Corporations registered in P.E.I. will need to disclose the names of their shareholders as of Sept. 1.
Changes to P.E.I.’s Business Corporations Act will take effect on that date requiring the disclosure of shareholders. As of that date, new corporations will be required to list their shareholders who own five per cent or more of the shares, as well as the total number of voting shares held by each shareholder, when registering their business. Existing corporations will need to include the names of these shareholders in order to file their annual return.
The changes to the Business Corporations Act were passed by P.E.I.’s legislature in the fall of 2019, following a controversial land sale that involved several landholding shell corporations.
Just over 2,200 acres of farmland was transferred from a family farming business, Brendel Farms Ltd., to Haslemere Farms Ltd., a company that listed a member of the Irving family as its director. A similar attempt to sell the same land, involving both Brendel and three other companies linked to the Irving family, was denied by cabinet on the eve of the last provincial election.
As the shareholders of the company that acquired the land are currently not publicly available, it is unclear exactly how the sale of the land occurred.
The changes to the Business Corporations Act have been touted as a means of providing greater transparency of corporate entities in P.E.I.
"It's about transparency and right now, P.E.I. is leading all of the provinces in this information. We hope to continue that," said Justice and Public Safety Minister Bloyce Thompson.
Islanders will be able to look up the shareholder names of registered corporations on the province’s business corporate registry. This online database currently lists only the names of company directors.
Prior to 2019, corporations registered in P.E.I. under the old Companies Act were required to list their shareholders. The Companies Act had been in place since 1888. But in the spring of 2018 the previous Liberal revamped its legislation governing corporations, passing the Business Corporations Act. This legislation provided some enhanced protections for shareholders but maintained a residency requirement for company directors.
However, the new act, modelled after federal legislation, removed the requirement for corporations to list the names of their shareholders. These changes took effect on May 3, 2019.
An archived public database still allows Islanders to search the names of shareholders for companies registered under the old Companies Act.
Curtis Toombs, a solicitor with the province’s consumer, corporate, financial services division, said that the Sept. 1 requirement to disclose shareholders puts P.E.I. ahead of many other jurisdictions in Canada when it comes to shareholder transparency.
"Overall, the Maritimes, Newfoundland, the federal government — none of them collect shareholder information. And Ontario definitely doesn't either," Toombs said.
Toombs added Quebec, Manitoba, Alberta and Saskatchewan do collect shareholder information, but focus mainly on shareholders with the biggest ownership stake in a company.
However, the period of May 3, 2019 to Sept. 1, 2020 will remain somewhat of a blind spot in terms of shareholder information. Companies will not be required to disclose shareholder information from that period.
This means that, for example, information on the beneficial owners of Haslemere Farms Ltd. will not become any clearer as of Sept. 1, 2020.
Toombs said the process involved in requiring companies to file shareholder information retroactively for a period in the past would be complicated.
"I'm not aware of any other jurisdiction where you would retroactively file information retroactively regarding either director or ownership information,” Toombs said.
"From a policy perspective, it's not something that's been done before. And I'm not aware of it being done elsewhere."
