Who Must be Included in a Transparency Report Under the Land Owner Transparency Act?

The Land Owner Transparency Act, SBC 2019, c 23 (the “Act”) came into force on November 30, 2020. Since then, on an application to register interest in land, every transferee must file with the Land Title Office a transparency declaration that states whether the transferee is a reporting body (s. 10 of the Act). A reporting body with an interest in land that is not the subject of a transfer must file a transparency report by November 30, 2021.

What is a reporting body?

Under the Act, reporting body means (s. 1 of the Act):

a) a relevant corporation, which means a corporation or limited liability company that has not been exempted under Schedule 1 of the Act or by regulation;

b) a trustee of a relevant trust, which means an express trust, including a bare trust, a prescribed trust, or a similar extra-jurisdictional legal relationship that has not been exempted under Schedule 2 of the Act or by regulation; or

c) a partner of a relevant partnership, which means a general partnership, limited partnership, limited liability partnership, professional partnership, or foreign partnership within the meaning of the Partnership Act, RSBC 1996, c 348; a prescribed partnership; or a similar extra-jurisdictional legal relationship that has not been exempted under the regulations.

A transferee that is a reporting body must identify the type of reporting body it is and file a transparency report that sets out certain information about the transferee and individual interest holders as required under the Act (ss. 12(1), 15(1), 15(4) of the Act).

Who is an interest holder?

A transparency report must disclose all interest holders of the reporting body. Under the Act, interest holder means:

a) in relation to an interest in land registered or to be registered in the name of a trustee of a relevant trust, a beneficial owner (ss. 1, 2 of the LOTA). An individual is a beneficial owner if any of the following apply:

1. the individual has, in respect of the interest in land, a beneficial interest, other than an interest that is contingent on the death of another individual;
2. the individual has the power to revoke the relevant trust and receive the interest in land;
3. the individual is a corporate interest holder in respect of a relevant corporation and the relevant corporation has a beneficial interest in respect of the interest in land, or the power to revoke the relevant trust and receive the interest in land;
4. the individual has a prescribed interest, right or ability in relation to the interest in land, or a prescribed criterion or circumstance applies to the individual.

b) in relation to a relevant corporation, a corporate interest holder ( 1, 3 of the LOTA). An individual is a corporate interest holder in respect of a relevant corporation if, alone or jointly with one or more other individuals, any of the following apply:

1. the individual has any of the following interests or rights, or any combination of them, in of 10% or more of the issued shares or rights to vote at general meetings of the relevant corporation:
   • the individual has an interest as a registered owner or beneficial owner of one or more of the corporation’s shares;
   • indirect control of one or more of the corporation’s shares;
2. the individual has any of the following rights or abilities, or any combination of them, that, if exercised, would result in the election, appointment, or removal of the majority of the directors of the relevant corporation:
   • the right, or indirect control of the right, to elect, appoint, or remove one or more of the corporation’s directors;
   • the ability to exercise direct and significant influence over an individual who has the right or indirect control described above;
3. the individual has a prescribed interest, right or ability in relation to the relevant corporation, or a prescribed criterion or circumstance applies to the individual in relation to the relevant corporation.

If two or more individuals have interests, rights, or abilities that, when combined, meet a criterion described above and are subject to an agreement or arrangement that they are to be exercised jointly or in concert by those individuals, or each individual is an associate of the other individuals as defined in section 192(1) of the Business Corporations Act, SBC 2002, c 57, each individual is a corporate interest holder.

c) in relation to an interest in land registered or to be registered in the name of a partner of a relevant partnership, a partnership interest holder (ss. 1, 4 of the LOTA). An individual is presumed to be a partnership interest holder in respect of an interest in land registered or to be registered in the name of a partner of a relevant partnership if the interest in land is partnership property and any of the following apply:

1. 1. the individual is a partner in the relevant partnership;
   2. the individual is a corporate interest holder in respect of a relevant corporation and the relevant corporation is a partner in the relevant partnership;
   3. the individual has a prescribed interest, right, or ability in relation to the interest in land, or a prescribed criterion, circumstance or presumption applies to the individual.

The presumption does not apply if the partner in whose name the interest in land is registered or to be registered can demonstrate that,

1. in the case of an individual who is a partner in the relevant partnership, the individual has no interest, right, or ability, as a partner, in respect of the interest in land, or
2. in the case of the individual is a corporate interest holder in respect of a relevant corporation and the relevant corporation is a partner in the relevant partnership, the relevant corporation has no interest, right, or ability, as a partner, in respect of the interest in land.

If an individual or relevant corporation is a partner in a relevant partnership who is a partner in another relevant partnership, that individual or relevant corporation is deemed to be a partner in the other relevant partnership (s. 4(1) of the LOTA).

The meaning of indirect control is addressed in Part 2 of the Land Owner Transparency Regulation, BC Reg 282/2020. Generally, indirect control refers to situations where there is at least one relevant intermediary between the reporting body and the interest holders. If there is more than one relevant intermediary in the chain of relevant intermediaries, we must follow the chain of relevant intermediaries until we find the natural person at the top of the chain.

What happens if a reporting body fails to file a transparency report as required?

Under the Act, a reporting body; a director, officer, manager, or agent of a corporation or limited liability company; an interest holder; or a settlor may be subject to an administrative penalty or a fine for failing to disclose an interest in land under the Act.

Conclusion

It is essential that landowners are aware of these deadlines and comply with the requirements for filing transparency declarations and reports as set out in the Act. To avoid penalties and ensure that your reports are filed correctly and on time, contact the experienced team of Real Estate lawyers at McQuarrie.

Written by Anna Schlagintweit