Bill C-42

An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts

This enactment amends the Canada Business Corporations Act to, among other things,
(a) require the Director appointed under that Act to make available to the public certain information on individuals with significant control over a corporation;
(b) protect the information and identity of certain individuals;
(c) add, or broaden the application of, offences and provide the Director with additional enforcement and compliance powers; and
(d) add regulatory authority to prescribe further requirements in certain provisions.
It also makes consequential and related amendments to other Acts.

Motions in Amendment

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Madam Speaker, I rise today to offer a few thoughts on Bill C-42, which proposes amendments to the Canada Business Corporations Act, or CBCA, and would make consequential changes to other statutes to create a federal beneficial ownership registry. This registry would be, arguably, the most important tool we could utilize to better detect, deter and prosecute money laundering, tax evasion, fraud and terrorist-financing activities.

First of all, I want to congratulate all members of the Standing Committee on Industry and Technology for their hard work. They studied a bill with more than 20 clauses, dealing with a highly complex subject matter, and heard from numerous stakeholders who represent a spectrum of views.

Among other factors, the committee heard that the interoperability of the registry is a key concern and is, in fact, a key ingredient to the success of a pan-Canadian beneficial ownership registry. Certain witnesses appearing before committee emphasized the need to ensure adequate alignment, both domestically and internationally. The need for this is obvious, given the transnational nature of organized crime and the complexity and sophistication with which actors can conceal the true owners of different assets. We need to be able to work together to counter this.

Interoperability has many dimensions, but it generally means that Canada not only respects international best practices on thresholds and uses the best available data standard but is also similarly aligned with domestic best practices. Thus, provinces are enticed to join a pan-Canadian registry and information can be shared seamlessly to trace illicit activities across jurisdictions. That is why Canada has adopted the beneficial ownership open data standard, which is an internationally accepted open standard for modelling and publishing information on the beneficial ownership and control of companies. It is used for collecting, sharing and using data on beneficial ownership. Canada's use of this standard would ensure that our registry could communicate and speak using the same technical language as beneficial ownership registries around the world do, as well as communicating with our provincial and territorial partners.

The standard would also mandate that corporations provide information about individuals who have significant ownership stakes and control in any corporation, thereby empowering law enforcement, the CRA, banks, journalists and the general public to accurately ascertain the true owners of any given company. This will help prevent criminals from using anonymous, numbered corporations, or shell companies, which are sometimes spread across multiple jurisdictions as a shield to conceal the true owners of companies.

Furthermore, I want to highlight the work of the committee in increasing the maximum penalties for those found to have failed to comply with the legislation, with fines now up to $1 million. This will ensure that there is a sufficient deterrent effect for individuals frustrating the important purpose of the legislation.

The provinces and territories have a major role to play here, because the vast majority of companies are in fact incorporated provincially. That is why I am pleased to see my home province of British Columbia taking a leadership role in response to widespread allegations of money laundering in the province. B.C. has tabled legislation to create its own beneficial ownership registry for corporations, and it has already created a beneficial land ownership registry, which is now in effect.

It is easy to see why action is important. A 2018 report estimated that money laundering has played a role in increasing housing prices by approximately 5% in British Columbia. The lack of knowledge regarding the true owners of over half of the top 100 most-expensive properties in B.C. not only worsens the problem of housing affordability but also raises further concerns about potential tax evasion related to the treatment of principal residences. Furthermore, clear ties have been made between money laundering and the devastating health crisis we are facing in B.C., the opioid epidemic, where illicit funds garnered from the sale of fentanyl and other illegal drugs are laundered through real estate and other opaque means, contributing to the problem.

That is why, in addition to Canada's adoption of the beneficial ownership open data standard, the federal government has worked and continues to work alongside its provincial and territorial counterparts to continue to move the needle ahead on ensuring beneficial ownership transparency in Canada. This collaboration began at the officials level in 2016 and was formalized in a 2017 agreement among federal, provincial and territorial finance ministers. They agreed, in principle, to pursue legislative amendments to their respective corporate statutes that would require corporations to hold accurate and up-to-date information on beneficial owners, as well as to eliminate the use of bearer shares.

In 2019, finance ministers further agreed to “cooperate on initiating consultations on making beneficial ownership information more transparent through initiatives such as aligning access through public registries, while respecting jurisdictional responsibilities with respect to corporations.” The ongoing collaboration has resulted in, among other things, the majority of the provinces making amendments to their corporate statutes to create and maintain a beneficial ownership registry of their individuals with significant control. These amendments largely emulated the 2019 legislative amendments made to the CBCA. This means that, for most businesses operating in Canada, there will be information available on their beneficial owners.

Our ongoing collaboration with the provinces has also culminated in the establishment of a common platform called the multi-jurisdictional registry access service, or MRAS for short. MRAS is a common front-end portal that provides access to all the corporate registries in the country. It was a project adopted many years ago among the provinces, the territories and the federal government, and it represents one of the options to build on in creating a pan-Canadian registry.

Our efforts to harmonize federal and provincial beneficial ownership regimes are an ongoing initiative. To illustrate this, it is notable that, on June 5, Minister Champagne and Deputy Prime Minister Freeland sent a joint letter to their respective provincial and territorial ministerial counterparts, asking them to once again join the federal government's effort to create a pan-Canadian beneficial ownership registry and seeking specifically to understand each—

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

moved:

That Bill C-42 be amended by deleting the long title.

Mr. Speaker, it is a pleasure to rise on Bill C-42, an act to amend the Canada Business Corporations Act and to make consequential and related amendments to other acts. I outlined the amendment because we really did not study or work on too many other acts.

Earlier last week, when we finally had time to debate this bill and study it extensively at committee, it was very unfortunate that we had our committee witnesses appear the hour before we were to discuss amendments and go through clause-by-clause of the bill. There were some aspects of the bill that could have been improved had we had more time.

An example is the threshold for significant control. While the government repeatedly claimed that 25% is the international standard, witnesses made clear that it was only a guideline and that Canada could be a leader by reducing it. James Cohen, executive director of Transparency International, noted:

I don't think, for one, lowering the threshold from 25% to 10% and a risk-based approach are mutually exclusive. I think they actually go hand in hand. I would note that the 25% isn't so much a standard as it was an initial global recommendation that everyone just kind of grabbed on to.

Furthermore, when asked if a lower threshold would create unnecessary administrative complications, Superintendent Denis Beaudoin, director of financial crime for the RCMP, stated, “The RCMP standpoint is that the more names and more information, the better. As we're trying to make links in a criminal investigation, it certainly can help.” Both Conservative and NDP members of the committee tabled amendments to reduce the threshold for significant control from 25% to 10%. However, they were blocked by the Liberal and Bloc Québécois members.

The next aspect of the bill that could have been improved had we had more time to go through the amendments and hear from expert testimony relates to searchability. The Conservatives tabled two amendments to improve the searchability of the public registry, which were both raised by Transparency International in its submission. The first would have required that the jurisdiction of residence for tax purposes and the name of the corporation be included for each individual listed on the registry. The second would have added specific language to the bill requiring that the registry be made available to the public in a searchable format. Other good-faith amendments that were rejected included the inclusion of real estate in Bill C-42 and interoperability measures that could have improved the ability to work with the provinces and territories to have all the data that our law enforcement needs to go after white-collar crimes.

The next clause that was deleted that I think could have improved the bill related to law enforcement access. This amendment would have added specific language to the bill to ensure that law enforcement and other investigative bodies like FINTRAC could access information from the director rather than having to go to corporations individually. It also would have removed a reference to prescribed circumstances in relation to exceptions, ensuring that only minors are automatically exempted from having their information disclosed and that all others must apply for an exemption and prove that it is necessary.

There was a good-faith amendment brought forward by the Conservatives and recommended by Transparency International related to post boxes. This amendment would have barred individuals from listing a post office box as their address to be made in the public registry. Transparency International and the End Snow-Washing campaign requested that this be included in the bill. Ministry staff assured members that disallowing the use of post boxes is already standard practice at Corporations Canada and that including this language in the bill would be unnecessary. However, that analysis did not account for fact that the provincial registries may have different guidelines. If we are to truly seek interoperability and go after white-collar crime, we have to be more open to explicit language in legislation like this to give law enforcement the tools it needs and to close as many loopholes as possible.

Another good-faith CPC amendment was related to penalties on provincially registered corporations. This amendment would have changed the definition of a corporation in the context of offences to include provincially regulated corporations. This was important to ensure that when we reach a stage of interoperability with all registries, either provincial or federal, all people who are in contravention of the bill, and hopefully future law, are subject to the same penalties and convictions under the Criminal Code of Canada. I will note that the Conservatives, in good faith, did support an amendment that we also tabled to increase the fines for people committing an offence under the corporations act and it was supported. It was one positive aspect of the process at committee.

However, overall, while enemy cannot be the perfect of the good, I think the bill could have used just a few more meetings to hear from witnesses to get it at a stage where we could be really assured that we made the necessary and appropriate amendments. I say that because there was a good-faith commitment from all parties on this legislation to move quickly. I will repeat that it is not good parliamentary practice to have serious witnesses appear an hour before we are doing clause-by-clause, especially when they are bringing forward substantive amendments and have very little time to present.

I will go over some of the positions of the Canadian Bar Association, which had concerns with public access to the beneficial ownership registry and ensuring that Bill C-42 complies with the Canadian Charter of Rights and Freedoms. It noted this in a letter to me:

Individuals have legitimate personal and business reasons for not publicly disclosing sensitive personal information of beneficial owners. Canada should be mindful that businesses will look carefully at the requirement to make information public and determine how and in which jurisdiction they want to structure their corporations.

Public disclosure of additional corporate information may deter corruption and money laundering, and frustrate the efforts of fraudsters to use sham corporate vehicles for criminal purposes. However, it may also increase identity theft...which could undermine the anti-fraud rationale of the registry.

I think we needed to hear more from the Canadian Bar Association to get the balance between personal information being disclosed publicly and the need for law enforcement to have the necessary tools to do its job effectively. Indeed, the letter from the Canadian Bar Association said that a key aspect of this bill is balancing public interests and privacy rights. It noted:

In 2022, the Court of Justice of the European Union (CJEU) examined an anti-money-laundering directive...establishing a Register of Beneficial Ownership where some information on the beneficial owners was accessible to the general public. The CJEU held that the directive was invalid because the public’s access to information on beneficial ownership constituted a serious interference with the fundamental rights to respect for private life and to the protection of personal data.

Although witnesses did appear before committee, they had very limited time to bring forward all of their amendments. In fact, we only received amendments from Publish What You Pay Canada, Transparency International and Canadians for Tax Fairness on June 8. They outlined a number of really key amendments, some of which we were able to get on the floor at the very last minute. However, again, had there been a week in between hearing from serious witnesses and going through the amendment process in clause-by-clause, the bill could have been a bit better.

For example, Transparency International outlined the verification of identity of a significant individual. It recommended for “the Government of Canada to review Division Two and consider amendments requiring corporations to provide identity documents to the registrar upon request for the specific purpose of verification.” Transparency International outlined the need to improve intergovernmental corporations, which was a big aspect of the work we did to study the legislation. It also pointed out, especially in the context of a place like British Columbia, where we see a lot of foreign investment or at least a lot foreign money entering our real estate market and local businesses, that more needed to be done to ensure that the country of residence, the name of a corporation and valid government ID be part of these registries moving forward. As I outlined earlier, it mentioned that post office boxes should be included and should not be used as a place to do business in Canada.

Overall, we did get some good work done on this bill, but a lot more could have been done.

Speaker's Ruling

[The Deputy Speaker, Conservative, Chris d'Entremont]

There is one motion in amendment standing on the Notice Paper for the report stage of Bill C-42. Motion No. 1 will be debated and voted upon.

The House proceeded to the consideration of Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts, as reported (with amendments) from the committee.

Business of the House

[Mark Holland, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I am very glad to respond on behalf of the government.

This afternoon we will continue debate on Government Business No. 26, concerning amendments to the Standing Orders. When debate concludes later this evening, we will consider Bill C-35, respecting early learning and child care, followed by Senate amendments to Bill C-9, concerning the Judges Act.

Tomorrow we will consider Bill C-42, respecting the Canada Business Corporations Act, at report stage and third reading, and Bill S-8, respecting sanctions.

The priorities for next week shall include Bill S-8, on sanctions; Senate amendments to Bill C-18, respecting online news; Bill C-40, concerning the miscarriage of justice review commission act, also known as David and Joyce Milgaard's Law; and Bill C-33, which strengthens the port system and railway safety.

Thursday shall be an allotted day.

Finally, I request that the ordinary hour of daily adjournment for the next sitting be 12 midnight, pursuant to order made Tuesday, November 15, 2022.

Industry and Technology

[Joël Lightbound, Liberal, Louis-Hébert, QC]

Mr. Speaker, I have the honour to table, in both official languages, the following three reports of the Standing Committee on Industry and Technology.

I am tabling the 14th report, entitled “Domestic Manufacturing Capacity for a COVID‑19 Vaccine - Prevention is Better than Cure”, and the 15th report, entitled “Blockchain Technology: Cryptocurrencies and Beyond”. Pursuant to Standing Order 109, the committee requests that the government table a comprehensive response to each of these two reports.

I also have the honour to table, in both official languages, the 16th report of the Standing Committee on Industry and Technology concerning Bill C-42, an act to amend the Canada Business Corporations Act and to make consequential and related amendments to other acts. The committee has studied the bill and has decided to report it back to the House with amendments.

I would like to take this opportunity to thank the analysts, the interpreters and our clerk, and now our new clerk. Their work was instrumental in the committee's successful presentation and tabling of these three reports.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Yes. I'd like to move CPC-73, which would amend Bill C-42 (a) by adding after line 26 on page 7 the following:

(2.1) The Director may, with the approval of the Minister, enter into an agreement or arrangement with a provincial corporate registry or with a provincial government department or agency that is responsible for corporate law in the province for the purpose of facilitating timely access to beneficial ownership information that could relate to the commission or potential commission of wrongdoing as described in paragraph (3)(b).

In (b), it would add after line 34 on page 7 the following:

(4) In this section and in sections 21.1 to 22, corporation includes a corporation that is incorporated under a Act of the legislature of a province that has entered into an agreement under subsection (2.1).

Of the approximately 4.3 million businesses in Canada, just 400,000 are incorporated federally and subject to CBCA regulations. Businesses incorporated provincially would be included in this public registry. Once an agreement between the province and the federal government is reached, however, they would not be subject to the penalties for non-compliance. This amendment will ensure that provincially incorporated businesses, in agreement to be part of the registry, face the same penalties as those incorporated federally.

Thank you, Mr. Chair.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

Thank you, Mr. Chair.

This is another one that's not in the main package but is being distributed now. It was emailed to you earlier. It's number 12517956. The clerk is emailing it now.

In essence, what this does, it's about searchability. I move that Bill C-42, in clause 4, be amended (a) by deleting lines 17 and 18 on page 3, and (b) by replacing lines 20 to 22 on page 3 with the following: “(2) The Director shall make the information referred to in subsection 21.1(1) that was sent to the Director under section 21.21 available to the public in a searchable format.”

We're trying to get a more usable searchable format for public disclosure and transparency as a condition here in the act.

[Rick Perkins, Conservative, South Shore—St. Margarets, NS]

I'll give everyone a chance to catch up to CPC-19.

As written, Bill C-42 does not require the director of Corporations Canada to share information collected from the registrars of corporations with their provincial counterparts, as we read it.

The Liberals talked about interoperability of the federal public registry, but I think it has to be a little more specific in this bill. Provinces and the federal government must be on the same page in information sharing, if possible. We're proposing this amendment to try to make sure that we're better tied on that sharing of information.

I actually wouldn't mind having the officials comment on this.

[Brian Masse, NDP, Windsor West, ON]

I have an amendment that Bill C-42, in clause 2, be amended by replacing line 32 on page 2 with the following: “$100,000”.

[The Chair, Liberal, Joël Lightbound]

Colleagues, I call this meeting back to order.

Again this week we are blessed with the presence of Mr. Schaan, who's now almost a permanent member of this committee. He's always here.

Thank you very much for being here with us to answer our questions as we go through clause-by-clause on Bill C-42.

He's accompanied by Martin Simard, who is the senior director, strategy and innovation policy sector at ISED.

Thanks to both of you.

Without further ado, dear colleagues, we will begin clause-by-clause consideration of Bill C‑42.

There is a new clause, clause 0.1.

Go ahead, Mr. Perkins.

[Justin Brown]

I can't give you any details. I know that the government signed an agreement with the provinces and territories in 2017, and it was further to those discussions that the 25% threshold was established. That's where the threshold in Bill C-42 came from.

[Supt Denis Beaudoin]

I don't think anything glaring is missing from Bill C-42. To repeat what others have mentioned, I think it's important to ensure that the regime is pan-Canadian. That's the most important thing, especially when you consider the fact that the share percentage varies from province to province. In some places, it's 25%, and in others, it's 10%. Criminals will go to areas or countries that don't have these kinds of rules. Corporations that are under criminal investigation by the RCMP or that are being used to launder money will be incorporated in those jurisdictions.

That's why the most important thing is to ensure that the legislation applies to the entire country. The provinces and territories have to be brought in, whether through this regime or an independent one.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

That really leaves leaves an impression. It would be easy to find the money to fight money laundering if we could catch it at the source, when the fraud is being committed.

Do you think Bill C-42 gives the Department of Finance enough tools to recover that money? Does it give you additional tools to address the problem? How would you like to see the bill improved?

[Supt Denis Beaudoin]

Sorry, but I'm not sure I understood your question. We already work with other police services. As I understand Bill C-42, it will give all police services access to the information on the criminals. We already have very smooth co-operation with most police services in Canada. The bill will strengthen that co-operation, because they will have access to the information as well.