Evidence of meeting #184 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was proposed.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Manuel Dussault  Senior Director, Framework Policy, Financial Sector Policy Branch, Department of Finance
Justin Brown  Director, Financial Stability, Financial Sector Policy Branch, Department of Finance
Peter Fragiskatos  London North Centre, Lib.
Yuki Bourdeau  Senior Advisor, Capital Markets Division, Financial Sector Policy Branch, Department of Finance
Eleanor Ryan  Director General, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Jean-François Girard  Director, Consumer Affairs, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Brigitte Goulard  Deputy Commissionner, Financial Consumer Agency of Canada
Kim Rudd  Northumberland—Peterborough South, Lib.
Mark Schaan  Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada
Ian Wright  Director, Financial Crimes Governance and Operations, Department of Finance
Darryl C. Patterson  Director, Corporate, Insolvency and Competition Policy Directorate, Marketplace Framework Policy Branch, Department of Industry
Martin Simard  Director, Copyright and Trademark Policy, Marketplace Framework Policy Branch, Department of Industry
Andrea Flewelling  Senior Policy Advisor, Marketplace Framework Policy Branch, Department of Industry
Patrick Blanar  Senior Policy Analyst, Patent Policy Directorate, Department of Industry
Dale MacMillan  Vice-President, Corporate Services and Chief Financial Officer, National Research Council of Canada
Christopher Johnstone  Director General, National Programs and Business Services, National Research Council of Canada
Eric Grant  Director, Community Lands Development, Lands and Environmental Management, Lands and Economic Development, Department of Indian Affairs and Northern Development
Leane Walsh  Director, Fiscal Policy and Investment Readiness, Economic Policy Development, Lands and Economic Development, Department of Indian Affairs and Northern Development
Susan Waters  Director General, Lands and Environmental Management Branch, Lands and Economic Development, Department of Indian Affairs and Northern Development
Michèle Govier  Senior Director, Trade Rules, International Trade and Finance Branch, Department of Finance
Katharine Funtek  Executive Director, Trade Controls Policy, Department of Foreign Affairs, Trade and Development
Bev Shipley  Lambton—Kent—Middlesex, CPC
Nicole Giles  Director, International Trade and Finance, Assistant Deputy Minister's Office, Department of Finance
Deirdre Kent  Director General, International Assistance Policy, Department of Foreign Affairs, Trade and Development
Mark Lusignan  Director General, Grants and contributions Management, Department of Foreign Affairs and International Trade (International Trade)
Michelle Kaminski  Director, Office of Innovative Finance, Grants and Contributions Management, Department of Foreign Affairs, Trade and Development
Chantal Larocque  Deputy Director, Development Finance, Grants and Contributions Financial Policy, Foreign Affairs Canada
Danielle Bélanger  Director, Gender-Based Analysis Plus and Strategic Policy, Policy and External Relations Directorate, Status of Women Canada
Alison McDermott  General Director, Economic and Fiscal Policy Branch, Department of Finance
Derek Armstrong  Executive Director, Results Division, Expenditure Management Sector, Treasury Board Secretariat
Lori Straznicky  Executive Director, Pay Equity Task Team, Strategic Policy, Analysis and Workplace Information, Labour Program, Department of Employment and Social Development
Don Graham  Senior Advisor to the Assistant Deputy Minister, Compensation and Labour Relations Sector, Treasury Board Secretariat
Bruce Kennedy  Manager, Pay Equity Task Team, Labour Program, Department of Employment and Social Development
Richard Stuart  Executive Director, Expenditure Analysis and Compensation Planning, Expenditure Management Sector, Treasury Board Secretariat
Colin Spencer James  Senior Director, Social Development Policy, Strategic and Service Policy Branch, Department of Employment and Social Development
Andrew Brown  Director General, Employment Insurance Policy Directorate, Skills and Employment Branch, Department of Employment and Social Development
Barbara Moran  Director General, Strategic Policy, Analysis and Workplace, Labour Program, Department of Employment and Social Development
Rutha Astravas  Director, Employment Insurance Policy, Special Benefits Policy, Department of Employment and Social Development
Charles Philippe Rochon  Senior Policy Analyst, Labour Standards and Wage Earner Protection Program, Workplace Directorate, Department of Employment and Social Development

5 p.m.

Liberal

Francesco Sorbara Liberal Vaughan—Woodbridge, ON

Thank you. I'll stop there.

5 p.m.

Liberal

The Chair Liberal Wayne Easter

Does anyone else have any further questions?

Mr. Fergus.

5 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

I might as well go for broke here.

I know that it's not in our framework at the federal level, but this is sort of a pan-Canadian approach. I just want to get a sense of the temperature of the pool with the provinces and territories.

Is there any discussion about how we try to get at the beneficial ownership of foreign owners?

5 p.m.

Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada

Mark Schaan

There's obviously quite a bit of international co-operation among authorities, particularly on the tax side. They're in a better place to be able to speak to some of that shared information on the legal enforcement side, as are some of our national security and national enforcement folks.

We're simply trying to make sure that the statute has the information being held by the corporation, which then can be utilized by competent authorities in both their respective domestic and international investigations.

5 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

Thank you for that.

I'm certain you're anticipating our report with great interest.

5 p.m.

Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada

Mark Schaan

Absolutely.

5 p.m.

Liberal

Greg Fergus Liberal Hull—Aylmer, QC

It should be forthcoming.

5 p.m.

Liberal

The Chair Liberal Wayne Easter

This week....

Mr. Kmiec.

5 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

I will continue Mr. Fergus's line of questioning because the committee has been taken with this issue. In the U.K. experience they talked about one of the problems with their registry being the verification of the data.

I see here there's only one provision asking corporations to update once a year. Was there any other thought given to perhaps putting the onus on them to update when their material changes? That should be reported.

Have I just missed it in this omnibus budget bill?

5 p.m.

Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada

Mark Schaan

They have to update it at least once per year. In terms of any material changes they would still stay in the registry.

I will turn to Darryl.

5 p.m.

Darryl C. Patterson Director, Corporate, Insolvency and Competition Policy Directorate, Marketplace Framework Policy Branch, Department of Industry

There's also an obligation. If the corporation comes into possession of information that needs to be put onto the registry, they must do so within 15 days.

5 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

For this registry, is there any...again, I don't see it in here, so maybe there is.

Is there a reason why the data verification side of it is not legislated? The U.K. registry suffers from a lot of inaccurate information or just errors. There have been reports that you can basically make a circular loop in it—that you could register things being owned by other corporations. You follow the lead and it leads back to the same corporations, so corporations are owning themselves. Is there—in law, in here—a method or a process to stop it, or is that just going to be a procedural process thing?

5 p.m.

Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada

Mark Schaan

No. We got around that by requiring the corporation to list in their registry of shareholders the natural person at the end of the chain.

5 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Where is that in here?

5 p.m.

Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada

Mark Schaan

It's the individual. “Individual” is defined in the act. In proposed subsection 2.1(1), then, we identify “an individual”, and then in the individual....

Go ahead, Darryl.

5 p.m.

Director, Corporate, Insolvency and Competition Policy Directorate, Marketplace Framework Policy Branch, Department of Industry

Darryl C. Patterson

We got around this by creating a new term: “individual of significant control”. It is defined in the thresholds that have been created here. At every subset it's an individual. That individual is a natural person. We couldn't use the word “person”, because “person” incorporates more than a natural individual.

5 p.m.

Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada

Mark Schaan

That's the way we got around the challenges of the loop.

In terms of the verification of the information, the corporation is required to make best efforts to populate their registry of beneficial owners. There are penalties for failure to maintain that.

5 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Right. On the penalties, under proposed subsection 21.1(6), it says, “A corporation that, without reasonable cause, contravenes this section is guilty of an offence and liable on summary”.... It's a fine “not exceeding five thousand dollars.”

Why $5,000?

5:05 p.m.

Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada

Mark Schaan

It's consistent with the other penalties in the statute. There is a penalty, though, for the individual. This is under “Penalty”, in proposed subsection 21.1(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 six months, or to both.

In terms of the burden—

5:05 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Please slow down right there. On 21.1(5), it says here “Disposal of personal information”, unless I'm reading it incorrectly.

Do you mean proposed subsection 21.4(5)?

November 5th, 2018 / 5:05 p.m.

Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada

Mark Schaan

I'm sorry. I think it's 21.4(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 six months, or to both.

On the burden, the corporation has a consistent penalty for the statute as a whole, which is to do due diligence and maintain a registry of shareholders. Individuals who knowingly seek to prevent themselves from being disclosed to the corporation face much higher penalties.

5:05 p.m.

Liberal

The Chair Liberal Wayne Easter

Go ahead, Tom.

5:05 p.m.

Conservative

Tom Kmiec Conservative Calgary Shepard, AB

Again, forgive me if I've missed it. Are there any provisions here for exemptions for personal security? The register will have your name, date of birth, last known address, each individual with significant control, and jurisdiction of residence. It's pretty specific.

Is there a mechanism for those individuals who would be listed here for whom there's a personal safety issue to seek an exemption and not to have their address listed? If I have a bunch of kids and I'm the CEO and official owner of a bunch of companies, and I have received death threats, here's a really easy way to find where I live. Is there a mechanism by which that could be blanked out, or is there no personal exception for safety?

5:05 p.m.

Director General, Marketplace Framework Policy Branch, Innovation, Science and Economic Development Canada

Mark Schaan

I'll say two things.

One is that the information is only available to competent authorities—to the director of Corporations Canada or to a fellow shareholder of the entity. Also, it's only available at the premises of the corporation.

The second is that there is an access affidavit provision that does indicate shareholders and creditors—

5:05 p.m.

Director, Financial Crimes Governance and Operations, Department of Finance

Ian Wright

Appropriate use....