Corporations Canada is Taking a Closer Look at ISC Filings

Both federal and Ontario corporations must maintain a register and other detailed records concerning any “individuals with significant control” (ISCs) over the corporation, including those who directly or indirectly own or control at least 25% of its shares as measured by votes or value, or who exercise control in fact.

Since 2024, federal corporations have been required to file ISC information with Corporations Canada upon incorporation, and again upon the filing of each corporate annual return, upon any amalgamation or continuance, and within 15 days of any change to the information.

Corporations must take reasonable steps to ensure the accuracy and completeness of their ISC register and must record the measures they take to do so. Non-compliance may result in significant penalties. See our corporate transparency blog for further details about the requirements for federal and Ontario corporations.

Recently, our Corporate Services team has noted that Corporations Canada appears to be taking a more active approach in reviewing compliance with the ISC regime, including sending notices to corporations whose public filings state that they have no ISC, and requiring information and supporting materials demonstrating the steps the corporation took to verify that conclusion.

The practical message is clear: Corporations Canada expects federal corporations to take the ISC requirements seriously, and compliance requires an organized and documented approach to collecting and maintaining accurate information.

What Corporations Canada Is Asking For

Based on our experience, Corporations Canada may request materials such as:

• the corporation’s ISC register;
• a current shareholder list;
• a summary of the steps taken to identify any ISC;
• supporting information; and
• an attestation addressing whether any individual exercises control in fact.

A deadline may also be imposed. In our experience, a notice typically requires a response within 30 days.

Supporting a “No ISC” Filing

A corporation can legitimately have no identifiable ISC. For example, its ownership may be widely dispersed so that no individual meets the applicable ownership thresholds, and no individual may exercise control in fact.

However, a conclusion that there is no ISC should be supported by a documented analysis. Corporations Canada appears increasingly interested in understanding how corporations reached that conclusion, rather than simply accepting the filing at face value.

For corporations with shareholder agreements, holding companies, trusts, nominee arrangements, or joint ownership structures, the analysis may require tracing ownership and control through multiple layers before reaching a conclusion.

In our experience, keeping the ISC register, working papers, and federal filings aligned makes responding to an inquiry significantly easier and helps demonstrate compliance efforts. Corporations should be prepared to support their ISC conclusions with a documented analysis.

What Federal Corporations Should Do Now

Federal corporations should proactively ensure their records are complete and up to date. As part of corporate maintenance, they should periodically:

• compare the ISC information in the corporate records with the information shown in Corporations Canada’s public search;
• confirm that the ISC register includes the required particulars and records the steps taken to update it;
• send appropriate information requests at least annually and retain the responses;
• revisit the analysis after ownership, governance or control arrangements change;
• file any changes to ISC information with Corporations Canada within 15 days; and
• ensure that any “no ISC” conclusion is supported by a current written analysis of ownership and control in fact.

If an inquiry from Corporations Canada arrives, a corporation should first verify whether its filed information is accurate. If it is not, the filing and the underlying ISC register should be corrected. If it is accurate, the corporation should assemble the requested supporting records, confirm that they are internally consistent and provide a complete response before the stated deadline.

Key Takeaways

• Corporations Canada appears to be taking a more active approach to reviewing ISC filings.
• Corporations reporting that they have no ISC should be prepared to support that conclusion.
• Compliance involves both maintaining an ISC register and documenting the steps taken to keep it accurate and up to date.
• Regular review of ISC records can make responding to an inquiry significantly easier.