Part III: Operational Readiness and Compliance

In the first two installments of this series, the theoretical and legislative dismantling of corporate anonymity in British Columbia was explored.

Part I examined the anatomy of control. It dissected the rigorous statutory definitions that now compel directors to look past the surface of the share register. The analysis covered the “look-through” provisions that pierce the corporate veil of holding companies, the complex rules regarding trust beneficiaries, and the aggregation clauses that deem family members to be acting as a single economic unit. It was established that identifying a “significant individual” is no longer a matter of reading a share certificate; it is an exercise in forensic accounting and legal interpretation.

Part II confronted the reality of exposure. It moved from the “who” to the “where,” detailing the seismic shift from private record-keeping to public broadcasting. The discussion covered the operationalization of the public transparency registry, the severe implications of the new 15-day reporting window, and the high evidentiary bar required to secure a privacy exemption. It highlighted that the “set and forget” compliance strategies of the past are now active liabilities, capable of exposing sensitive personal data to competitors, creditors, and the general public.

Moving from Legal Theory to Corporate Action

In Part III, attention now turns to execution. Understanding the law and appreciating the risk are prerequisites, but they are not solutions in themselves. How does a responsible board of directors or a business owner ensure the corporate “glass house” is orderly before the curtains are pulled back? The transition to a public registry requires a fundamental shift in corporate governance. The following sections outline a strategic, step-by-step framework for auditing corporate structures, sanitizing data, and establishing the governance protocols necessary to satisfy the rigorous “duty of inquiry” mandated by the Business Corporations Act.

Phase 1: The Historical Audit

The first and most critical step for any private company is to audit existing records. It is dangerous to rely on a Transparency Register created in 2020 when the legislation was new, and understanding was low. Directors must review the Central Securities Register and apply the “significant individual” tests anew.

Verifying Ownership and Control

This audit requires a forensic approach. Directors must verify direct ownership, ensuring all individuals holding 25% or more of issued shares or voting rights are listed. More importantly, they must rigorously examine indirect ownership. For every corporate shareholder on the capitalization table, the “natural person” controlling that entity must be identified. This may require requesting the transparency registers of those shareholder entities.

The Trust Review

Should shares be held within a trust, the governing legal instrument, the trust deed, must be reviewed to ensure adherence to the trust’s stipulations. Directors cannot rely solely on the word of the trustee. They must identify the trustees, beneficiaries with fixed interests, and any individuals with the power to appoint or remove trustees (often called “protectors”). If the trust is discretionary, the directors must ask probing questions about who exercises influence over the trust’s decisions.

Aggregation Check

Finally, the audit must check for aggregation. Directors must determine if any shareholders are spouses or relatives sharing a home, or if any shareholders’ agreements exist that compel parties to vote together. This often requires asking shareholders to declare their marital status and living arrangements—a sensitive but necessary inquiry.

Phase 2: Data Collection 

Once the individuals are identified, the data held on them must be scrutinized for both accuracy and privacy.

New Statutory Data Points

The public filing regime requires data that companies may not have previously collected. Specifically, companies must now collect Social Insurance Numbers (SIN) or Individual Tax Numbers (ITN) for all significant individuals. While this data is not made public, it is required for the government filing to ensure the unique identification of individuals across the database. Collecting this sensitive data requires secure channels; email is often not sufficient for transmitting SINs.

Privacy and Safety Assessment

Simultaneously, the company must conduct a safety assessment. Directors should inquire if any significant individual has a valid safety concern that might warrant an exemption application. If a threat exists, the process of gathering evidence (such as police reports and legal affidavits) must begin immediately, as the application process is rigorous and time-consuming. Furthermore, to protect privacy where possible, the company should ensure that legitimate “addresses for service” (such as a law firm or business address) are used in the public filing rather than residential addresses, provided this is legally supportable under the Act.

Phase 3: Ongoing Governance Protocols

Compliance is not a one-time event. To manage the strict 15-day reporting window, internal governance must change.

The “Internal Flag” System

Companies should implement an “Internal Flag” system with their legal counsel and corporate secretaries. Protocols must be established so that any share transfer, new share issuance, or death of a shareholder triggers an immediate review of the Transparency Register. The reflex to “file it and forget it” must be replaced with a reflex to “update and verify.”

The Annual Confirmation

Despite the need for real-time updates, a formal Annual Review remains a best practice. Alongside the Annual General Meeting (AGM) materials, the company should send a confirmation questionnaire to all shareholders. The questionnaire must require confirmation that no undisclosed changes, particularly concerning tax residency, citizenship, or marital status, have occurred within the preceding year. This creates a paper trail demonstrating that the directors have exercised their due diligence.

Handling the Recalcitrant Shareholder

The legislation imposes a positive “duty of inquiry” on the company. Directors cannot simply wait for shareholders to volunteer information; they must actively ask for it. But what if a shareholder refuses to respond?

The Business Corporations Act provides the company with a draconian tool to enforce compliance. If a shareholder fails to provide the required information for the Transparency Register, the company may issue a formal notice. If compliance is not forthcoming, the company has the statutory power (and arguably the duty) to freeze the rights associated with those shares. This means the shareholder is prohibited from voting at meetings and, crucially, prohibited from receiving any dividends. The freezing of dividends is usually a sufficiently strong motivator to ensure cooperation.

Securing Your Glass House Through Robust Legal Defence

The “glass house” is being built around every private company in the province. The transition from private anonymity to public transparency is complete. For business owners and directors, the only defence against the risks of this new regime is rigorous preparation. By ensuring that the internal structure is compliant, the data is accurate, and the governance protocols are robust, companies can navigate this new era of transparency with confidence.

CM Lawyers Offers Top-Tier Corporate Compliance & Regulation Advice in Vernon, Salmon Arm & Enderby

The shift to public corporate transparency in British Columbia leaves little room for error. If your company has not recently audited its ownership structure, data practices, and governance protocols, now is the time to act. The corporate lawyers at CM Lawyers advise directors, shareholders, and private companies on navigating the Transparency Register, managing disclosure risks, and implementing defensible compliance systems. To discuss your company’s operational readiness under BC’s transparency regime, contact us online or call (250) 308-0338.