An Onerous New Burden For Private Equity In British Columbia

Private equity funds that own British Columbia companies face an onerous, new administrative burden under recent amendments to the province's Business Corporation Act (BCA). The changes could discourage the use of B.C. companies as a vehicle for private equity investment in British Columbia, at a time when economic recovery from the COVID-19 pandemic is critical for the province.

The cumbersome new rules for PE funds are a result of the deemed control definition for limited partnerships and business trusts and the new corporate requirement for transparency registers for B.C. private companies.

Deemed Control

The amendments to the BCA state that where a partnership holds 25 percent or more of a private company's shares or the right to appoint or remove a majority of the directors of such company, each partner of the partnership is deemed a significant individual under the BCA regulations and will require disclosure on the register.