New reporting requirements for beneficial ownership of Nova Scotia companies
On April 1, 2023, the Nova Scotia government will proclaim into force Bill 226, which amends the Companies Act (the “Act”) to require companies formed under the Act to create and maintain a register of individuals with significant control over the company.
We want to ensure that you are aware of these new requirements for Nova Scotia companies, and have the opportunity to comply with them. Non-compliance can result in significant fines for a company, its shareholders, directors and officers, or potential imprisonment, for shareholders, directors and other relevant persons.
All companies formed under the Act, aside from public corporations, will be required to maintain a register of individuals with significant control (the “Register”).
Who has significant control?
An “individual with significant control” over a company is a person holding “a significant number of shares”, either directly or indirectly, or an individual with direct or indirect influence that, if exercised, would result in control in fact of a company.
Under the amendments, a “significant number of shares” means (1) shares that carry 25% or more of the voting rights attached to all of a company’s outstanding voting shares; or (2) that represent 25% or more of all of the company’s outstanding shares as measured by fair market value.
Content of the Register
For each individual with significant control the Register must include the following information:
- name, date of birth and last known address;
- jurisdiction of residence for tax purposes;
- the day when the individual became, or ceased to be, an individual with significant control;
- description of how the individual has significant control over a company, including a description of any interests and rights they have in shares of the company;
- description of the steps taken by the company in each financial year to ensure the Register is complete and accurate; and
- any other prescribed information required by regulation.
At least once in each of its financial years, the company must take reasonable steps to ensure that it has identified all individuals with significant control, and ensure that the information in the Register is accurate, complete and up to date, and must also update any information which has changed once it becomes aware of such change, within fifteen days.
Compliance and penalties
Companies may be fined up to $5,000 for failing to maintain a Register, or for failing to comply with a request for information from an investigative body. Directors and officers can be fined up to $200,000 or imprisoned for up to six months for failing to maintain the Register, failing to respond to a request from an investigative body or allowing false or misleading information to be recorded in the Register. Shareholders will also face imprisonment for up to six months and fines of up to $200,000 for failure to meet their obligations to provide information for the Register.
If you would like our assistance in complying with these legislative changes and preparing your Register, or if you have any questions about the new disclosure requirements, please contact us at compliance@stewartmckelvey.com.
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