Beneficial ownership transparency


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Submitted By
James McKinney
Votes: 98

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Beneficial ownership transparency requires that the real people who own/control companies be disclosed. The Panama Papers are the most recent event to draw attention to the need for beneficial ownership transparency to combat tax avoidance, tax evasion, money laundering and corruption; however, it is not a new concern.

The context

Budget 2016 sets out measures to improve tax compliance and tax integrity and to reduce tax evasion and tax avoidance [1] [2]. However, it doesn’t set out measures relating to beneficial ownership transparency, even though Canada has made commitments to beneficial ownership transparency at the 2014 G20 Brisbane Summit [3] and the 2013 G8 Summit [4]. Specific measures endorsed by the G20 are described in the Guidance on Transparency and Beneficial Ownership [5] by the Financial Action Task Force, cited in the G20 Anti-Corruption Action Plan [6].

In terms of Canada’s progress on its G20 commitments, in its 2014 G20 Anti-Corruption Working Group Accountability Report Questionnaire [7], Canada reports that it doesn’t “require that the beneficial ownership and company formation of all legal persons organized for profit be reported.” A later evaluation [8] in 2015 by Transparency International (the international secretariat, not the Canadian chapter) found Canada’s progress to be lacking.

In 2014, Canada held a consultation on the Canada Business Corporations Act [9], which included a question on beneficial ownership transparency. However, most comments addressed beneficial owners’ shareholder rights and communications means and did not engage with beneficial ownership transparency.

Beneficial ownership transparency was among the most popular ideas from Canada’s consultation on its 2014-16 action plan [10] and in the comments on its draft 2014-16 action plan [11]. The proposal was supported by Publish What You Pay Canada, Global Organization of Parliamentarians Against Corruption, Partnership Africa Canada, MiningWatch Canada, InterPARES, Canadians for Tax Fairness.

A proposal

In drafting this commitment, Canada should explore which entities should be subject to beneficial ownership transparency and how and to whom this information should be disclosed. Implementing this commitment may require coordination with provincial securities regulations and the amendment of policies and regulations. Its implementation may benefit from a public consultation.

Canada may need to review the category of Objecting Beneficial Owners (OBOs): shareholders who can hide their identity from issuers and other marketplace participants. OBOs are unique to the US and Canada. The relevant policy is the National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer.

If there are privacy concerns with respect to the collection of personal information for beneficial ownership, Canada can request that an expert, like the Privacy Commissioner, describe the privacy concerns and explore mitigation strategies.

Other resources

OGP members with commitments for beneficial ownership transparency include the UK [12] and US [13]. Other countries have implemented beneficial ownership transparency outside the scope of the OGP, including Australia.

For additional information, the policy paper, “A Beneficial Ownership Register for the World”, by OpenCorporates, may be relevant [14]. Many additional resources are available in Canada and internationally.

In brief

Canada should fulfill the commitments it made as a member of the G20 and G7 on beneficial ownership transparency through its 2016-18 action plan.


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