First

Session, 50th General Assembly

Elizabeth II, 2021

BILL 24

AN ACT TO AMEND THE

CORPORATIONS ACT

Received

and Read the First Time ................................................................

Second

Reading ............................................................................................

Committee .....................................................................................................

Third

Reading ...............................................................................................

Royal

Assent .................................................................................................

HONOURABLE SARAH

STOODLEY

Minister of Digital

Government and Service Newfoundland and Labrador

Ordered to be printed by

the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Corporations Act to

remove the residency

requirements for directors; and

increase the transparency of

beneficial ownership of corporations.

A BILL

AN ACT TO AMEND THE CORPORATIONS ACT

Analysis

S.2 Amdt.

Definitions

S.36 Amdt.

Corporate records

Ss. 45.1 to 45.5 Added

45.1 Individual with signif-

icant control over corporation

45.2 Register

of individuals with significant control over corporation

45.3 Inability

to identify individuals

45.4 Disclosure

of infor-

mation

in register

45.5 Disclosure

to investigative bodies

S. 174 Rep.

Residency requirement

S.184 Amdt.

Meeting of directors

S.189 Amdt.

Delegation

of director's powers

S.408.1 Added

Statutory review

S.503.1 Added

Offences respecting register of individuals with significant control over

corporation

S.504 Amdt.

Offences with respect to reports

Commencement

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

RSNL1990 cC-36

as amended

(1) Paragraph 2(o.1) of the Corporations Act is repealed.

(2) Paragraphs 2(q.1) and (q.2) of the Act are

repealed.

(3) Paragraph 2(

y) of the Act is repealed and the

following substituted:

(y) "resident Canadian" means an

individual who is

(

i) a Canadian citizen

ordinarily resident in Canada,

(ii) a Canadian citizen

not ordinarily resident in Canada who is a member of a prescribed class of

persons, or

(iii) a permanent resident

within the meaning of the Immigration and Refugee Protection Act (Canada)

and ordinarily resident in Canada, except a permanent resident who has been ordinarily

resident in Canada for more than one year after the time at which he or she

first became eligible to apply for Canadian citizenship;

Section 36 of the Act is amended by deleting

the word "and" at the end of paragraph (c), by deleting the period at

the end of paragraph (

d) and substituting a semi-colon and the word

"and" and by adding immediately after that paragraph the following:

(

e) subject to subsection 45.2(7), a register of

individuals with significant control over the corporation that complies with

section 45.2.

3. The Act is amended by adding immediately after

section 45 the following:

Individual with

significant control over corporation

45.1

(1) For

the purposes of this Act, any of the following individuals is an individual

with significant control over a corporation:

(

a) an individual who has any of the following

interests or rights, or any combination of them, in respect of a significant

number of shares of the corporation:

(

i) an interest as a registered holder of them,

(ii) an interest as a beneficial owner of them, or

(iii) direct or indirect control or direction over

them;

(

b) an individual who has any direct or indirect

influence that, where exercised, would result in control in fact of the

corporation; or

(

c) an individual to whom prescribed circumstances

apply.

(2) Two or more individuals are each considered to

be an individual with significant control over a corporation where, in respect

of a significant number of shares of the corporation,

(

a) an interest or right, or a combination of

interests or rights, referred to in paragraph (1)(

a) is held jointly by those

individuals; or

(

b) a right, or combination of rights, referred to

in paragraph (1)(

a) is subject to any agreement or arrangement under which the

right or rights are to be exercised jointly or in concert by those individuals.

(3) For the purposes of this section, a

significant number of shares of a corporation is

(

a) any number of shares that carry 25% or more of

the voting rights attached to all of the corporation's outstanding voting

shares; or

(

b) any number of shares that is equal to 25% or

more of all of the corporation's outstanding shares measured by fair market

value.

Register of

individuals with significant control over corporation

45.2

(1) A

corporation shall prepare and maintain, at its registered office or at any

other place in the province designated by the directors, a register of

individuals with significant control over the corporation that contains

(

a) the name, the date of birth and the latest

known address of each individual with significant control over the corporation;

(

b) the jurisdiction of residence for income tax

purposes of each individual with significant control over the corporation;

(

c) the date on which each individual became or

ceased to be an individual with significant control over the corporation, as

the case may be;

(

d) a description of how each individual is an

individual with significant control over the corporation, including, as

applicable, a description of the individual's interests and rights in respect

of shares of the corporation;

(

e) any other prescribed information; and

(

f) a description of each step taken in accordance

with subsection (2).

(2) At least once during each financial year of a

corporation, the corporation shall take reasonable steps, including any

prescribed steps, to ensure that it has

identified all individuals with significant control over the corporation and

that the information in the register is accurate, complete and up-to-date.

(3) Where a corporation becomes aware of any

information referred to in paragraphs (1)(

a) to (

e) as a result of steps taken

in accordance with subsection (2) or through any other means, the corporation

shall record that information in the register within 15 days of becoming aware

of it.

(4) Where a corporation requests information

referred to in any of paragraphs (1)(

a) to (

e) from one of its shareholders,

the shareholder shall, to the best of the shareholder's knowledge, reply

accurately and completely as soon as practicable.

(5) Within one year after the sixth anniversary of

the date on which an individual ceases to be an individual with significant

control over the corporation, the corporation shall, subject to any other Act or

Act of Parliament that provides for a longer retention period, dispose of in a

secure manner any of that individual's personal information, as defined in

subsection 2(1) of the Personal

Information Protection and Electronic Documents Act (Canada), that is

recorded in the register.

(6) A corporation that, without reasonable cause,

contravenes this

section is guilty of an offence and liable on

summary

conviction to a fine not exceeding $5,000.

(7) This

section does not apply to a corporation

that

(

a) is a reporting issuer under the Securities Act ;

(

b) is listed on a designated stock exchange as

defined in subsection 248(1) of the Income

Tax Act (Canada); or

(

c) is a member of a prescribed class.

Inability to

identify individuals

45.3 A

corporation to which

section 45.2 applies shall take the prescribed steps where

it is unable to identify any individuals with significant control over the

corporation.

Disclosure of

information in register

45.4

(1) A

corporation to which

section 45.2 applies shall disclose to the registrar, on

request, any information in its register of individuals with significant

control over the corporation.

(2) Shareholders and creditors of the corporation

or their personal representatives, on sending to the corporation or its agent the

affidavit referred to in subsection (3), may on application require the

corporation or its agent to

(

a) allow the applicant access to the register of

the corporation referred to in subsection 45.2(1) during the usual business

hours of the corporation; and

(

b) on payment of a reasonable fee, provide the

applicant with an extract from that register.

(3) The affidavit required under subsection

(2) shall contain

(

a) the name and address of the applicant;

(

b) the name and address for service of the body

corporate, where the applicant is a body corporate; and

(

c) a statement that any information obtained

under subsection (2) shall not be used except as permitted under subsection

(5).

(4) Where the applicant is a body corporate, the

affidavit shall be made by a director or officer of the body corporate.

(5) Information obtained under subsection

(2) shall not be used by any person except in connection with

(

a) an effort to influence the voting of

shareholders of the corporation;

(

b) an offer to acquire securities of the

corporation; or

(

c) any matter relating to the affairs of the

corporation.

(6) A person who, without reasonable cause,

contravenes subsection (5) is guilty of an offence and liable on

summary

conviction to a fine not exceeding $5,000 or to imprisonment for a term not

exceeding 6 months, or to both.

Disclosure to

investigative bodies

45.5

(1) In this

section

(a) "investigative body" means a police

agency, regulator or taxing authority;

(b) "police agency" means the Royal

Newfoundland Constabulary and the Royal Canadian Mounted Police;

(c) "regulator" means

(

i) the Superintendent of Securities appointed

under the Securities Act ,

(ii) the Financial Transactions and Reports

Analysis Centre of Canada established under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada),

(iii) a prescribed public officer, corporation,

agency or other entity whose authority to regulate is based on a law of the

province or of Canada; and

(d) "taxing authority" means the Canada

Revenue Agency or the department of the government of the province that is

responsible for administering or enforcing a law of the province that provides

for the imposition of a tax, royalty or duty.

(2) On request by an investigative body, a

corporation to which

section 45.2 applies shall, as soon as practicable after

the request is served on the corporation or is deemed to be received by it, and

in the manner specified by the investigative body

(

a) provide the investigative body with a copy of the

register of the corporation referred to in subsection 45.2(1); or

(

b) disclose to the investigative body any

information specified by the investigative body that is in the register of the

corporation referred to in subsection 45.2(1).

(3) A police agency may make a request under subsection

(2) only for the following purposes:

(

a) conducting an investigation in Canada

(

i) that is undertaken with a view to a law

enforcement proceeding, or

(ii) from which a law enforcement proceeding is

likely to result;

(

b) policing and criminal intelligence operations

in Canada;

(

c) assisting another law enforcement agency in

Canada for a purpose described in paragraph (

a) or (b); or

(

d) providing information contained in the

register to a law enforcement agency in a jurisdiction outside of Canada to

assist the agency in a law enforcement proceeding where the assistance is

authorized under an arrangement, written agreement, treaty or law of the

province or of Canada.

(4) A regulator may make a request under

subsection (2) only for the following purposes:

(

a) administering or enforcing a law for which the

regulator is responsible;

(

b) assisting another agency in Canada in the

administration or enforcement of a law that is similar to a law for which the

regulator is responsible; or

(

c) providing information contained in the

register to an agency outside of Canada to assist the agency in the

administration or enforcement of a law that is similar to a law for which the

regulator is responsible where this assistance is authorized under an arrangement,

written agreement, treaty or law of the province or of Canada.

(5) A taxing authority may make a request under

subsection (2) only for the following purposes:

(

a) administering or enforcing

(

i) a law of the province or of Canada that

provides for the imposition or collection of a tax, royalty or duty, or

(ii) a prescribed law of the province or of Canada

that is related to a law referred to in subparagraph (i); or

(

b) providing information contained in the

register to another jurisdiction inside or outside of Canada to assist the

jurisdiction in the administration or enforcement of a law of that jurisdiction

that provides for the imposition or collection of a tax, royalty or duty, where

the assistance is authorized under an arrangement, written agreement, treaty or

law of the province or of Canada.

(6) A request by an investigative body under

subsection (2) shall be served on the corporation by leaving the request at the

corporation's registered office as shown in the last notice filed under

section

34 or sent to the corporation by registered mail to that registered office and,

where sent, is deemed to be received at the time it would be delivered in the

ordinary course of mail, unless there are reasonable grounds for believing that

the corporation did not receive the request at that time or at all.

(7) A corporation that, without reasonable cause,

contravenes subsection (2) is guilty of an offence and liable on

summary

conviction to a fine not exceeding $5,000.

Section 174 of the Act is repealed.

5. Subsections 184(3) and (4) of the Act are

repealed.

6. (1) Subsection 189(1) of the Act is repealed

and the following substituted:

Delegation of

director's powers

(1) Directors of a corporation may appoint from their number a

managing director or a committee of directors and delegate to the managing

director or committee the powers of the directors.

(2) Subsection 189(2) of the Act is repealed.

7. The Act is amended by adding immediately after

section 408 the following:

Statutory review

408.1 The

minister shall, within 5 years of the coming into force of this section,

perform a review of all or part of this Act and consider the areas in which it

may be improved and report the findings to the Lieutenant-Governor in Council.

8. The Act is amended by adding immediately after

section 503 the following:

Offences

respecting register of individuals with significant control over corporation

503.1

(1) Every

director or officer of a corporation who knowingly authorizes, permits or

acquiesces in the contravention of subsection 45.2(1) or 45.5(2) by that

corporation commits an offence, whether or not the corporation has been

prosecuted or convicted.

(2) Every director or officer of a corporation who

knowingly records or knowingly authorizes, permits or acquiesces in the

recording of false or misleading information in the register of the corporation

referred to in subsection 45.2(1) commits an offence.

(3) Every director or officer of a corporation who

knowingly provides or knowingly authorizes, permits or acquiesces in the

provision to any person or entity of false or misleading information in

relation to the register of the corporation referred to in subsection 45.2(1)

commits an offence.

(4) Every shareholder who knowingly contravenes

subsection 45.2(4) commits an offence.

(5) A person who commits an offence under any of

subsections (1) to (4) is liable on

summary conviction to a fine not exceeding $200,000

or to imprisonment for a term not exceeding 6 months, or to both.

Section 504 of the Act is amended by adding

immediately after subsection (3) the following:

(4) For greater certainty, a register referred to

in subsection 45.2(1) or an extract from it is not a report, return, notice or

other document for the purposes of this section.

Commencement

10. This Act comes into force on April 1, 2022.

Queen's Printer