Information Restricted by Government Changes

Monday Magazine | September 14, 2004
Among the range of agencies governing companies in this province, one of the most useful for finding information has been the B.C. Securities Commission.

The commission is responsible for regulating the trading of securities in the province, and when I worked in Vancouver in pre-internet days I’d make regular swings by its downtown offices to check the files on any companies of interest. Some of the information was later posted on the commission’s website, adding to its accessibility. Among the more valuable filings for a reporter were those concerning so-called “exempt distributions,” meaning companies raising funds without the need to file a prospectus. The filings included a list of those buying into companies, and how much they’d invested.

That was how I discovered that under the New Democrats, the B.C. government had handed over millions in taxpayer funds to VLC Properties Ltd., a company helped along by an unholy alliance of then-Vancouver mayor Gordon Campbell and trade unionists, including Ken Georgetti. (Georgetti now heads the Canadian Labour Congress, and VLC, now known as Concert Properties Ltd., is now a reputable developer of numerous projects, including two in downtown Victoria.)

Following the revelation of the investment, the government changed its mind and withdrew its position in VLC.

Alas, that scenario couldn’t have played out today, since shareholder information is no longer available from the commission.

A little over a year ago, the commission’s chairman, Doug Hyndman, announced that those lists of shareholders’ names, filed under exempt distribution requirements, would no longer be made public.

The reason is privacy—the same rationale cited by the B.C. government for eliminating public access to the names of company owners through firms’ registered offices.

According to Hyndman, securities purchasers had complained about the loss of privacy, and of receiving “unwelcome solicitations.”

“We have decided that the need to protect the privacy of purchasers outweighs the need for this information to be publicly available,” wrote Hyndman in a June 23, 2003, memo.

Even previously filed exempt distribution reports were removed from the commission’s website.

As much as I dislike “unwelcome solicitations,” the change is another retrograde step in restricting the flow of once-public information.

One area activist has an interesting response to the severe restrictions recently placed on access to the names of shareholders of B.C. companies.

As noted here in the September 2-8 issue, thanks to the business corporations act, members of the public can now obtain lists of shareholders only by signing an affidavit promising they will use the list only for purposes related to corporate governance. The legislation specifies those purposes, of which there are four: influencing the voting of shareholders at a company shareholder meeting, buying or selling shares, effecting an amalgamation or similar process, and calling some kinds of company meetings. Naturally, writing an article naming the shareholders doesn’t fit any of those conditions.

The B.C. government’s privacy-motivated move appears to effectively make a secret of who owns what in the corporate world.

But Michael Begg, of the Victoria-based Dogwood Initiative, writes that activists might yet have an out. Dogwood’s goals, writes Begg in a commentary on the change, include convincing shareholders to “influence corporate policy.” And that can be done by attempting to change how shareholders vote at corporate meetings.

Ergo, he could legitimately gain access to shareholder names.

To this suggestion, all I can say is: Good luck.

There’s another complication caused by the change in the rules governing access to shareholders’ names.

Unlike shareholders’ names, those of company directors were—and still are—readily available to the public, albeit after paying a fee. One can find them through BC OnLine, or go in person to the corporate registry, in downtown Victoria.

Because it is so much simpler to find directors than shareholders, for many, a quick check of the directors is all that’s needed. The reason is that in the case of smaller firms—the majority of the 280,000 companies registered in B.C.—often the directors are either identical or closely related to the shareholders. A couple of friends incorporate a business, and they end up being the sole directors.

Under the old regime, to check on who controls a company, one simply looked up the directors. The vast majority of company owners are, of course, legitimate and don’t object to their identities being disclosed. But then there are others who, for good reason or bad, don’t want their ownership of a firm known.

Until last March 29, there was no point in trying to hide corporate ownership by installing directors who were not also shareholders, as it was always possible for a reporter to put in a little extra effort to uncover the shareholders.

That’s all changed now.

The business corporations act offers every incentive for secrecy-prone shareholders to install stand-ins as directors, so that the owners’ names no longer appear on the public directors’ list.

The net result is that searching directors no longer provides a reliable indication of the ownership of small firms. 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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