In addition to all of the other records expected to be maintained by registrants, private companies incorporated in Ontario should take note that as of January 1, 2023, it is also now a requirement to keep a register of individuals with significant control or influence over the company.

The definition of significant control is complex, particularly with respect to indirect and joint ownership. One example includes a registered or beneficial owner of a significant number of shares, which includes shares that carry 25% or more of the voting rights or represent 25% or more of all the outstanding shares’ fair market value, however other arrangements may also be captured. The register must still be maintained even if there are no individuals that cross the threshold for inclusion on the form.

The new register does not have to be maintained for private companies that are wholly owned subsidiaries of another company that is publicly traded. For all others, please note that there are penalties that can be levied on both the private company and the company’s shareholders, directors and officers if the requirements for the new register are not complied with. The register must be reviewed and updated at least once a year, and changes to the register must be entered within a prescribed period of time. Certain regulators, including the Ontario Securities Commission, can have access to the register.

For additional helpful information on what the register should contain, how to determine the individuals with significant control and the significant penalties for non-compliance, please see this article from our friends at BLG.

February 28, 2023