2021 Bill 24

First Session, 50th General Assembly

70 Elizabeth II, 2021

BILL 24

AN ACT TO AMEND THE CORPORATIONS ACT

Received and Read the First Time................................................................

Second Reading............................................................................................

Committee.....................................................................................................

Third Reading...............................................................................................

Royal Assent.................................................................................................

HONOURABLE SARAH STOODLEY

Minister of Digital Government and Service Newfoundland and Labrador

Ordered to be printed by the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Corporations Act to

· remove the residency requirements for directors; and

· increase the transparency of beneficial ownership of corporations.

A BILL

AN ACT TO AMEND THE CORPORATIONS ACT

Analysis

1. S.2 Amdt.
Definitions

2. S.36 Amdt.
Corporate records

3. Ss. 45.1 to 45.5 Added
45.1 Individual with signif-

icant control over corporation

45.2 Register of individuals with significant control over corporation

45.3 Inability to identify individuals

45.4 Disclosure of infor-

mation in register

45.5 Disclosure to investigative bodies

4. S. 174 Rep.
Residency requirement

5. S.184 Amdt.
Meeting of directors

6. S.189 Amdt.

Delegation of director's powers

7. S.408.1 Added
Statutory review

8. S.503.1 Added
Offences respecting register of individuals with significant control over corporation

9. S.504 Amdt.
Offences with respect to reports

10. Commencement

Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows:

RSNL1990 cC-36
as amended

1. (1) Paragraph 2(o.1) of the Corporations Act is repealed.

(2) Paragraphs 2(q.1) and (q.2) of the Act are repealed.

(3) Paragraph 2(y) of the Act is repealed and the following substituted:

(y) "resident Canadian" means an individual who is

(i) a Canadian citizen ordinarily resident in Canada,

(ii) a Canadian citizen not ordinarily resident in Canada who is a member of a prescribed class of persons, or

(iii) a permanent resident within the meaning of the Immigration and Refugee Protection Act (Canada) and ordinarily resident in Canada, except a permanent resident who has been ordinarily resident in Canada for more than one year after the time at which he or she first became eligible to apply for Canadian citizenship;

2. Section 36 of the Act is amended by deleting the word "and" at the end of paragraph (c), by deleting the period at the end of paragraph (d) and substituting a semi-colon and the word "and" and by adding immediately after that paragraph the following:

(e) subject to subsection 45.2(7), a register of individuals with significant control over the corporation that complies with section 45.2.

3. The Act is amended by adding immediately after section 45 the following:

Individual with significant control over corporation

45.1 (1) For the purposes of this Act, any of the following individuals is an individual with significant control over a corporation:

(a) an individual who has any of the following interests or rights, or any combination of them, in respect of a significant number of shares of the corporation:

(i) an interest as a registered holder of them,

(ii) an interest as a beneficial owner of them, or

(iii) direct or indirect control or direction over them;

(b) an individual who has any direct or indirect influence that, where exercised, would result in control in fact of the corporation; or

(2) Two or more individuals are each considered to be an individual with significant control over a corporation where, in respect of a significant number of shares of the corporation,

(a) an interest or right, or a combination of interests or rights, referred to in paragraph (1)(a) is held jointly by those individuals; or

(b) a right, or combination of rights, referred to in paragraph (1)(a) is subject to any agreement or arrangement under which the right or rights are to be exercised jointly or in concert by those individuals.

(3) For the purposes of this section, a significant number of shares of a corporation is

(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.

45.2 (1) A corporation shall prepare and maintain, at its registered office or at any other place in the province designated by the directors, a register of individuals with significant control over the corporation that contains

(a) the name, the date of birth and the latest known address of each individual with significant control over the corporation;

(b) the jurisdiction of residence for income tax purposes of each individual with significant control over the corporation;

(c) the date on which each individual became or ceased to be an individual with significant control over the corporation, as the case may be;

(d) a description of how each individual is an individual with significant control over the corporation, 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 in accordance with subsection (2).

(2) At least once during each financial year of a corporation, the corporation shall take reasonable steps, including any prescribed steps, 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.

(3) Where a corporation becomes aware of any information referred to in paragraphs (1)(a) to (e) as a result of steps taken in accordance with subsection (2) or through any other means, the corporation shall record that information in the register within 15 days of becoming aware of it.

(4) Where a corporation requests information referred to in any of paragraphs (1)(a) to (e) from one of its shareholders, the shareholder shall, to the best of the shareholder's knowledge, reply accurately and completely as soon as practicable.

(5) Within one year after the sixth anniversary of the date on which an individual ceases to be an individual with significant control over the corporation, the corporation shall, subject to any other Act or Act of Parliament that provides for a longer retention period, dispose of in a secure manner any of that individual's personal information, as defined in subsection 2(1) of the Personal Information Protection and Electronic Documents Act (Canada), that is recorded in the register.

(6) A corporation that, without reasonable cause, contravenes this section is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000.

(7) This section does not apply to a corporation that

(a) is a reporting issuer under the Securities Act;

(b) is listed on a designated stock exchange as defined in subsection 248(1) of the Income Tax Act (Canada); or

Inability to identify individuals

45.3 A corporation to which section 45.2 applies shall take the prescribed steps where it is unable to identify any individuals with significant control over the corporation.

Disclosure of information in register

45.4 (1) A corporation to which section 45.2 applies shall disclose to the registrar, on request, any information in its register of individuals with significant control over the corporation.

(2) Shareholders and creditors of the corporation or their personal representatives, on sending to the corporation or its agent the affidavit referred to in subsection (3), may on application require the corporation or its agent to

(a) allow the applicant access to the register of the corporation referred to in subsection 45.2(1) during the usual business hours of the corporation; and

(b) on payment of a reasonable fee, provide the applicant with an extract from that register.

(3) The affidavit required under subsection (2) shall contain

(a) the name and address of the applicant;

(b) the name and address for service of the body corporate, where the applicant is a body corporate; and

(c) a statement that any information obtained under subsection (2) shall not be used except as permitted under subsection (5).

(4) Where the applicant is a body corporate, the affidavit shall be made by a director or officer of the body corporate.

(5) Information obtained under subsection (2) shall not be used by any person except in connection with

(a) an effort to influence the voting of shareholders of the corporation;

(b) an offer to acquire securities of the corporation; or

(6) A person who, without reasonable cause, contravenes subsection (5) is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 6 months, or to both.

Disclosure to investigative bodies

45.5 (1) In this section

(a) "investigative body" means a police agency, regulator or taxing authority;

(b) "police agency" means the Royal Newfoundland Constabulary and the Royal Canadian Mounted Police;

(i) the Superintendent of Securities appointed under the Securities Act,

(ii) the Financial Transactions and Reports Analysis Centre of Canada established under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), or

(iii) a prescribed public officer, corporation, agency or other entity whose authority to regulate is based on a law of the province or of Canada; and

(d) "taxing authority" means the Canada Revenue Agency or the department of the government of the province that is responsible for administering or enforcing a law of the province that provides for the imposition of a tax, royalty or duty.

(2) On request by an investigative body, a corporation to which section 45.2 applies shall, as soon as practicable after the request is served on the corporation or is deemed to be received by it, and in the manner specified by the investigative body

(a) provide the investigative body with a copy of the register of the corporation referred to in subsection 45.2(1); or

(b) disclose to the investigative body any information specified by the investigative body that is in the register of the corporation referred to in subsection 45.2(1).

(3) A police agency may make a request under subsection (2) only for the following purposes:

(a) conducting an investigation in Canada

(i) that is undertaken with a view to a law enforcement proceeding, or

(ii) from which a law enforcement proceeding is likely to result;

(b) policing and criminal intelligence operations in Canada;

(d) providing information contained in the register to a law enforcement agency in a jurisdiction outside of Canada to assist the agency in a law enforcement proceeding where the assistance is authorized under an arrangement, written agreement, treaty or law of the province or of Canada.

(4) A regulator may make a request under subsection (2) only for the following purposes:

(a) administering or enforcing a law for which the regulator is responsible;

(b) assisting another agency in Canada in the administration or enforcement of a law that is similar to a law for which the regulator is responsible; or

(c) providing information contained in the register to an agency outside of Canada to assist the agency in the administration or enforcement of a law that is similar to a law for which the regulator is responsible where this assistance is authorized under an arrangement, written agreement, treaty or law of the province or of Canada.

(5) A taxing authority may make a request under subsection (2) only for the following purposes:

(a) administering or enforcing

(i) a law of the province or of Canada that provides for the imposition or collection of a tax, royalty or duty, or

(ii) a prescribed law of the province or of Canada that is related to a law referred to in subparagraph (i); or

(b) providing information contained in the register to another jurisdiction inside or outside of Canada to assist the jurisdiction in the administration or enforcement of a law of that jurisdiction that provides for the imposition or collection of a tax, royalty or duty, where the assistance is authorized under an arrangement, written agreement, treaty or law of the province or of Canada.

(6) A request by an investigative body under subsection (2) shall be served on the corporation by leaving the request at the corporation's registered office as shown in the last notice filed under section 34 or sent to the corporation by registered mail to that registered office and, where sent, is deemed to be received at the time it would be delivered in the ordinary course of mail, unless there are reasonable grounds for believing that the corporation did not receive the request at that time or at all.

(7) A corporation that, without reasonable cause, contravenes subsection (2) is guilty of an offence and liable on summary conviction to a fine not exceeding $5,000.

4. Section 174 of the Act is repealed.

5. Subsections 184(3) and (4) of the Act are repealed.

6. (1) Subsection 189(1) of the Act is repealed and the following substituted:

Delegation of director's powers

189. (1) Directors of a corporation may appoint from their number a managing director or a committee of directors and delegate to the managing director or committee the powers of the directors.

(2) Subsection 189(2) of the Act is repealed.

7. The Act is amended by adding immediately after section 408 the following:

Statutory review

408.1 The minister shall, within 5 years of the coming into force of this section, perform a review of all or part of this Act and consider the areas in which it may be improved and report the findings to the Lieutenant-Governor in Council.

8. The Act is amended by adding immediately after section 503 the following:

Offences respecting register of individuals with significant control over corporation

503.1 (1) Every director or officer of a corporation who knowingly authorizes, permits or acquiesces in the contravention of subsection 45.2(1) or 45.5(2) by that corporation commits an offence, whether or not the corporation has been prosecuted or convicted.

(2) Every director or officer of a corporation who knowingly records or knowingly authorizes, permits or acquiesces in the recording of false or misleading information in the register of the corporation referred to in subsection 45.2(1) commits an offence.

(3) Every director or officer of a corporation who knowingly provides or knowingly authorizes, permits or acquiesces in the provision to any person or entity of false or misleading information in relation to the register of the corporation referred to in subsection 45.2(1) commits an offence.

(4) Every shareholder who knowingly contravenes subsection 45.2(4) commits an offence.

(5) A person who commits an offence under any of subsections (1) to (4) is liable on summary conviction to a fine not exceeding $200,000 or to imprisonment for a term not exceeding 6 months, or to both.

9. Section 504 of the Act is amended by adding immediately after subsection (3) the following:

(4) For greater certainty, a register referred to in subsection 45.2(1) or an extract from it is not a report, return, notice or other document for the purposes of this section.

Commencement

10. This Act comes into force on April 1, 2022.