Summary

Bill C-42 proposes amendments to the Canada Business Corporations Act with the goal of increasing transparency around individuals with significant control over corporations. Key changes include:

1. Public Disclosure: The Director must make publicly available certain information about individuals with significant control, including their name, birth date, residential address, and service address.
2. Privacy Protections: Some individuals will have their information protected under specific circumstances, particularly if sharing it poses a serious safety threat.
3. Enforcement Powers: The bill grants the Director new powers to ensure compliance and enforce penalties for non-compliance, including fines up to $1 million for individuals or corporations found violating these provisions.
4. Annual Reporting: Corporations will be required to review and update their records of individuals with significant control at least once a year.
5. Consequential Amendments: The bill also leads to changes in other laws, including the Access to Information Act and the Income Tax Act, which will require sharing specific business and taxation information with authorities.

What it means for you

For ordinary citizens, this bill can have several implications:

• Transparency: If you conduct business or have interactions with corporations, it could become easier to know who actually controls them, which could influence decisions like investing or entering contracts.
• Privacy Considerations: While the aim is to increase transparency, there’s a balance to be struck concerning individual privacy. Certain individuals may remain anonymous if disclosing their personal information could endanger them.
• Compliance Requirements: If you are a business owner or involved with corporate governance, you need to ensure your company adheres to these new requirements, which might involve collecting and reporting more detailed information.

Expenses

The enforcement of this bill may lead to additional costs for businesses:

• Compliance Costs: Corporations may have to invest time and resources into collecting and maintaining accurate information about individuals in significant control positions. This may involve hiring professionals or investing in new systems.
• Potential Penalties: Non-compliance with these regulations could lead to significant financial penalties, potentially up to $100,000 for corporations and $1 million for individuals. Such risks may lead to higher insurance or legal costs for companies to mitigate these issues.

Proponents' View

Supporters of Bill C-42 argue that:

• Enhanced Transparency: By making information about those in control of corporations public, the bill promotes accountability, reduces corporate fraud, and fosters a business environment that supports fair competition.
• Robust Framework for Enforcement: Increased enforcement powers for the Director are viewed as necessary to ensure compliance, with the belief that strict penalties will deter corporations from neglecting their obligations.
• Public Safety: While the bill imposes public disclosure, it also considers individual safety and privacy, protecting certain individuals from potential threats.

Proponents believe that this balance of transparency and safety can improve trust in the business community and ensure that corporations operate responsibly.

Opponents' View

Critics of the bill express concerns such as:

• Privacy Concerns: There is apprehension that mandatory public disclosure could expose individuals to privacy violations, particularly in cases involving sensitive personal information.
• Administrative Burden: Opponents argue that the compliance requirements could place a heavy administrative burden on small businesses, which may lack the resources to effectively manage these new reporting obligations.
• Potential Stifling of Entrepreneurship: Some believe the added layers of regulation might deter investment and stifle innovation, as prospective investors could be turned off by the increased bureaucratic hurdles associated with corporate oversight.

Opponents worry that while the intentions may be good, the practical implications could be negative for business operations, particularly for smaller enterprises that may struggle to cope with the complexity of these new rules.