Corporate Transparency Requirements

This update provides general information regarding recent amendments to the Business Corporations Act. The information is not a substitute for legal advice. When in doubt, please seek legal advice to ensure that your corporation's needs are met.

Starting in September 2020, corporations governed under the Business Corporations Act will need to:

• file shareholder information in the new Online Corporate Business Names Registry; and
• create and maintain a register of individuals with significant control.

These amendments provide greater transparency over who owns and controls PEI corporations, and will strengthen the Island Regulatory and Appeals Commission's authority to request ownership information.

Shareholder Information

Effective September 1, 2020, PEI corporations will need to file shareholder information in the Online Corporate Business Names Registry. Corporations will be asked to include this information when they submit their next annual return. New corporations and companies re-registering in the online system will be asked to file shareholder information when registering or within a period of 60 days.

Register of Individuals with Significant Control

Corporations will also need to create and maintain a register of individuals with significant control. The register is a document - for example, a logbook, database or spreadsheet - that contains information about each individual with significant control. For each individual, the register must include:

• name;
• date of birth;
• address;
• county where the individual is resident for tax purposes;
• the date when control started (for example, share purchase date);
• the date when control ended (for example, share transfer date); and
• a description of how the individual has significant control.

Corporations should keep the register with their corporate records, such as the bylaws and articles of incorporation.

A template register is available for download at Register Template.

Who is an individual with significant control?

An individual with significant control is someone who owns or controls a corporation. This individual:

• owns, controls or directs a significant number of shares;
• has significant influence over the corporation without owing shares; or
• has a combination of any of these factors.

  Significant Number of Shares

  A significant number of shares is: 25% or more of the voting shares; or 25% or more of all the shares based on fair market value.

Individual Shareholders

The most common example of an individual with significant control is someone who owns 25% or more of the voting shares of a corporation. Individual shareholders (natural persons) who meet the 25% threshold need to be listed in the new register.

Joint Owners and Groups

People can also have significant control if they jointly own or act in concert with other individuals that meet the 25% threshold. For example, if two or more individuals jointly own or control at least 25% of a corporation’s shares, each individual must be recorded in the new register.

Beneficial Owners

Beneficial owners are individuals who ultimately own or control a corporation. Sometimes, a corporation's beneficial owners are not the same as the registered shareholders. For example, if a registered shareholder is another corporation or a nominee person, the beneficial owner would be the individual(s) behind the holding company or the nominee. Beneficial owners who meet the 25% threshold must be recorded in the new register.

In the case of a holding company, the beneficial owner is the individual who owns or controls the corporate shareholder. The corporation would request this information from the shareholders and they would then need to provide the corporation with accurate and complete information. If there are multiple intermediaries (e.g., a chain of holding companies), the corporation would need to follow the chain of control to the individual(s) with significant control.

An example of a nominee person holding shares on behalf of someone else is a trustee of a trust holding registered ownership on behalf of a beneficiary.

Significant Influence

Sometimes it is possible for an individual to have significant influence over a corporation without owning or controlling shares. For example, if an individual is not a shareholder but has the ability or right to acquire a significant number of shares or change the board of directors, the individual may have significant control over the corporation. The test is generally whether the influence, if exercised, would result in factual control of the corporation.

If you are unsure about whether an individual has significant control or influence, you should seek legal advice.

Who can access the new register?

Corporations are not required to publicly disclose the register of individuals with significant control.

Upon request, however, corporations must disclose the register to:

• the corporation's shareholders and creditors (they must provide a declaration stating that the information obtained will only be used for matters related to the corporation);
• investigative bodies, including the Island Regulatory and Appeals Commission;
• tax authorities;
• police services; and
• the Director of Corporations.

What does my corporation need to do?

1.  File shareholder information with your next annual return

Corporations will need to file shareholder information with their next annual return in the Online Corporate Business Names Registry. You will be asked to add the information when you submit your annual return. New corporations and companies re-registering in the new system will be asked to include this information when they register or within a period of 60 days.

2.  Record information in a new register

Corporations will also need to create a register of individuals with significant control. To get started, please refer to the above-noted template. If your company has a straightforward legal structure (e.g., individual shareholders), you may simply need to include information for shareholders who own 25% or more of the shares. If your business has a more complicated structure (e.g., beneficial owners, holding companies) you may need to contact anyone who owns shares or has a major influence on your business. Anyone who owns or controls 25% or more of a corporation, including beneficial owners, needs to be listed in the register. Those individuals are obligated to provide your corporation with accurate and complete information.

3.  Update the register

At least once a year, corporations will need to update the register. This means taking reasonable steps to find out if any of the information has changed and whether any new individuals need to be listed. In addition, when a corporation becomes aware of a chance affecting the register, it needs to change within 15 days of becoming aware of the new information.

Who can I contact for more information?

Corporate and Business Names Registry

Department of Justice and Public Safety
Consumer, Corporate and Financial Services Division
1st Floor Shaw Building North

Telephone: (902) 368-4550

Fax: (902) 368-5283

Email:  askcorporateregistry@gov.pe.ca