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Corporate Law, General, Law

Hockey Bags full of cash

Author: Christopher Green

Corporate & Commercial Property Transactions & Conveyancing

We have all seen the news hour videos- sketchy individuals depositing hockey bags full of cash in local casinos- the outrageous tip of what we are told is an iceberg of dirty money that has washed up on  BC’s shores.

Now, there is nothing like an embarrassing headline to get the attention of government, so it should come as no surprise that the authorities have recently focused a spotlight on money laundering and tax evasion,especially involving off-shore interests.

Limited liability companies have always been a vehicle for anonymizing business transaction- the business activities are conducted in the Company name, rather than the  owner’s, and the ownership of a company is not  public knowledge, so limited companies have always offered a comforting degree of privacy to business people. Determined to cast aside the cloak of secrecy surrounding the true ownership of  companies, the BC government  embarked upon a three step, multi-year plan, to achieve ‘transparency’.

The first step was to require all BC companies to maintain an internal record, available to law enforcement, of who the real players were in the company -the ‘true owners’ or ‘significant individuals’, called the ‘transparency  register. We have created such a register for each of the companies we act for, and as we attend to their annual reports, are contacting the company directors to ensure its accuracy. not surprisingly, in the vast majority of cases, the one or two controlling shareholders are the only  ‘significant individuals’ we have to list.

The second phase of the transparency initiative actually began a couple of years ago, when a new Land Title office requirement was introduced, in the form of a ‘transparency report” that had to accompany the registration of every corporate land purchase, to inform the Land Title office who the individuals behind the company actually were. The purpose of the transparency report was to identify, to the authorities, the identities of the trus owners of each land owning company, even if they were hiding behind trust arrangements disguising their share ownership.

Now the government has moved into the most ambitious and daunting phase of the plan- forcing all limited companies that own real estate within the province to retro-actively self-report their ownership, through the filing of a transparency report. The task is huge, since there are literally tens of thousands of properties owned by limited companies, and, dare we say, in some cases unfair, since the new requirement, although retro-active, has not been widely publicized, and the owners of companies which have owned  real estate for decades likely have no idea they are about to become law-breakers, and potentially liable to huge fines.

The fines involved are impressive,- up to $50,0000 or even 5% of the value of the property, so anyone who owns a limited company needs to pay attention.  While we are taking steps to notify the companies we act for of the new requirements, we know that many companies prefer to keep  their own corporate records, and will be unaware. So, if you know anyone who owns real estate through a limited company, urge them to contact us, even if they are avid do-it-yourselfers- A Land Title office Transparency report is one document that can only be filed by a lawyer or notary.