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Canada

Corporate Transparency (CA0066)

Overview

At-a-Glance

Action Plan: Canada Action Plan 2018-2020

Action Plan Cycle: 2018

Status: Active

Institutions

Lead Institution: Department of Finance Canada (FIN); Innovation Science and Economic Development Canada (ISED)

Support Institution(s): NA

Policy Areas

Anti-Corruption, Beneficial Ownership, Capacity Building, E-Government, Fiscal Openness, Legislation & Regulation, Local Commitments, Open Parliaments, Participation in Lawmaking, Private Sector, Public Participation, Tax

IRM Review

IRM Report: Canada Design Report 2018-2020

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Civic Participation

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

Corporate transparency
Issue to be addressed
Concealing information about corporate ownership can facilitate:
• tax evasion
• money laundering
• terrorist financing
• human rights abuses
• corruption
By improving corporate transparency, governments can safeguard against the misuse of
corporations and other legal entities while continuing to facilitate the ease of doing business in
order to foster growth and innovation.
In Canada, the responsibility for corporate law is shared between federal, provincial, and
territorial governments. Additionally, international collaboration and information-sharing
where appropriate can support more effective work in this domain by identifying best practices
and common challenges. Coordination is therefore needed to address corporate issues
effectively.
Commitment
The Government of Canada will continue to work with provincial and territorial governments to
implement the federal, provincial, and territorial finance ministers’ December 2017 Agreement
to Strengthen Beneficial Ownership Transparency. We will:
• require federal corporations to hold beneficial ownership information
• engage with key stakeholders on possible options to improve timely access to beneficial
ownership information
Lead department(s)
Department of Finance Canada (FIN); Innovation Science and Economic Development Canada
(ISED)
23
Milestones
What will we do? How we will know we succeeded? What is our
deadline?
3.1 Implement legislative
amendments to require federal
corporations to hold accurate
and up to date beneficial
ownership information, and
eliminate use of bearer shares
(FIN/ISED)
Amendments made to the Canada
Business Corporations Act
July 2019
3.2 Work with provincial and
territorial governments and key
stakeholders representing
various perspectives on
possible options to improve
timely access to beneficial
ownership information,
including retention and
disclosure obligations relating
to such information and the
exploration of a public registry
option
(FIN/ISED)
Consultations, framed by a discussion
document, with stakeholders from civil
society, private sector, academia and
other sectors are held to discuss issues
relating to beneficial ownership
information, including emerging best
practices in other jurisdictions
July 2019
Federal recommendations are provided
to provincial and territorial governments
on improving timely access to beneficial
ownership information
August 2019
3.3 Continue to work with
provincial and territorial
governments to support
coordinated implementation of
the Agreement to Strengthen
Beneficial Ownership
Transparency
(FIN/ISED)
All elements of the Agreement are
implemented by the federal government
August 2020

IRM Midterm Status Summary

3. Corporate Transparency

The Government of Canada will continue to work with provincial and territorial governments to implement the federal, provincial, and territorial finance ministers’ December 2017 Agreement to Strengthen Beneficial Ownership Transparency. We will:

  • require federal corporations to hold beneficial ownership information
  • engage with key stakeholders on possible options to improve timely access to beneficial ownership information

Milestones

3.1 Implement legislative amendments to require federal corporations to hold accurate and up to date beneficial ownership information, and eliminate use of bearer shares (Department of Finance Canada/Innovation Science and Economic Development Canada)

3.2 Work with provincial and territorial governments and key stakeholders representing various perspectives on possible options to improve timely access to beneficial ownership information, including retention and disclosure obligations relating to such information and the exploration of a public registry option (Department of Finance Canada/Innovation Science and Economic Development Canada)

3.3 Continue to work with provincial and territorial governments to support coordinated implementation of the Agreement to Strengthen Beneficial Ownership Transparency (Department of Finance Canada/Innovation Science and Economic Development Canada)

For more details about the commitment text, milestones, self-identified success criteria, and estimated completion dates see, https://open.canada.ca/en/content/canadas-2018-2020-national-action-plan-open-government#toc3-4

Start Date: August 2019

End Date: Varies according to milestone

Commitment Overview

Verifiability

OGP Value Relevance (as written)

Potential Impact

Completion

Did It Open Government?

Not specific enough to be verifiable

Specific enough to be verifiable

Access to Information

Civic Participation

Public Accountability

Technology & Innovation for Transparency & Accountability

None

Minor

Moderate

Transformative

Not Started

Limited

Substantial

Completed

Worsened

Did Not Change

Marginal

Major

Outstanding

1. Overall

Assessed at the end of action plan cycle.

Assessed at the end of action plan cycle.

Context and Objectives

This Commitment builds on commitment 12 from Canada’s third action plan, and is in line with broader international efforts [14] at tackling money laundering, corruption, terrorist financing, and tax evasion by requiring federal corporations to retain and provide timely access to beneficial ownership information. [15] As written, the commitment sets out no information about the negative effects the concealing of corporate information is having in the Canadian context, or of the change that is meant to emerge from the commitment’s implementation.

In Canada, responsibility for regulating corporations is divided between the federal government and the provinces and territories. Strengthening corporate law pertaining to beneficial ownership requires coordination across these differing levels of government. In accordance with milestone 3.1, legislative amendments to Canada Business Corporations Act (CBCA) were made in the October 2018 federal budget bill and received Royal Assent on December 13, 2018. [16] These amendments, which apply only to federally incorporated private companies, [17] came into effect on June 13, 2019. Prior to their enactment there was no corporate statute in Canada requiring corporations to maintain a record of beneficial ownership. Under the amendments, federal corporations are now required to actively collect and maintain information about both registered and beneficial shareholders having ‘significant’ control’ [18] over the corporation. The information required to be held about those with significant control includes: name, date of birth, and address; jurisdiction of residence for tax purposes; day they became or ceased to have significant control; description of the interests and rights they have in shares of the corporation; and a description of how the corporation is keeping the registry up to date. The corporate records are to be available to tax authorities, law enforcement, and other regulators dealing with anti-money laundering and other criminal activities. [19] In addition, extracts of the register may be accessed upon request by shareholders and creditors. [20] In April 2019, the government of British Columbia became the first mover on this front by introducing legislation to create a public registry for beneficial ownership of real estate at the provincial level. [21]

The extent to which the Commitment’s three milestones align with OGP values is mixed. Milestone 3.2 aligns with the value of Civic Participation given its focus on consultations with a wide array of stakeholders. In the light of ongoing uncertainties about whether the public will eventually be granted access to the beneficial ownership records, at this time Milestones 3.1 cannot be deemed to be relevant to the OGP value of Access to Information. Milestone 3.3 focuses on inter- and intra-governmental dialogue. Based on the value definitions provided in the IRM Procedures Manual, it is unclear how it aligns with any of the four OGP values.

The milestones are sufficiently specific so as to be verifiable. Legislative amendments have been made to the CBCA, and by the end of the action plan cycle one will be able to ascertain whether the consultations which are meant to be indicators of success for milestone 3.2 have actually occurred. In terms of milestone 3.3 all elements of the Agreement to Strengthen Beneficial Ownership Transparency have been implemented by the federal government. [22]

The implementation of the milestones is set to contribute to improving corporate financial transparency, albeit not directly for the public just yet nor to the extent that public registries of beneficial ownership would enable. [23] Commitment 3 is an incremental, positive step in working toward enhancing financial transparency in the private sector though it falls short of the desire for establishing public registries of beneficial ownership expressed by civil society MSF members and a number of individuals who offered comments via google docs on the July-August 2018 draft commitment. The commitment is deemed as likely having a moderate potential impact on open government in Canada. In other words, it is an important step forward in the relevant policy areas but remains limited in scale or scope.

Next steps

The opinions expressed during the IRM researcher’s discussions with civil society stakeholders suggest Commitment 3 is viewed as one of the three most important proposed areas of reform in the current action plan. While acknowledging the commitment as a positive step, they uniformly expressed disappointment about the inability to bring about publicly accessible registries of beneficial ownership. For these individuals, public registries are seen as central to the commitment having “a real impact with teeth.” This view was made clear by Tracey Lauriault, a civil society member of the MSF, during the opening ceremony of OGP Global Summit 2019. In her welcome addresses to the plenary she noted,

we did not achieve beneficial ownership. And, if anybody is trying to buy property in Canada right now, now you will see why we really, really need beneficial ownership. [24]

The civil society MSF members consider that there has been a lack of progress on beneficial ownership and that it is directly linked to a combination of the disconnect between the timing of Canada’s OGP action plan creation cycle and the time required to bring about major policy changes and initiatives, a perceived lack of political will, and perceived resistance from Innovation, Science and Economic Development Canada.

Milestone 3.2 offers the opportunity for domestic and international stakeholders to continue engaging with federal, provincial, and territorial governments in working toward making beneficial ownership registries accessible to the public. Building on the experience from the United Kingdom, the IRM researcher recommends that beneficial ownership and public registries be recognized as important tools for tackling domestic and international corruption, money laundering, as well as other illicit activities, and that a problem-centered impact/results oriented variation of this commitment aimed at enabling public access to beneficial ownership records be carried forward into the next action plan.

[14] For comparative information about the progress member states of the European Union are making implementing laws pertaining to public access of beneficial ownership information see, https://www.transparencyregisterlaws.com/#
[15] Canada Business Corporations Act (R.S.C., 1985, c. C-44) defines beneficial ownership as including “ownership through any trustee, legal representative, agent or mandatary, or other intermediary”. See, https://laws-lois.justice.gc.ca/eng/acts/c-44/fulltext.html.
[17] Businesses operating in Canada can elect to incorporate either at the federal or provincial level. The key difference between the two options pertains to issues of name selection and protection, business reach, annual filings and costs. See, Provincial and Federal Incorporation: What is the Difference? https://www.lawdepot.ca/law-library/business-articles/provincial-and-federal-incorporation/?loc=CA#.XTcf21B7lR0
[18] An individual own 25% or more of the voting rights attached to a corporation’s outstanding voting shares or 25% or more of the corporation’s outstanding shares measured by fair market value is deemed to have ‘significant control.’ Individuals acting “jointly or in concert” who meet the 25% threshold as a group and individuals with the ability to exert influence resulting in “control in fact” over a corporation are also considered individuals with ‘significant control’. See, Jagdeep S. Shergill and Andrew Kemp (January 30, 2019). CBCA Corporations Required To Track Beneficial Ownership, Business Law Blog. Lawson Lundell LLP. https://www.lawsonlundell.com/the-business-law-blog/cbca-corporations-required-to-track-beneficial-ownership
[19] In the lead-up to the proposing of the legislative amendments pertaining beneficial ownership, the House of Commons Standing Committee on Finance supported the notion of creating a registry but recommended against making it publicly accessible, advocating for access to be constrained to “certain law enforcement authorities, the Canada Revenue Agency, Canadian Border Services Agency, FINTRAC, authorized reporting entities and other public authorities.” See, https://www.ourcommons.ca/DocumentViewer/en/42-1/FINA/report-24/page-18
[20] See Section 21 of the Canada Business Corporations Act (R.S.C., 1985, c. C-44) at: https://laws-lois.justice.gc.ca/eng/acts/c-44/FullText.html
[21] Stueck, Wendy (2019, April 2). B.C. unveils Canada’s first beneficial ownership registry. Globe and Mail. https://www.theglobeandmail.com/canada/article-bc-unveils-canadas-first-beneficial-ownership-registry/. See also, Hoekstra, Gordon (2019, June 27). Growing push on in Western world to make corporate ownership transparent, conference hears. Vancouver Sun. https://vancouversun.com/business/local-business/growing-push-on-in-western-world-to-make-corporate-ownership-transparent-conference-hears
[23] In March 2019 The U.S. Department of State designated Canada a “major money laundering country.” See, https://www.state.gov/documents/organization/290502.pdf
[24] See, The #OGPCanada Opening Ceremony (starting at 20:27) https://www.youtube.com/watch?v=znADM9jqvZM

Commitments

  1. User-Friendly Open Government

    CA0064, 2018, Access to Information

  2. Financial Transparency and Accountability

    CA0065, 2018, Access to Information

  3. Corporate Transparency

    CA0066, 2018, Anti-Corruption

  4. Digital Government and Services

    CA0067, 2018, Automated Decision-Making

  5. Open Science

    CA0068, 2018, Access to Information

  6. Healthy Democracy

    CA0069, 2018, Anti-Corruption

  7. Access to Information

    CA0070, 2018, Access to Information

  8. Feminist and Inclusive Dialogue

    CA0071, 2018, Capacity Building

  9. Reconciliation and Open Government

    CA0072, 2018, Access to Information

  10. Open Government Community

    CA0073, 2018, Access to Information

  11. Enhance Access to Information

    CA0042, 2016, Access to Information

  12. Streamline Requests for Personal Information

    CA0043, 2016, E-Government

  13. Expand and Improve Open Data

    CA0044, 2016, Access to Information

  14. Provide and Preserve Open Information

    CA0045, 2016, E-Government

  15. Define an Approach for Measuring Open Government Performance

    CA0046, 2016, Capacity Building

  16. Develop Open Government Skills Across the Federal Public Service

    CA0047, 2016, Access to Information

  17. Embed Transparency Requirements in the Federal Service Strategy

    CA0048, 2016, Capacity Building

  18. Enhance Access to Culture & Heritage Collections

    CA0049, 2016, Capacity Building

  19. Enhance Openness of Information on Government Spending and Procurement

    CA0050, 2016, Capacity Building

  20. Increase Transparency of Budget and Other Department of Finance Information

    CA0051, 2016, Capacity Building

  21. Starred commitment Increase Transparency of Grants and Contributions Funding

    CA0052, 2016, Capacity Building

  22. Improve Public Information on Canadian Corporations

    CA0053, 2016, E-Government

  23. Increase the Availability and Usability of Geospatial Data

    CA0054, 2016, Access to Information

  24. Increase Openness of Federal Science Activities (Open Science)

    CA0055, 2016, Capacity Building

  25. Stimulate Innovation through Canada’s Open Data Exchange (ODX)

    CA0056, 2016, Access to Information

  26. Align Open Data Across Canada (Open Data Canada)

    CA0057, 2016, Access to Information

  27. Implement the Extractives Sector Transparency Measures Act

    CA0058, 2016, Anti-Corruption

  28. Support Openness and Transparency Initiatives Around the World

    CA0059, 2016, Access to Information

  29. Engage Civil Society on Open Government

    CA0060, 2016, Public Participation

  30. Enable Open Dialogue and Open Policy Making

    CA0061, 2016, Capacity Building

  31. Promote Open Government Globally

    CA0062, 2016, Access to Information

  32. Engage Canadians to Improve Key Canada Revenue Agency Services

    CA0063, 2016, Access to Information

  33. Implement Directive on Open Government

    CA0030, 2014, Access to Information

  34. Starred commitment Open Data Canada

    CA0031, 2014, Access to Information

  35. Canadian Open Data Exchange (ODX)

    CA0032, 2014, Access to Information

  36. Open Data for Development

    CA0033, 2014, Access to Information

  37. Open Data Core Commitment

    CA0034, 2014, Access to Information

  38. Starred commitment Open Science

    CA0035, 2014, Public Participation

  39. Starred commitment Mandatory Reporting on Extractives

    CA0036, 2014, Anti-Corruption

  40. Open Contracting

    CA0037, 2014, Anti-Corruption

  41. Open Information on Budgets and Expenditures

    CA0038, 2014, Fiscal Openness

  42. Digital Literacy

    CA0039, 2014, Capacity Building

  43. Open Information Core Commitment

    CA0040, 2014, Access to Information

  44. Consulting Canadians

    CA0041, 2014, Marginalized Communities

  45. Starred commitment International Aid Transparency Initiative: Publish Plan to Make CIDA Activities Available and Accessible

    CA0010, 2012, Aid

  46. International Aid Transparency Initiative: Implement Plan

    CA0011, 2012, Aid

  47. Opening Government of Canada Records: Increase Access to Archived Federal Documents at Library and Archives Canada

    CA0012, 2012, Records Management

  48. Opening Government of Canada Records: Issue New Mandatory Policy on Document Classification

    CA0013, 2012, Records Management

  49. Opening Government of Canada Records: Make Classified Information Available Online

    CA0014, 2012, E-Government

  50. GCDOCS: Deploy Wave One of Electronic Record and Document Management Solution

    CA0015, 2012, E-Government

  51. GCDOCS: Deploy Across Federal Government

    CA0016, 2012, E-Government

  52. GCWEB: Develop Consolidated Web Presence

    CA0017, 2012, E-Government

  53. GCWEB: Implement New Platform

    CA0018, 2012, E-Government

  54. Data.Gc.Ca: Expand Number of Datasets Available

    CA0019, 2012, Access to Information

  55. Data.Gc.Ca: Implement Data.Gc.Ca Portal

    CA0020, 2012, Access to Information

  56. Data.Gc.Ca: Improve Standardization of Data

    CA0021, 2012, Access to Information

  57. Government of Canada Resource Management Data: Publish Resource Management and Performance Data

    CA0022, 2012, Access to Information

  58. Government of Canada Resource Management Data: Enhance Search and Data Tools

    CA0023, 2012, Access to Information

  59. Consulting Canadians: Develop New Platform for Consultation

    CA0024, 2012, E-Government

  60. Consulting Canadians: Develop Standard Approach to Use of Social Media

    CA0025, 2012, E-Government

  61. Consulting Canadians: Pilot a Crowdsourcing Initiative

    CA0026, 2012, E-Government

  62. Consulting Canadians: Enable Use of Common Online Tools

    CA0027, 2012, E-Government

  63. Open Regulation: Federal Regulators to Post Forward Regulatory Plans

    CA0028, 2012, Legislation & Regulation

  64. Open Regulation: Simplify Engagement Activities

    CA0029, 2012, Legislation & Regulation

  65. Open Government Directive: Issue Directive on Open Government

    CA0001, 2012, E-Government

  66. Open Government Directive: Implement Directive on Open Government

    CA0002, 2012, E-Government

  67. Starred commitment Open Government Licence: Issue Open Government Licence

    CA0003, 2012, Legislation & Regulation

  68. Starred commitment Open Government Licence: Adopt Open Government Licence

    CA0004, 2012,

  69. Modernising Administration of Access to Information: Pilot of Online Request and Payment Service

    CA0005, 2012, Access to Information

  70. Modernising Administration of Access to Information: Implement ATI Solution

    CA0006, 2012, Access to Information

  71. Modernising Administration of Access to Information: Make Completed ATI Request Summaries Searchable

    CA0007, 2012, Access to Information

  72. Virtual Library: Begin Design of Virtual Library

    CA0008, 2012, E-Government

  73. Virtual Library: Launch Virtual Library

    CA0009, 2012, E-Government

Open Government Partnership