Earlier this year we provided an update to our article covering the Land Owner Transparency Act (British Columbia) (the "Act") and the corresponding Land Owner Transparency Register (the "Register"). Following COVID-19-related legislative delays, the provincial government approved and ordered Order in Council No. 549 on September 20, 2020 and thereby confirmed the Act and the Land Owner Transparency Regulation (the "Regulations") will largely come into force November 30, 2020.
Sections 30 to 38, 110 to 112, 117 to 121, 123 and related sections including Part 4 of the Regulations, all of which govern the ability and limitations of searching the Register, will come into force April 30, 2021.
Many professionals and owners alike will be wondering how long before existing owners of interests in land, who would otherwise be reporting bodies under the Act, must file transparency reports as required to do so by section 15 of the Act. Pursuant to the Regulations, those pre-existing owners obligated under section 15 of the Act must file a transparency report by November 30, 2021. Luckily for some, registered owners of leases with less than 10 years in the initial term as of November 30, 2020 will not be required to file a transparency report. The Regulations additionally clarified the Act's inclusion of 10 or more year term leases as interests in land, specifying that transparency reports are only required upon registration of a lease when the initial term of the lease is more than 10 years. Commercial tenants registering a lease containing renewals or extensions beyond 10 years therefore will not trigger the requirement to file a transparency report if the initial term is less than 10 years.
Part 2 of the Regulations further defines the concept of indirect control as this term is used, but not defined, in the Act's definition of "corporate interest holder". Section 3(2) of the Act discusses the various circumstances in which someone may be a corporate interest holder, including without limitation to maintaining indirect control, within the meaning of the regulations, over the corporation's shares or over the right to elect or remove directors from the corporation. In attempt to bring clarity to the meaning of indirect control, the Regulations provide two additional definitions: "relevant intermediary" and "chain of relevant intermediaries". When controlled by another person, a relevant intermediary is a relevant corporation, relevant partnership, a trustee of a relevant trust, personal or legal representative of any of the foregoing, or an agent of any of the foregoing. A chain of relevant intermediaries is therefore the hierarchy of subsidiary relevant entities all falling under the controlling individual(s) at the top of the chain. The Regulations relies on examinations of relevant intermediaries to aid practitioners in identifying the ultimate individual beneficial owner when preparing transparency reports.
While the provisions within the Regulations surrounding control of a corporation are more or less expected, legislators took a novel approach in measuring control of a partnership. A person, being an individual or a relevant entity, controls a relevant partnership when:
- the person is a partner, other than a limited partner, in the relevant partnership, or
- the person is a limited partner in the relevant partnership,
- is entitled to at least 25% of the profits of the partnership assets,
- is entitled on wind up to at least 25% of the assets of the partnership,
- has at least 25% of the votes in the partnership management, or
- has the right to appoint or remove the majority of the partnership's management.
The Regulations also contain guidance on when lawyers' records may be inspected or seized in the course of investigating offences under the Act and how the government must apply to do so, along with lawyers' obligations surrounding claims of solicitor-client privilege if client records have been seized. The MLT Aikins Real Estate team will continue monitoring the roll out of the Act and provide updates as they are announced.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.