: jbrockman@shtb-law.com
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[1] The Business Corporations Amendment Act, 2020 received Royal Assent on March 16, 2020 and will come into force by order of the Lieutenant Governor in Council. As of November 20, 2020, The Business Corporations Amendment Act, 2020 has not yet come into force.
The information in this article is not legal advice. We encourage you to consult with your legal advisor for advice specific to you.