The creation of a publicly-accessible BC corporate transparency registry: Good corporate policy or provincial intrusion into criminal law?

Bill 20 has now received first reading in the BC legislature. If enacted, it will amend the Business Corporations Act, S.B.C. 2002, c. 57 (the “Act”) to require private companies to file information currently contained in their transparency registers with the Registrar of Companies. See our previous tax alert for a brief description of transparency registers.

Certain private, personal information compelled through operation of the amendments would be searchable and publicly accessible. For each “significant individual” in a private company (as defined at s. 119.11 of the Act), the information made available to the public would include the person’s full name and year of birth, whether the person is a Canadian citizen or permanent resident of Canada, and, if not, every country of which the person is a citizen. Limited exceptions would apply (e.g., for minors and persons able to demonstrate that their health or safety would be put at risk), similar to existing exemptions in the Land Owner Transparency Act.

The proposed amendments would permit the full transparency register, containing more detailed information than that available to the public, to be searched by enforcement officers to ensure compliance with the Act. Enforcement officers would also be given the right to enter and search a location where a private company’s records are kept for the purpose of inspecting those records. Administrative penalties may attach to non-compliance.

Notably, the amendments would also permit tax authorities to search the register for the purpose of administering or enforcing tax laws or for providing information to foreign jurisdictions to assist in the administration and enforcement of the tax laws of those other jurisdictions. In addition, amendments would permit the register to be searched by police officers for the purposes of conducting investigations in Canada, for advancing policing and criminal intelligence operations in Canada, and providing information to law enforcement agencies outside of Canada if authorized by a treaty or other law of BC or Canada.

The proposed amendments prohibit the inspection of records held by a lawyer if the lawyer claims solicitor-client privilege in respect of those records. I have previously written and spoken about concerns that potentially arise when law offices become search locations for compliance and law enforcement purposes. At the very least, lawyers should turn their minds to what is and what is not protected by privilege so that important and often nuanced decisions are not made in haste during a search.

In an accompanying news release, the purposes of the proposed amendments were laid bare by the Minister of Finance: “We’ve all heard about money launderers using numbered companies and complex corporate structures to hide their illegal activities and identities. … By creating a registry for beneficial owners, we’re rooting out money laundering and strengthening how we detect, deter and relentlessly disrupt illegal activity in B.C.”

The news release indicates that the “centralized registry will provide law enforcement and other authorities with more efficient and timely access to information” and will “prevent bad actors from being prematurely aware that they are being investigated.” The Minister concluded: “We look forward to working with cross-jurisdictional partners to further combat money laundering throughout Canada, and potentially beyond.”

The significance of Bill 20 is two-fold. First, if enacted, it will give rise to compliance obligations with the costs that attach to that. Secondly, it is beyond doubt that a guiding, if not primary, purpose of the proposed amendments is to facilitate tax and criminal law enforcement investigations. Prosecutions for the criminal offence of money laundering and, though not specifically referred to, tax evasion will almost certainly follow.

In the normal course, information cannot be statutorily compelled under the threat of penalty where the primary purpose of the compulsion is to advance a criminal investigation or prosecution. In light of the purposes of the proposed amendments as communicated in the Minister’s news release, Bill 20 appears to ignore that. In addition, criminal law is a federal rather than provincial authority. These considerations potentially create constitutional uncertainty over the validity of the proposed amendments and invite a court to rule, not upon whether the Bill reflects good policy, but whether the Bill passes constitutional muster.