Canada Considering Creating a Database of Beneficial Owners of its Corporations

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!

Businesses in Québec Should Prepare to Deal with “Assistants” to the Elderly

Further to the adoption of Bill 18, Québec individuals, including the elderly, who may wish to do so will soon be allowed to appoint one or two “assistants” to help them -a role that will be legally recognized through an amendment being made to the Civil Code of Québec.

Many feel the various protection regimes currently available for vulnerable individuals in Québec leave a gap, especially for family members wishing to help parents and the like with their everyday lives. This sort of situation often includes helping parents understand situations they may find themselves in, asking questions (from government officials or businesses, for example) and interacting with third parties with which the elderly may be required to deal with day-to-day. A good example may be calling a bank, on behalf of a parent who is a client of the institution but unwilling or unable to call him/herself.

The new role of assistants is being created to help fill that gap and avoid often-seen situations where an organization may refuse to talk to a person who is not the citizen or the client at issue him/herself, unless the caller can show he/she has legal authority. To avoid this problem, assistants will be provided with a special status under Québec law, being understood that their role will NOT be to decide or make decisions for protected individuals, but rather to assist and speak for them, whenever it may be required.

After November 1, Quebecers who regularly require help will thus be allowed to designate a loved-on (who is willing to take on this role) to assist them. After going through the formal process of appointing this person, the name of the assistant will be entered into an online database to be hosted and made available by the Québec Curateur public (pursuant to the new C.c.Q. Article 297.10). Thereafter, anyone who needs to confirm whether a person they get contacted by has been duly authorized (as somebody else’s “assistant”) will be allowed to check the database.

One should note that this possibility will be available not only for the elderly but also for other individuals who would benefit from the help of a loved one day-to-day, including those with physical or intellectual limitations, etc.

This change to Québec law will require that for businesses and organizations update their protocols to take into account the possibility that users and customers may soon be contacting them through duly appointed intermediaries. Whenever this happens, assuming the proper verifications are made, businesses and organizations will be legally prohibited from refusing to interact with a customer’s assistant. Indeed, assuming the identity of the assistant is ascertained adequately, one will then be obligated by the Civil Code of Québec to deal with the assistant as the assisted person’s representative and intermediary.

Business and organizations operating in Québec should start training their staff and update their internal protocols, rules and procedures to allow for this change as to “assistants”.