BC Public Loses Access to Corporate Records

Monday Magazine | September 14, 2004
The rights of citizens to basic corporate information was sadly intruded upon last spring, with a change that occurred when the B.C. Liberals’ amendments to the law governing B.C. companies took effect.

The change means it’s no longer possible for members of the public, let alone governments or reporters, to discover who owns a B.C. company. The net effect could end up costing taxpayers untold sums of money when their governments unknowingly do business with shady operators.

The legislature passed the business corporations act in the fall of 2002, all 447 sections of it. As is often the case with such large pieces of legislation, two amendments were necessary. They were approved in October, 2003.

Last March 29, the amended business corporations act became the law in B.C.

While there were a few complaints at the time about the new law’s requirements that companies must now file their annual statements electronically, the change that has the most impact—the bill’s section 47, which removes the right of access to ownership information—went unnoticed until a few weeks ago, when Vancouver investigator Bruce Bowie revealed the change in an August 8 appearance on Peter Warren’s CKNW talk show.

The Vancouver Sun’s crack business reporter, David Baines, took up the fight a couple of weeks later. He was followed by NDP consultant David Schreck, who spent more than 30 hours researching the change.

For some strange reason, mention of the momentous change was entirely missing from government press releases at the time the bill was introduced.

Let’s hope the reason is that not even the finance ministry’s press-release writer knew about it.

Here’s how things used to work.

Under the old company act, a member of the public could apply to a company for a list of shareholders, which included their addresses and the number of shares each held. For citizens merely curious about who owned a company, this provision was of little use. One would be granted access to such a list only upon signing an affidavit stating that it would be used solely to influence the voting of shareholders at a shareholders meeting, or for other corporate purposes.

A reporter, for instance, could not use the list to report on the owners of a company.

In practical terms, this restriction didn’t matter much, because a separate section of the company act provided for members of the public to obtain a copy of another list of shareholders, known as the “central securities register.” No affidavit was needed, and there were no restrictions on the use of the register.

The process was sometimes time-consuming; it required going to the company’s registered office, which is typically a lawyer’s office. And a surprising number of lawyers either didn’t know they were required to release the list, or pretended not to know—until the provisions of the company act were pointed out to them.

But the mechanism did offer a reliable way of checking the actual ownership of a company.

Like most reporters, I used this provision extensively. In the early 1990s, I looked into downtown Vancouver’s Georgian Court Hotel, which Gordon Campbell had built during his developer days. As a subsequent member of the Vancouver city council, Campbell voted for several measures that helped the fortunes of the hotel, which struggled in its early days.

No problem, said Campbell: He’d sold his shares as soon as he was elected.

But by checking at the company’s registered office, I discovered that Campbell had not sold his shares till some time after he was elected. I also found that some of his relatives still owned shares at the time that Campbell was voting on motions to help the hotel.

Performing such a check is no longer possible: Under the business corporations act, members of the public gain access to the registry only by signing the same affidavit needed for the shareholder’s list.

Following the change, I will now be obliged to take politicians at their not-always-reliable word.

What on earth could have motivated the government to make this draconian change?

Last week I spoke with Joann Cain, who heads the finance ministry’s financial and corporate sector policy branch. She cited several reasons for the modification.

One was to make the rules governing release of a company’s securities register the same as those for the shareholder list.

I asked the obvious question: Why not make the rules the same by relaxing the previous restrictions on releasing the shareholder lists?

Cain replied that similar rules apply to federally registered companies, and the federal law is regarded as a “benchmark.”

However, she did say that she knew of no other provincial jurisdiction that has effectively removed public access to shareholder names. (In the case of Ontario, one must be either a creditor or a shareholder to obtain the list, but that’s not much of a deterrent. After buying a single share, a reporter can legally publish shareholders’ names.)

Even Alberta—the province where business reigns supreme—permits the peons access to corporate ownership.

Cain also mentioned concerns for the privacy rights of shareholders. Yet according to Mary Carlson, director of compliance for the office of the information and privacy commissioner, shareholder privacy has not even been on the office’s radar screens. (In any case, when the business corporations act was passed, there was no privacy law governing the B.C. private sector.)

The ministry’s Cain hastened to point out that, just months after the business corporations act took effect, the government is reviewing the legislation.

The minister who introduced the act, Gary Collins, is a busy man. I wouldn’t be surprised if he wasn’t aware of section 47 until the recent publicity.

Unless he’s a far bigger fan of secrecy than I’ve been led to believe, I’m hopeful he’ll quickly introduce an amendment to reinstate the public’s right to learn who owns B.C.’s companies. M


Monday Magazine

Founded in 1975 to provide a critical voice in Victoria's political and cultural communities, Monday Magazine continues to shake British Columbia's conservative capital city with tell-it- like-it-is features and reviews. Targeting educated, active adults and Victoria's growing youth market, Monday...
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