Canada Gazette, Part I, Volume 153, Number 11: Regulations Amending the Canada Business Corporations Regulations, 2001

March 16, 2019

Statutory authority
Canada Business Corporations Act

Sponsoring department
Department of Industry

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

Service fees under the Canada Business Corporations Act (CBCA) have not changed since 2001. Some fees need to be better aligned with the cost of delivering the related services, and need to better reflect the objectives of optimizing the design and delivery of services and increasing the uptake of digital services. In addition, the Standing Joint Committee for the Scrutiny of Regulations (SJCSR) has identified concerns with the wording of certain fees and has recommended that the fee schedule be clarified with respect to what is covered by each fee.

Background

The CBCA provides the corporate governance framework for many small and medium-sized businesses as well as many of the largest corporations operating in Canada. The fees under the CBCA are prescribed in the Canada Business Corporations Regulations, 2001 (the Regulations), and were last changed in 2001.

The 2001 fee changes introduced lower fees for two services — incorporation and annual return filings — based on the method of filing: online or non-online. Incorporation and annual return filings were the first services offered online. Currently, 11 out of 15 of the services are available online, with 95% of applications submitted online. Though lower in volume, the remaining services are being considered for online development.

Over the past decade, the digital economy has evolved dramatically. Stakeholders expect effective services that are integrated, simple, timely and secure. Within that context, the Policy on Service of the Government of Canada aims to offer a better service experience, increase the number and uptake of e-services, and provide more efficient services.

Objectives

The objectives of the proposed amendments are to better align service fees under the CBCA with the cost of delivering the services and to achieve the following principles and objectives identified by Corporations Canada and the Government of Canada:

Description

Below is a summary of the proposed changes followed by a table setting out the proposed fee changes under the CBCA.

Certificates

Service fees related to certificates issued under the CBCA would increase to $250 for applications that are not filed online. This increase will better align the non-online applications with their higher cost of delivery. This differentiation would also encourage clients to choose the most efficient service delivery method.

Priority services

For a number of years, clients have asked Corporations Canada to develop a priority service, in relation to applications submitted under the CBCA, that would allow faster processing times when needed. This type of service is currently offered by some provincial corporate regulators.

A new priority service for online applications is being proposed. Clients would pay $100 in addition to the application fee. The additional fee would afford clients a shorter turnaround time.

The priority service would only apply to applications for certificates of incorporation, amendment, continuance, amalgamation and revival of a dissolved corporation, and for letters of satisfaction. These are the services for which clients typically request a shorter turnaround time.

The priority service would only apply to applications that are submitted online to discourage non-online applications. The only exception is for services which are currently not offered online, namely for certificates of revival under the CBCA.

Annual returns

There is a requirement under the CBCA for every corporation to file an annual return to allow Corporations Canada to keep its database of federal corporations up to date. It is proposed to reduce the fee for filing an annual return online to $12 from the current fee of $20. The non-online fee would not change.

Reducing the fee would result in cost savings for all corporations including the many small corporations that are created under the CBCA. It would also encourage corporations to file online and promote Corporation Canada’s focus on client-centric digital services.

Cancellations and corrections

A new fee is proposed for applications to cancel a certificate. Currently, there is no fee for a cancellation application. However, there is a fee of $200 for a correction application. Cancellation and correction services are processed similarly and therefore have similar costs.

The proposal is to add a new fee of $250 for cancellations and increase the current fee for corrections to $250 in order to align it more closely with the cost of delivering the service. Requests for corrections or cancellations resulting from an error that is solely attributable to the Director appointed under the CBCA would continue to be free.

Certificates of compliance or existence

With regards to certificates of compliance or existence, the proposal is to increase the fee for non-online applications to $20 and keep the current online fee at $10 to better reflect the cost of processing the applications.

Intent to dissolve and revocation of intent to dissolve

It is proposed that the fee for filing a revocation of intent to dissolve a corporation be increased from $50 to $100 for non-online requests. This would better reflect the cost of processing the filing.

Copy fee for corporate records

The proposal is to provide copies of corporate records for free when requested online. Making online requests for copies free would increase corporate transparency and would benefit many stakeholders, including corporations and the general public.

There are additional costs for processing non-online requests for copies, so the fee for these requests would be $5 per document. There would be no fee for such requests from police and law enforcement as well as from other federal, provincial or municipal governments and agencies that use the corporate information for compliance and investigative activities.

Certified copy fee for corporate records

The fees related to requests for certified copies of corporate records filed with Corporations Canada would also change. The online fee would be $10 per document, which is a $25 reduction from the current fee. For non-online requests, the fee would be $40 per document, which represents the current fee of $35 plus the new copy fee of $5.

To address an issue raised by the SJCSR, the proposed fee would clearly indicate that the certified copy fee includes any fee for copies.

No fee payable for certain amendments to articles

To encourage higher compliance with the requirements of the CBCA, it is proposed to remove the fee for online requests to amend articles when the change relates only to the province in which the registered office is located, to the number of directors, or to both.

Corporations are required to have a registered office address in the province indicated in their articles of incorporation. If they want to change the province of the registered office, they are required to amend their articles. Discussions with clients have indicated that sometimes corporations do not keep the registered office address up to date because they would have to pay a $200 fee to amend the articles.

The no-fee approach would also apply to online applications to change the number of directors in the articles. Some corporations avoid updating their director information when the number of directors no longer corresponds to the number indicated in the articles. By removing this fee, it is anticipated that the level of compliance with the CBCA would improve.

Fee for certificates of arrangement

It is proposed to increase the fee for reviewing arrangement transactions from the current fee of $200 to $500. The increase in fee takes into account the costs of reviewing arrangements prior to the issuance of a certificate of arrangement.

An arrangement is a complex corporate transaction that is supervised by a court. Corporations Canada reviews the court applications to ensure compliance with the requirements at both the interim and final order stages of the court process. Once a final court order is received, Corporations Canada issues a certificate of arrangement by the Director. On average, 40 arrangement transactions are processed each year.

Restated articles of incorporation

The proposal is to increase the fee for online and non-online applications for restated articles of incorporation to $100 from the current $50. The $100 fee would also apply to restated articles that are filed with articles of amendment, for which there is currently no fee. This will better align the fee with the cost of providing the service.

When the fee is payable

According to the CBCA, the fee for a service is payable before the Director can deliver the service. The current wording of the fee schedule suggests that the fee is only payable if the Director approves the application. However, the costs associated with the service are carried during the review of the application, not at the issuance of the certificate. Even if an application is rejected because it does not comply with the act, costs will have been carried.

Moreover, the SJCSR has suggested that the wording of the fee schedule in the Regulations be clarified to indicate that the fee covers the cost of reviewing the application and not the cost for the issuance of the certificate.

As a result, the wording of the fee schedule would clarify that the service fee is payable when an application is filed. Once the Director has received an application containing all the required documents and the fee, a refund would not be issued if the application is deficient or rejected.

Periodic escalator clause

The Service Fees Act requires each fee to be increased each fiscal year based on the percentage change in the Consumer Price Index (CPI) for Canada, as published by Statistics Canada for the previous fiscal year. The objective of the annual increase is to ensure that service fees keep pace with the increase in the cost of providing the service so that the potential funding gaps are eliminated. An annual increase is not required if the fees are adjusted periodically by an escalator clause set out in the Regulations.

An escalator clause that better reflects Corporations Canada’s experience is included in the proposed amendments. Specifically, the escalator clause would

This approach would eliminate the need for annual increases to the service fees to minimize costly system changes including to Corporations Canada’s IT system. The proposed escalator clause also takes into account Corporations Canada’s experience with its ongoing efforts to reduce costs. The result has been that for many years, the revenue collected by Corporations Canada has been sufficient to cover the costs of providing the services as more businesses opt to use its online services, and it is expected that this will continue in the future.

Table of fee changes
Fee Changes
Service Method Current Fee Proposed Fee
Annual return Online $20 $12
Non-onlinefootnote 1 $40 No change
  • Amalgamation
  • Continuance
  • Revival
Online $200 No change
Non-online $200 $250
Amendment Online $200 No change
Online if only province and number of directors $200 Free
Non-online $200 $250
Letter of satisfaction Online $200 No change
Non-online $200 $250
Restated articles Online or non-online $50 $100
Arrangement Online or non-online $200 $500
Revocation of intent to dissolve Online $50 No change
Non-online $50 $100
Priority service (for certainfootnote 2 online applications only) Online N/A $100 + application fee
Non-online if online not developed N/A $100 + application fee
Certificate of compliance or existence Online $10 No change
Non-online $10 $20
Cancelled certificate Online or non-online Free $250
Corrected certificate Online or non-online $200 $250
Copies of documents Online N/A Free
Non-online $1 per page $5 per document
Copy of a corporate profile (online service only) Online $1 per page Free
Copies of documents for police or governments Online N/A Free
Non-online $1 per page Free
Certified copies of documents Online N/A $10
Non-online $35 per document certified $40 per document certified including the copy fee

Benefits and costs

Following the review of the costs for each service, the proposal would make several adjustments to service fees. Given the higher costs for processing non-online applications (via email, fax or mail), the majority of the changes would result in a fee increase for those transactions while the fee for online applications would remain the same.

For a few of the services, the proposed fee would be lower than the current fee. For example, the proposed fee is $12 for online annual returns, which is $8 lower than the current fee of $20. The reduction in this fee is a benefit for corporations who file their annual return online, which is 98% of annual returns filed in 2017–2018. It is anticipated that the lower fee for online annual returns will result in a decrease in revenue for Corporations Canada of $1,917,422 in 2019–2020.

To encourage compliance, the fee would be removed for online amendments to the articles to change the province of the registered office, the number of directors or both. It is anticipated that this proposal will result in a decrease in revenues of $346,160 for Corporations Canada in 2019–2020.

Copies of corporate documents would also be available online for free in order to make this information more accessible. Providing this information free of charge would benefit many stakeholders, including corporations and the general public. It is anticipated that the removal of the fee will result in a decrease in revenues of $92,767 for Corporations Canada in 2019–2020.

The proposed increases to fees are small and generally only apply to non-online applications. With 95% of applications filed online, the number of applications for which the fee is increased is small. Using the last completed fiscal year (2017–2018) as an example for the number of transactions, Corporations Canada processed a total of 452 194 fee transactions under the CBCA. Of those, 3 047 were transactions for services that are not available online.

Furthermore, the number of transactions with an online application and a fee increase that only applies to the non-online process is also low at 1 480 transactions. For these transactions, the cost for corporations would increase by $46,920. However, since the service is offered online, clients requesting that service can avoid the increase in costs by using the online service. It is anticipated that lower fees for online applications will reduce the number of non-online applications.

Summary

The proposal has fees that are both increasing and decreasing, with direct benefits for corporations and the general public of $33,401,000 (present value) from 2019–2020 to 2029–2030. The benefit for corporations would result in a reduction of an equal amount to Corporations Canada’s revenue. At the same time, the proposal would increase the fees for various paper-based transactions, which would result in an increase to Corporations Canada’s revenue, and increased costs for corporations, of $4,823,000 (present value) over the same time period.

The overall reduction in fees will not have a negative impact on Corporations Canada, corporations or the general public. Without the reduction to some fees, there is concern of an accumulation of surplus in Corporations Canada’s accounts. By better aligning fees with the costs of providing the service, any surplus will be limited. Corporations Canada does not anticipate any additional costs or consequential effects on its operating budget as a result of this regulatory proposal. The level of service will not be affected. In the past, increasing demand has increased revenues at a higher rate than the rate of cost increases. Corporations Canada’s analysis has indicated that this pattern will continue. There would be no risk to the fiscal framework.

Offering lower fees for online services will encourage corporations to file online and promote Corporation Canada’s focus on client-centric digital services. It is anticipated that removing the fee for online requests to amend articles when the change relates only to the province in which the registered office is located or to the number of directors, or to both, will encourage higher compliance with the requirements of the CBCA. Currently, some corporations are not keeping the registered office address up to date because they are reluctant to pay the $200 fee to amend the articles.

Also, providing free access to copies of corporate records when requested online will increase corporate transparency and would benefit stakeholders (i.e. potential investors, financial institutions, creditors) including the corporations and the general public. Making copies free increases the availability of accurate information on corporations. Accurate information is required for the effectiveness and efficiency of the CBCA framework.

Cost-benefit statement
 

Base Year: 2019–2020

Final Year: 2029–2030

Total
(PV)

Annualized Average

A. Quantified impacts

Benefits (in Can$, 2017 price level / constant dollars)

Benefits to corporations and intermediaries

Reduction in fees of various online transactions

$3,288,000

$2,548,000

$33,401,000

$4,756,000

Benefits to Corporations Canada

Increase in fees for various non-online transactions

$479,000

$403,000

$4,823,000

$687,000

Total benefits

$3,767,000

$2,951,000

$38,224,000

$5,443,000

Cost (in Can$, 2017 price level / constant dollars)

Costs to corporations and intermediaries

Increase in costs of various non-online transactions

$479,000

$403,000

$4,823,000

$687,000

Costs to Corporations Canada

Reduction in revenues collected

$3,288,000

$2,548,000

$33,401,000

$4,756,000

Total costs

$3,767,000

$2,951,000

$38,224,000

$5,443,000

Net benefits

$0

$0

Qualitative impacts

  • Making copies free increases the availability of accurate information on corporations. Accurate information is required for the effectiveness and efficiency of the CBCA framework.
  • Removing the fee for certain amendments to articles should increase compliance with the obligation to inform the Director of changes in registered office address and directors.
  • Fee changes are designed to encourage the use of online services, which cost less to provide.

A discount rate of 7% has been used.

Projected revenues

The proposal will result in a reduction of online fees collected of $3,288,000 in the first year, mostly benefiting existing corporations’ maintenance costs. Corporations Canada will collect $479,000 more in revenue related to paper transactions in the first year, better aligning the costs carried to provide these services. Overall, new and existing corporations will benefit from a net annualized average reduction of $4,069,000.

Projected operational costs and fees

The costs of services are expected to grow at a stable ratio in the coming years along with revenues. The cost-benefit analysis provided the opportunity to represent the growing gap between revenues and costs, prompting a change in fees with the goal of realigning them with costs. The graphic below demonstrates this well. A considerable gap can be seen between costs and revenue if no changes are applied. The fee changes have a positive effect on aligning costs and revenue. This is important as an organization funded through a net voting authority.

A review is planned five years following the implementation of the fee changes, which will arrive at an appropriate time to determine if changes are needed once again to realign costs and revenue.

Projected operational costs and fees - CBCA Fee Change Proposal graph.

The costs and benefits of the proposed amendments are based largely on a cost-benefit analysis prepared by Corporations Canada. Revenue projections were based on 15 years of historic transaction volumes. Although Corporations Canada provides various types of services, the historical data for incorporations (or new corporations created in a time period) were used for projections, because this transaction type (almost on its own) defines the total number of clients Corporations Canada serves, which in turn determines the volume dynamics of all other transactions types. The volume of incorporation was used to establish the growth trend line applicable to the CBCA. The trend has a growth rate of 5.28% for incorporations and other transaction types. The transactions related to maintaining or closing a corporation were calculated as a ratio dependent on incorporation volumes and active corporation volumes, as these rations are steady and provided stability to the model.

By choosing to use a historical trend line for projections, Corporations Canada acknowledges that there are various factors influencing federal incorporations, many of which are related to each other in a complex and not easily measurable way, and assumes that the net effect is going to largely remain the same as in the past few years. Corporations Canada recognizes that the latter assumption is strong, but at the moment is unable to make more reliable projections for such a long time span.

It has to be noted that price elasticity of transaction volumes have been analyzed by Corporations Canada on two occasions and the effect has been measured. More specifically, the effect of changes in incorporation fees on the decision whether to incorporate federally or provincially has been analyzed and proven to exist. However, since incorporation fees are proposed to remain unchanged for this amendment, the net elasticity effect is assumed to be non-existent (i.e. the assumption is that, while deciding whether to incorporate federally or provincially, businesses do not compare federal and provincial fees other than incorporation fees).

Based on these elements, an interactive projection model determined the impact on revenue and costs of any specific fee changes, for the next 10 years.

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as it is expected to reduce overall fee payments for all business, including small businesses.

Consultation

On May 31, 2018, information was posted on the Innovation, Science and Economic Development Canada website about public consultations on proposed changes to the service fees under the CBCA, the Canada Not-for-profit Corporations Act and the Canada Cooperatives Act. Two comments were received in response to the consultations. One comment supported the proposed changes and considered them reasonable. The other comment objected to service fees being charged to not-for-profit corporations under the Canada Not-for-profit Corporations Act. This comment is described and responded to in more detail within the Regulatory Impact Analysis Statement in support of the proposal to update fees under that Act.

Rationale

Fees for services under the CBCA have not changed since 2001. The proposed amendments would make a variety of fee changes to encourage the use of low-cost delivery methods, promote compliance with the CBCA, and support greater transparency. Overall, the impact of the fee changes is expected to generate a net reduction of Corporations Canada revenue of $28.6M (present value) over 10 years. This would also lead to an equivalent cost saving for corporations and the general public and limit future surpluses by better aligning the costs and revenues of Corporations Canada. Finally, the proposed amendments would address an issue identified by the SJCSR by clarifying certain wording. Stakeholders were consulted and did not express any concern with these fee changes.

Implementation, enforcement and service standards

Implementation

The proposed regulatory amendments are targeted to come into force on January 15, 2020.

As part of the implementation of the amendments, a communication strategy would include notices to stakeholders about the changes to the fees and updates to the Corporations Canada website and Online Filing Centre.

Enforcement

The CBCA requires fees to be paid before the associated application is processed by Corporations Canada. If a user fails to pay a fee, then the service will not be provided, in accordance with standard practice.

Service standards

Currently, service standards are generally 1 business day for online requests and 5 business days for non-online requests, with a few exceptions such as corrections, cancellations, arrangements and exemptions. The intent is to have the general online service standard remain at 1 business day and the non-online standard increase to 10 business days.

Table of service standard changes
Canada Business Corporations Act
Service Standard Changes
Service Method Current Proposed

Annual return

Online

1 day

No change

Non-online

5 days

10 days

  • Amalgamation
  • Continuance
  • Revival

Online

1 day

No change

Non-online

5 days

10 days

Amendment

Online

1 day

No change

Online if only province and number of directors

1 day

No change

Non-online

5 days

10 days

Letter of satisfaction

Online

1 day

No change

Non-online

5 days

10 days

Restated articles

Online or non-online

5 days

10 days

Arrangement

Online or non-online

5 days

No change

Revocation of intent to dissolve

Online

1 day

No change

Non-online

5 days

10 days

Priority service (new online only service)

Online

N/A

Expedited

Non-online if online not developed

Expedited

Certificate of compliance or existence

Online

1 day

No change

Non-online

1 day

10 days

Cancelled certificate

Online or non-online

20 days

10 days

Corrected certificate

Online or non-online

20 days

10 days

Copies of documents

Online

1 day for active corporations / 6 days for inactive corporations

1 day

Non-online

1 day for active corporation / 6 days for inactive corporations

10 days

Copies of documents for police or governments

Online

1 day for active corporation / 6 days for inactive corporations

1 day

Non-online

1 day for active corporations / 6 days for inactive corporations

10 days

Copy of a corporate profile (online service only)

Online

1 day

1 day

Certified copies of documents

Online

N/A

1 day

Non-online

1 day for active corporations / 6 days for inactive corporations

10 days

All other services

Non-online

Varies

10 days

Contact

Comments received during the 30-day public comment period will be taken into consideration and will be summarized in the Regulatory Impact Analysis Statement submitted to the Governor in Council to support approval of the proposed amendments and published in Part II of the Canada Gazette. The statement will not contain any personal information that could be used to identify individual stakeholders, and submissions should not contain any confidential or personal information. Business contact information will be collected and may be used for future business consultations conducted by Innovation, Science and Economic Development Canada.

Innovation, Science and Economic Development Canada
Attention: Coleen Kirby
Manager
Policy Section
Corporations Canada
Telephone: 1-866‑333‑5556
Email: ic.corporationscanada.ic@canada.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to paragraph 261(1)(b) footnote a of the Canada Business Corporations Actfootnote b, proposes to make the annexed Regulations Amending the Canada Business Corporations Regulations, 2001.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Coleen Kirby, Manager, Policy Section, Corporations Canada, Innovation, Science and Economic Development Canada (tel.: 1-866‑333‑5556; email: ic.corporationscanada.ic@canada.ca).

Ottawa, February 28, 2019

Jurica Čapkun
Assistant Clerk of the Privy Council

Regulations Amending the Canada Business Corporations Regulations, 2001

Amendments

1 Subsections 97(1) and (2) of the Canada Business Corporations Regulations, 2001footnote 3 are replaced by the following:

97 (1) The fee in respect of a service set out in items 1 to 3 of column 1 of Schedule 5 is the applicable fee set out in column 2.

(2) No fee is payable for

(2.1) In addition to the applicable fees set out in item 1 of Schedule 5, the fee set out in item 4 of Schedule 5 is to be paid for

2 Section 98 of the Regulations and the heading before it are replaced by the following:

98 The fees set out in column 2 of Schedule 5 are to be adjusted on April 1, 2024 and every five years after that date by increasing them by one percent and rounding down to the nearest multiple of five dollars.

3 Schedule 5 to the Regulations is replaced by the Schedule 5 set out in the schedule to these Regulations.

Coming into Force

4 These Regulations come into force on January 15, 2020.

SCHEDULE

(Section 3)

SCHEDULE 5

(Subsections 97(1) and (2.1) and section 98)

Fees

Item

Column 1

Service under the Act

Column 2

Fee ($)

1

Receipt and examination by the Director of

 
 

(a) an application made under subsection 2(6), a request for an exemption referred to in subsection 10(2) or 82(3) or an application made under subsection 151(1), section 156 or subsection 171(2) or 187(11)

250

 

(b) articles of incorporation sent under section 7

 
 
  • (i) if sent using the online service of the Director

200

 
  • (ii) if sent using any other means

250

 

(c) articles of amendment sent under subsection 27(4) or 177(1) or articles of reorganization sent under subsection 191(4)

 
 
  • (i) if sent using the online service of the Director

200

 
  • (ii) if sent using any other means

250

 

(d) restated articles of incorporation sent under subsection 180(2)

100

 

(e) articles of amalgamation sent under subsection 185(1)

 
 
  • (i) if sent using the online service of the Director

200

 
  • (ii) if sent using any other means

250

 

(f) articles of continuance sent under subsection 187(3)

 
 
  • (i) if sent using the online service of the Director

200

 
  • (ii) if sent using any other means

250

 

(g) a request for a document evidencing
the satisfaction of the Director for the purpose of subsection 188(1)

 
 
  • (i) if sent using the online service of the Director

200

 
  • (ii) if sent using any other means

250

 

(h) articles of arrangement sent under subsection 192(6)

500

 

(i) articles of revival sent under subsection 209(2)

 
 
  • (i) if sent using the online service of the Director

200

 
  • (ii) if sent using any other means

250

 

(j) a statement of revocation of intent to dissolve sent under subsection 211(10)

 
 
  • (i) if sent using the online service of the Director

50

 
  • (ii) if sent using any other means

100

 

(k) an annual return sent under section 263

 
 
  • (i) if sent using the online service of the Director

12

 
  • (ii) if sent using any other means

40

 

(l) request for a certificate referred to in subsection 263.1(1)

 
 
  • (i) if sent using the online service of the Director

10

 
  • (ii) if sent using any other means

20

 

(m) documents sent under subsection 265(1) or a request referred to in subsection 265(3)

250

 

(n) a request for a cancellation referred to in subsection 265.1(1) or a request referred to in subsection 265.1(3)

250

2

Provision by the Director of an uncertified copy or uncertified extract under subsection 266(2), if requested using any means other than the online service of the Director, per copy or extract

5

3

Provision by the Director of a certified copy or certified extract under subsection 266(2)

 

(a) if requested using the online service of the Director, per copy or extract

10

(b) if requested using any other means, per copy or extract

40

4

Expedited examination by the Director

100