Canada’s Register of Individuals with Significant Control: What Every Federal Corporation Must Know
As of January 22, 2024, every corporation incorporated under the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (CBCA) must not only maintain an internal register of individuals with significant control but also file that information publicly with Corporations Canada. Names of beneficial owners are now searchable by any member of the public. The change introduced by Bill C-42, An Act to Amend the Canada Business Corporations Act and aimed at combating money laundering, tax evasion, and the use of shell companies is the most significant shift in Canadian corporate transparency law in a generation.
Background: Two Separate Obligations
It is important to distinguish between two obligations that often get conflated.
The first is the internal ISC register, which has been required under CBCA s. 21.1 since June 13, 2019. Every CBCA corporation has been required for years to maintain a register at its registered office or records office identifying its individuals with significant control, along with prescribed personal details. This register was and remains confidential, accessible only to directors, officers, shareholders, creditors, and certain regulators.
The second is the public filing requirement, which came into force on January 22, 2024, under amendments enacted by Bill C-42. This requirement obligates CBCA corporations to file ISC information directly with Corporations Canada, where a portion of it becomes publicly searchable through the federal government’s online corporate registry.
Understanding the distinction matters because the legal obligations, the timelines, and the consequences differ. A corporation that maintains a perfect internal register but fails to file with Corporations Canada is still non-compliant as of January 2024.
Who Is an Individual with Significant Control?
Under CBCA s. 21.1, an individual has “significant control” over a corporation if, alone or jointly with one or more other individuals, they:
meet the 25% share threshold they are the registered holder of, or have direct or indirect control or direction over, shares that carry 25% or more of the voting rights attaching to all outstanding shares of the corporation;
meet the 25% fair market value threshold they are the registered holder of, or have direct or indirect control or direction over, shares equal to 25% or more of all outstanding shares measured by fair market value; or
exercise control; in fact they have any direct or indirect influence that, if exercised, would result in control in fact of the corporation, regardless of whether they hold shares at all.
The “control in fact” limb is deliberately broad. An individual who directs the board through contractual arrangements, who exercises dominant influence over management decisions as a de facto officer, or who holds shares through a trust or nominee arrangement may be an ISC even without appearing on the share register. The purpose is to pierce through nominee and holding structures to identify the ultimate natural person with real power over the corporation.
The joint significant control rule adds further reach. Two or more individuals who, acting jointly, satisfy any of the three tests above are each considered ISCs even if individually neither would cross the 25% threshold. A common example: two founders who each hold 20% of voting shares but make all material decisions together. They may be ISCs even though neither alone hits 25%.
Who Must Comply
The ISC filing obligation applies to all corporations incorporated under the CBCA, including private profit corporations, incorporated federally, and federal holding companies. Crown corporations and corporations incorporated under the Canada Not-for-profit Corporations Act, S.C. 2009, c. 23 (CNCA) are outside the regime.
Provincial corporations those incorporated in Ontario under the Ontario Business Corporations Act, R.S.O. 1990, c. B.16 (OBCA), or under the Business Corporations Act in British Columbia or Alberta are not subject to the CBCA’s public filing requirement. Ontario requires OBCA corporations to maintain an internal ISC register (since January 1, 2023 under the Business Corporations Amendment Act, 2021), but that register is not publicly filed. Only the federal regime currently mandates public disclosure.
This distinction carries practical significance for founders and owners who value privacy. A corporation incorporated in Ontario is not required to disclose its beneficial owners publicly. A corporation incorporated under the CBCA is.
What the Internal ISC Register Must Contain
The internal register maintained at the corporation’s registered office or records address must include the following information for each ISC, updated and accurate as of the date of the last annual meeting or annual resolution:
- the ISC’s full legal name;
- date of birth;
- last known residential and business address;
- jurisdiction of residence for tax purposes;
- the date on which the individual became or ceased to be an ISC;
- a description of how the individual has significant control (for example, “registered holder of 30% of Class A voting shares”); and
- any other prescribed information.
This internal register must be accurate and kept up to date. Changes must be reflected within 15 days of the corporation becoming aware of the change.
What Gets Filed Publicly and What Stays Confidential
The January 2024 filing requirement does not make the entire internal register public. Corporations Canada distinguishes between information that is publicly searchable and information that is collected and held in confidence.
Publicly searchable information includes the ISC’s full name; their jurisdiction of residence (province/state and country); and a description of the nature of their significant control (for example, “holds voting rights over 30% of shares”).
Confidential information collected by Corporations Canada but accessible only to law enforcement, tax authorities, and certain other prescribed entities includes the ISC’s date of birth; the ISC’s full residential address, and other personal identifiers.
The result is a two-tier system. A competitor, journalist, or member of the public can search the federal registry and learn the names of beneficial owners and the general nature of their control. Governments and law enforcement can access the complete record. Residential addresses and birthdates do not appear in public searches.
When and How to File
At incorporation: A CBCA corporation incorporated on or after January 22, 2024 must file ISC information at the time of incorporation.
Annually: Existing CBCA corporations must file or confirm their ISC information when they file their annual return with Corporations Canada. The annual return filing deadline is 60 days after the corporation’s anniversary date of incorporation.
Within 15 days of a change. If a corporation becomes aware that an individual has become or ceased to be an ISC, or that information about an existing ISC has changed, the corporation must update Corporations Canada within 15 days. This 15-day obligation runs from when the corporation becomes aware, not from the date the change actually occurred.
Filing is done through the Corporations Canada online portal. The corporation’s directors are responsible for ensuring compliance. In practice, most corporations delegate the filing to their corporate lawyer or corporate secretary, but delegation does not relieve the corporation or its directors of legal responsibility.
What If No ISC Can Be Identified?
Not every corporation has an identifiable ISC. A widely held corporation, a corporation owned by multiple trusts, or a corporation where no single individual or group of jointly acting individuals crosses the 25% thresholds and no individual exercises control in fact may legitimately have no ISC.
In that case, the CBCA requires the corporation to file a statement to that effect, confirming that the corporation has taken reasonable steps to identify ISCs and has been unable to do so. “Reasonable steps” is not defined in the Act but would typically include reviewing the share register, querying shareholders, and documenting the inquiry. Filing a bare declaration without evidence of inquiry is unlikely to satisfy the obligation if challenged.
Penalties for Non-Compliance
Penalties under the CBCA for failure to comply with ISC obligations are substantial and target both the corporation and the individuals responsible.
A corporation that fails to maintain an accurate internal register, fails to file with Corporations Canada, or fails to update within 15 days of becoming aware of a change is liable on summary conviction to a fine of up to $100,000.
An individual including a director, officer, or ISC who knowingly contravenes the provisions or provides false or misleading information is liable on summary conviction to a fine of up to $1,000,000, imprisonment for up to five years, or both.
The most serious exposure falls on individuals who deliberately falsify ISC records or actively conceal beneficial ownership. Casual non-compliance, a corporation that forgets to file an annual update is more likely to result in a financial penalty than imprisonment. But the scale of the personal fine ($1 million) underscores that Parliament treats ISC non-compliance as a serious compliance failure, not a technical administrative oversight.
Practical Implications for Business Owners and Advisers
Nominee arrangements are effectively exposed: If a nominee holds shares on behalf of a beneficial owner, that beneficial owner is likely an ISC under the control, in fact, or indirect control limbs of CBCA s. 21.1. Filing must reflect the true beneficial owner, not the nominee.
Holding company chains must be traced: Where a CBCA corporation is owned by a holding company, which in turn is owned by a trust, which has individual beneficiaries, the inquiry must trace through the chain to identify the natural persons at the end of it. Corporations are not ISCs; only individuals are.
Founders who step back operationally may still be ISCs: A founder who has transferred day-to-day management to a CEO but retains 30% of the voting shares remains an ISC. The test is share ownership, voting rights, fair market value of shares, or control, in fact, not active management.
Privacy-sensitive owners should reconsider CBCA incorporation: For owners who prioritize ownership confidentiality, investors, high-net-worth individuals, or business owners with security concerns, the public nature of the federal ISC registry may make provincial incorporation a more appropriate choice. Ontario’s OBCA requires an internal register but does not require public filing. Business owners who have not yet incorporated, including those currently operating as a sole proprietorship should factor this disclosure difference into their choice of structure from the outset.
Shareholder agreements should address ISC obligations: A well-drafted shareholders agreement should include representations from each shareholder about their ISC status, update obligations, and a mechanism for the corporation to obtain ISC information from shareholders within the 15-day update window.
Call to Action
The CBCA’s public beneficial ownership regime has changed what it means to incorporate federally in Canada. For some businesses, the transparency is straightforward compliance. For others particularly those with complex ownership structures, nominee arrangements, or privacy-sensitive principals, the new rules require a careful review of whether the federal structure still serves the business’s needs.
At Kalfa Law Firm, we help federally and provincially incorporated businesses understand their ISC obligations, structure shareholder arrangements that are both compliant and commercially appropriate, and assess whether provincial incorporation offers advantages their current structure does not. We also advise on the corporate governance documents shareholders agreements, annual resolutions, and minute book maintenance that underpin a well-run corporation.
If your corporation has not yet reviewed its ISC compliance or if you are deciding between CBCA and provincial incorporation, contact us at (416) 631-7227 or book a consultation online. Getting this right is cleaner and less expensive before a problem is identified than after.
FAQs:
-Shira Kalfa, BA, JD, Partner and Founder
Shira Kalfa is the founding partner of Kalfa Law Firm. Shira’s practice is focused in corporate-commercial and private M&A law including corporate reorganizations, corporate restructuring, mergers and acquisitions, commercial financing, secured lending and transactional law.
© Kalfa Law 2024. Updated September 9, 2026.
The above provides information of a general nature only. This does not constitute legal or accounting advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.
