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

Sponsor

Status

This bill has received Royal Assent and is, or will soon become, law.

Summary

This is from the published bill. The Library of Parliament has also written a full legislative summary of the bill.

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.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, an excellent resource from Parliament. You can also read the full text of the bill.

Bill numbers are reused for different bills each new session. Perhaps you were looking for one of these other C-42s:

C-42 (2017) Veterans Well-being Act
C-42 (2014) Law Common Sense Firearms Licensing Act
C-42 (2012) Law Enhancing Royal Canadian Mounted Police Accountability Act
C-42 (2010) Law Strengthening Aviation Security Act

Votes

June 22, 2023 Passed 3rd reading and adoption of Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts
June 20, 2023 Passed Concurrence at report stage of Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts
June 20, 2023 Failed Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts (report stage amendment)
June 19, 2023 Passed Time allocation for Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts
June 1, 2023 Passed 2nd reading of Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts

Debate Summary

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This is a computer-generated summary of the speeches below. Usually it’s accurate, but every now and then it’ll contain inaccuracies or total fabrications.

Bill C-42 aims to combat money laundering, terrorist financing, and tax evasion by amending the Canada Business Corporations Act to create a publicly accessible registry of beneficial owners of federally regulated corporations. The registry will require corporations to disclose information about individuals with significant control, including residential addresses and citizenship, while implementing an exemption regime for at-risk individuals and protections for whistle-blowers. The bill also proposes consequential amendments to other acts to facilitate information sharing and data validation, with the goal of improving corporate accountability and public trust.

Liberal

  • Supports beneficial ownership registry: The Liberal Party supports Bill C-42, which would implement a public and searchable beneficial ownership registry of corporations governed under the Canada Business Corporations Act. The registry would increase the transparency of beneficial owners of federally regulated Canadian corporations, which would increase corporate accountability and improve public trust in corporate institutions.
  • Combat financial crimes: The Liberals argue that the bill would strengthen Canada's efforts to prevent and combat financial crimes, facilitate tax administration, and improve corporate accountability. It is intended to help protect the public, improve trust in business institutions, and ensure a well-functioning marketplace.
  • Minimize administrative burden: The Liberal speakers argue that the bill minimizes the administrative burden on businesses by leveraging existing intake and reporting mechanisms that federal corporations are already familiar with, such as annual updates.
  • Collaboration with provinces: The Liberals are working to ensure that the federal registry is scalable and provides access to the beneficial ownership data held by provinces and territories that agree to participate. They cite collaboration with Quebec as an example.

Conservative

  • Supports registry concept: The Conservatives support the concept of a national public registry of beneficial owners of companies as an important tool in the fight against money laundering and terrorist financing. The Cullen commission in British Columbia called for the creation of such a registry.
  • Bill has shortcomings: The Conservatives believe that much can be done to improve this bill and guarantee that it is effective. They feel that in order to reach the objectives of this registry, the bill must be amended.
  • Need pan-Canadian registry: The corporate registry will be only as strong as the provinces and territories that opt into it, and without all of them on board, criminals will just take their dirty money to the jurisdiction with the least strongest regulations. Amendments should be adopted to ensure the federal government is required to pursue agreements with the provinces and territories on information sharing to ensure the registry is truly pan-Canadian and interoperable.
  • Penalties must be stronger: Parliament needs to consider the registry in the context of the ability of law enforcement to combat the use of illegal funds, and strengthen some of the penalties. The government should consider strengthening the penalties and making some offences indictable, and ensure that corporations that do not comply with these regulations are held just as accountable as the individuals involved.
  • Lower the threshold: The CBCA currently defines significant control as an individual who owns or controls 25% or more, which is quite a high threshold. The House should consider aligning these regulations with those currently imposed on publicly traded companies by amending this bill to change the threshold to 10%.
  • Registry functionality unclear: The bill is concerningly quiet when it comes to how this registry will work and what information will be made available to the public. What exactly does it mean by “prescribed information”?, as the information made publicly available must keep in mind privacy interests.

NDP

  • Supports beneficial ownership registry: The NDP supports a public beneficial ownership registry, arguing it will help identify individuals with controlling stakes in the economy. This will address issues like unjustified price hikes and opaque land-use decisions.
  • Combating money laundering: The NDP believes the registry is crucial for combating money laundering, as Canada has a reputation as a destination for illicit funds. Identifying beneficiaries of corporate holdings is essential for effective action.
  • Enforcing sanctions on Russia: The registry is seen as a vital tool for enforcing sanctions against Russia by identifying the individuals behind corporate entities. This would enable Canada to take more meaningful action against those supporting the war in Ukraine.
  • Addressing wealth inequality: The NDP argues the registry will help track the wealth of the top 1%, enabling the implementation of wealth taxes. This is seen as a solution to the structural deficits causing problems for most Canadians, in contrast to Conservative proposals like cutting the carbon tax.

Bloc

  • Supports greater transparency: The Bloc supports the bill's aim to increase transparency by requiring federally incorporated businesses to report their real owners to Corporations Canada, creating a public registry.
  • Importance of provincial jurisdiction: The Bloc emphasizes the importance of respecting provincial jurisdiction over business ownership and property rights, particularly Quebec's Civil Code and Autorité des marchés financiers, to avoid centralization and ensure continued harmonization of laws.
  • Identifying beneficial owners: The Bloc questions whether the bill effectively identifies the true owners of companies with complex structures, especially those involving entities in tax havens or countries with limited information sharing, and emphasizes the need for well-equipped monitoring teams and international cooperation.
  • Mirrors Quebec's Efforts: The Bloc highlights that Quebec has already passed similar legislation (Bill 78) to create a registry of beneficial owners, emphasizing the importance of coordinating efforts between the federal and provincial governments.
Was this summary helpful and accurate?

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:25 p.m.

Conservative

Greg McLean Conservative Calgary Centre, AB

Mr. Speaker, I will not address the Broadcasting Act, because I am not sure that should be covered here or should be covered in a different bill, but I will address what the member talked about regarding lawyers' trust accounts. Lawyers' trust accounts are not held to the same standard as financial transactions. I remember that, in the financial industry, if $10,000 in cash came into one's account, one had to report that to FINTRAC authorities immediately. If one was at a brokerage, $1,000 of cash was actually the hurdle. Money laundering actually happens at places like currency exchanges, where people walk in with a thousand bucks and will exchange $999 and effectively do it that way. We do need to include the trust from lawyers in here. We will watch them fight it again in the Supreme Court, but making sure we bring them under the umbrella of what is acceptable for money-laundering mechanisms in Canada is very important.

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:25 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Mr. Speaker, I thank my colleague for his very interesting speech. I think we share rather similar points of view on this bill.

His colleague from Sarnia—Lambton, who spoke before he did, brought up the Panama Papers scandal in her speech to illustrate the fact that the government is not doing enough.

I would like to remind the House of some of the figures from that scandal. While the government brags about how much it is doing, the Canada Revenue Agency has recovered less money than Revenu Québec has. By way of comparison, the United Kingdom recovered more than $317 million; Germany, $246 million; Spain, $209 million; France, $179 million; Australia, $173 million and Canada, $21 million. That is 10 times less than the others.

Does my colleague agree that the government needs to be doing a lot more?

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:30 p.m.

Conservative

Greg McLean Conservative Calgary Centre, AB

Mr. Speaker, I thank my colleague for his good question.

He is right. The CRA's weakness internationally is appalling. Every other country in the world says that it has recovered more “dirty money”, as it is called, from the money laundering that is done in countries like Panama.

I am sure that the Canada Revenue Agency should be producing better results.

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:30 p.m.

Liberal

Chandra Arya Liberal Nepean, ON

Mr. Speaker, I agree with the hon. member on the need to combat money laundering and tax evasion. On the disclosure norms, I think he mentioned the threshold of 10%. He seems to agree with that. My concern is this. Why should we have any threshold of any percentage before the names of the shareholders are made public? It is very easy to work around this owner threshold.

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:30 p.m.

Conservative

Greg McLean Conservative Calgary Centre, AB

Mr. Speaker, we should have a beneficial owner threshold that actually says who controls these companies. A lot of them will be in separate nominated accounts that might have the same person behind them, but eventually we need to see our way to who those people are. As my colleague is, I think, alluding to, if there are 11 people owning 9% of a corporation, none of those has a full 10%. In that case, the beneficial ownership should be quite clear that it is the same entities that control that corporation. He is right; we should capture making sure we are talking about beneficial ownership of at least 10% or more. There comes a point in time when one is just a passive investor, but at 10%, one is actually a participant, in my opinion.

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:30 p.m.

Liberal

Chandra Arya Liberal Nepean, ON

Mr. Speaker, I will be sharing my time with the hon. member for Richmond Hill.

I rise to speak to Bill C-42, which would implement a public and searchable beneficial ownership registry of corporations governed under the Canada Business Corporations Act.

We have an issue with money ‎laundering and terrorist financing. To deal with this, we need tools and mechanisms in Canada that are in line with international best practices. Creating a public and searchable registry would increase the transparency of beneficial owners of federally regulated Canadian corporations, which would increase corporate accountability and improve public trust in corporate institutions.

These measures would help protect Canadians against money laundering and terrorist financing, deter tax evasion and tax avoidance, and make sure Canada remains an attractive place to conduct business.

I will take a moment to mention what corporations are. Corporations exist basically to allow individuals to channel their capital for the benefit of making profits. The corporation, as we know, came into existence in the 1844 act in Britain, and the shareholders were granted limited liabilities in 1855. In 1866, the United States court declared that a corporation is a natural person. Basically, while the corporation channels the resources for investment in a commercial enterprise, it limits the liability of the person to the capital contributed.

I will quote from an article published in New Internationalist:

What is a corporation? Ambrose Bierce's Devil's Dictionary defines it as “an ingenious device for obtaining profit without individual responsibility”. It is a legal construct, a charter granted by the state to a group of investors to gather private funds for a specific purpose. Originally, charters were granted in the service of a public purpose, and could be revoked if this were not fulfilled. The relationship between state and corporation is a complex one. Over the past 400 years corporations have conquered territory and brought in resources for the state, breaking laws put in place to constrain them and gaining in power and privilege. History shows a repetitive cycle of corporations over-reaching, causing such social turmoil that the state is forced to rein them back in through regulation.

Now, corporations are being created for no other purpose than to evade or avoid taxes. Supreme courts around the world have ruled on the difference between tax avoidance and tax evasion, and mentioned that if there is any transaction followed by an individual or a corporation that does not have any impact or consequence other than to reduce or eliminate tax, the transaction can be declared null and void.

We need to take all steps to rein back and plug the loopholes that are exploited by individuals and corporations to avoid or evade paying their fair share of taxes.

In budget 2022, we committed to implementing a public and searchable registry of beneficial ownership information. The registry would cover corporations governed under the Canada Business Corporations Act and would be scalable to allow access to the beneficial ownership data held by provinces and territories that agree to participate. The objective of the registry is to provide relevant authorities with timely access to accurate and up-to-date information about the true controlling individuals of corporations in order to combat illegal activities, including money laundering, corruption and tax evasion.

Greater transparency would also improve corporate accountability more generally and thus help protect the public, improve trust in corporate institutions and ensure a well-functioning marketplace. As it currently stands, corporations are already obligated to compile some beneficial ownership information. Upon the entering into force of this new piece of legislation, corporations would need to collect additional information from their beneficial owners, like citizenship and residential address, and send the information in their register of individuals with significant control to Corporations Canada on an annual basis and within 15 days of the day on which a change is recorded in their register.

There are a couple of shortcomings in the current bill, which can be overcome. One is with respect to fully publicly disclosing the names and citizenship of shareholders or members of corporations. The fundamental question is this: Why should the public not be aware of who is investing in a corporation, including their citizenship being known? It is not the fundamental right of any individual that he or she can be a shareholder. It is a privilege offered by the state through various acts, so why should the public not be aware of individuals who are shareholders, including their citizenship?

I do understand the need for their privacy of information like the address of the shareholder, which is something that has been addressed, but there is no reason why the names and citizenship of the shareholders of any corporation should be kept from becoming public. Especially, we Canadians should be aware of foreign nationals investing in Canadian corporations; disclosing their citizenship is a must.

There is another solution, which is that the information may be disclosed only if a threshold of ownership is significant and exceeds a certain mark. For significant shareholding, the threshold is 25% in some jurisdictions and 10% in other jurisdictions. However, using a threshold to limit disclosure requirements creates a loophole that can easily be exploited. If the threshold is fixed at 25%, five people could form a corporation with 20% each or 11 people could form a corporation if the threshold is 10%.

On the positive side, through this bill, we have sought to limit administrative burden by leveraging existing intake and reporting mechanisms that federal corporations are already familiar with. For example, federal corporations are already required to update Corporations Canada within 15 days after a change of directors occurs and to file an annual return.

We have carefully considered domestic and international best practices in developing the proposed beneficial ownership registry regime, including the U.K. system. We also made sure the proposed model would meet and exceed the standards for beneficial ownership transparency maintained by the Financial Action Task Force, a global anti-money laundering and anti-terrorism financing body of which Canada is a founding member.

In closing, I want to reiterate that this is a good bill that is very much required. We have to bring Canadian standards in line with international best practices. However, there are certain shortcomings, which I think should and must be addressed at the committee stage. I am sure that with the co-operation of all parties in this House, this bill will get passed and will become legislation sooner rather than later.

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:40 p.m.

Conservative

Brad Vis Conservative Mission—Matsqui—Fraser Canyon, BC

Mr. Speaker, the member for Nepean raised two areas of amendment: on disclosure of information, such as citizenship, and on the significant interest threshold, which members on our side have raised during the debate today as well.

I would like the member's opinion about whether the Liberal Party is open to further amendments on the penalties for corporations and individuals. In some cases, penalties in the legislation go up to $200,000, but are as low as $5,000 in other cases for corporations. Would the member opposite be open to further amendments to ensure that people who seek to launder money in Canada and have a registered corporation at the federal level would be accountable to higher penalties?

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:40 p.m.

Liberal

Chandra Arya Liberal Nepean, ON

Mr. Speaker, first on the question of disclosure of information, my understanding is that the bill does disclose citizenship and other details to various law enforcement agencies. However, my view is that citizenship information must be available to the public, too.

On the question of imposing penalties, personally I am in favour of changing the penalties if they are too lenient. We have to make it worthwhile. Penalties for the people who break the law should be sufficiently high to cause at least some pain.

The House resumed consideration of the motion that Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts, be read the second time and referred to a committee.

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:40 p.m.

Bloc

Gabriel Ste-Marie Bloc Joliette, QC

Mr. Speaker, I want to start by commenting on the time allocation that was just imposed on us.

I just want to remind my colleagues in the House that the Standing Committee on Finance is already doing a pre-study of Bill C-47. It is progressing very well. Work is moving forward. We are sitting until midnight. This allows my colleagues who want to speak to Bill C-47 to do so. There was no need for the government to impose time allocation. This infringes on the rights of members of Parliament in the House. It is shameful.

What does my hon. colleague think of this?

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:40 p.m.

The Acting Speaker Mike Morrice

I will remind members that there is a lot of latitude in debate, but we are meant to be speaking to Bill C-42 at this time.

That being said, I will allow the hon. member for Nepean to respond.

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:40 p.m.

Liberal

Chandra Arya Liberal Nepean, ON

Mr. Speaker, obviously the question is not part of Bill C-42 that we are debating.

I would like to take this opportunity to solicit the support of the Bloc Québécois to pass this important legislation that we are debating today.

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:45 p.m.

NDP

Jenny Kwan NDP Vancouver East, BC

Mr. Speaker, on the issue of money laundering, the impact on housing has been significant. In fact, in British Columbia, it has been indicated that it has contributed to inflating the cost of housing as much as 5%.

With this piece of legislation, could the member advise whether or not it would be effective in addressing the issue particularly on the land registry perspective?

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:45 p.m.

Liberal

Chandra Arya Liberal Nepean, ON

Mr. Speaker, I am not aware that the land registry can be dealt with in this bill. I am not particularly sure, but I do agree with the sentiment expressed by the hon. member on the impact of corporations investing in real estate and driving up the prices unnaturally, causing a hardship for Canadians in owning a property.

Canada Business Corporations ActGovernment Orders

April 28th, 2023 / 12:45 p.m.

Winnipeg North Manitoba

Liberal

Kevin Lamoureux LiberalParliamentary Secretary to the Leader of the Government in the House of Commons

Mr. Speaker, the federal government has been demonstrating very strong leadership by bringing forward the legislation. We get a sense of the support for the legislation and hope to see it pass. There is an obligation, if I can put it that way, for other jurisdictions in Canada, the provinces, in particular, to step up at the same time.

Ottawa is more than happy to assist in working with them where it is needed, but it is important that other jurisdictions also take action of sorts. I wonder if the member could provide his thoughts on the importance of that.