CBC is reporting that the Canadian government is mulling over the possibility of emulating jurisdictions trying to curb the problems of the individuals who can (still a little too easily) hide behind corporations, by creating a public register of beneficial owners. The Federal government may thus amend the statute that governs corporations created under the federal regime (as opposed to this incorporated under provincial statutes), so as to force them to disclose who the real owners are.
To be clear, yes the federal statute at issue already says corporations created under the CBCA must create and maintain a register stating who the real owners are, and logging a modicum of info as to each, including date of birth, etc. However, until now, this info can remain secret (even IF the register is actually created and maintained), locked in a minute-book that no one ever sees, so to speak. The change that the government is now contemplating would make such information part of a PUBLIC register, thereby taking this info from entirely private to public -of course subject to hiding really private info.
As to this, I’d say that with everything I have seen over the years, with individuals declaring false names and addresses (e.g., PO boxes, etc.), holding shares for somebody else (under scrutiny or investigation), declaring an other lawyer’s office at the domicile of a shareholder, etc., it’s not a moment too soon! I think we could definitely do with a little more transparency as to Canadian corporations. The current regime is simply too naïve to lead to a system that one can rely on to know who’d really behind any private corporation. Want an example? Check out this story in this morning’s paper (in French), about a security company that the Federal government apparently regularly hires. Blink, blink… yes, I know.
Mind you, rules are fine, but having rules that are serious enough (with strong enforcement behind them) is something else. Not sure the current set of rules is quite adequate to convince overly creative (read scumbag) businessmen, fraudsters and mafiosi to play by them whenever they use corporate vehicles to do their dirty work.
Meanwhile, Québec is doubling down on its own efforts to curb this kind of problem. Starting next month, corporations registered in the province will have to provide more info on their owners, provide IDs of directors, etc. Québec is also starting to require corporations to determine who the real owners are, and to collate that info, internally at least. Apparently, starting next year, the REQ register will also include info on beneficial owners behind the ones listed as shareholders, and even start allowing searches of the REQ database to identify what entities any given individual is involved in. Not a moment too soon!