All About Estates

Amendments to the CBCA: Implications for the Valuation of Interests in Trusts?

Amendments to Canada Business Corporations Act (“CBCA”), will come into force mid-2019 which will require each private CBCA corporation to maintain a register listing the actual individuals (i.e., physical persons with name, address and date of birth and tax jurisdiction) with significant control in fact over the corporation including individuals who are beneficial shareholders with significant control: an individual who is a registered or beneficial owner of, or who has direct or indirect control or direction of, either 25% or more of the voting rights of all of the corporation’s outstanding shares or 25% or more of all of the corporation’s shares measured by fair market value. Two or more individuals can be registered as one individual with significant control if they are joint owners or have an agreement to act jointly.

It appears that whether or not there are nominee owners among the direct and indirect shareholders of the Corporation, the company register is supposed to show the actual individuals (not another corporation, and not a trust or other entity) who ultimately own or control, directly or indirectly, at least 25% of the Corporation in votes or value.

All those who have a stake in interpreting the new rules will need to deal with many issues such as the connection between “voting rights” and “voting shares”, determining “direct and indirect control” or “direct or indirect influence”, “beneficial ownership”.

What about the implications for trusts as shareholders of a CBCA?

For a discretionary family trust holding the non-voting common shares of the corporation, would value have to be (re-) considered for the purposes of the register? In the past, valuators viewed (and not without some controversy) a discretionary trust interest to be speculative and therefore had no value, but in family law matters, sometimes a value is ascribed and perhaps other rights and obligations to a trust beneficiary with, for example, a history of receiving trust income.

Notwithstanding the new requirements for a CBCA register, it is hoped it will not dissuade Canada Revenue Agency’s current view that a reasonable method to value a disposed trust interest would be to value the interest as if the trust assets were fully distributed equally among all the discretionary beneficiaries. What about the trustees?

Stay tuned – more to come on this I am sure of it!

Happy Reading


About Steven Frye
Baker Tilly WM LLP is a leading, independent audit, tax, and business advisory firm based in Vancouver and Toronto, serving clients across Canada. Drawing on well-trained teams across a variety of disciplines, we ensure the alignment of our professional’s skills and experience with client requirements, resulting in exceptional service and business outcomes.


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