Interested Persons

The Real Estate and Business Brokers Act, 2002, (the “Act”) requires the registrar to consider the activities of “interested persons” in assessing an applicant’s fitness for registration.

Specifically, Sec. 10 (1) of the Act states in part that:

10. (1) An applicant that meets the prescribed requirements is entitled to registration or renewal of registration by the registrar unless,

(a) the applicant is not a corporation and,

(i) having regard to the applicant’s financial position or the financial position of an interested person in respect of the applicant, the applicant cannot reasonably be expected to be financially responsible in the conduct of business,
(ii) the past conduct of the applicant or of an interested person in respect of the applicant affords reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty, or
(iii) the applicant or an employee or agent of the applicant makes a false statement or provides a false statement in an application for registration or for renewal of registration;

(d) the applicant is a corporation and,

(i) having regard to its financial position or the financial position of an interested person in respect of the corporation, the applicant cannot reasonably be expected to be financially responsible in the conduct of its business,
(ii) having regard to the financial position of its officers or directors or an interested person in respect of its officers or directors, the applicant cannot reasonably be expected to be financially responsible in the conduct of its business,
(iii) the past conduct of its officers or directors or of an interested person in respect of its officers or directors or of an interested person in respect of the corporation affords reasonable grounds for belief that its business will not be carried on in accordance with the law and with integrity and honesty, or
(iv) an officer or director of the corporation makes a false statement or provides a false statement in an application for registration or for renewal of registration.

(e) the applicant or an interested person in respect of the applicant is carrying on activities that are, or will be if the applicant is registered, in contravention of this Act or the regulations, other than the code of ethics established under section 50;

Sec. 10 (4) defines the term interested person:

10. (4) For the purposes of this section, a person shall be deemed to be an interested person in respect of another person if the person is associated with the other person or if, in the opinion of the registrar,

(a) the person has or may have a beneficial interest in the other person’s business;
(b) the person exercises or may exercise control either directly or indirectly over the other person; or
(c) the person has provided or may have provided financing either directly or indirectly to the other person’s business. 2002, c. 30, Sched. C, s. 10 (4).
Sec. 1 (2) of the Act further defines what is meant by associated persons:

1.(2) For purposes of this Act, one person is associated with another person in any of the following circumstances:

1. One person is a corporation of which the other person is an officer or director.
2. One person is a partnership of which the other person is a partner.
3. Both persons are partners of the same partnership.
4. One person is a corporation that is controlled directly or indirectly by the other person.
5. Both persons are corporations and one corporation is controlled directly or indirectly by the same person who controls directly or indirectly the other corporation.
6. Both persons are members of the same voting trust relating to shares of a corporation.
7. Both persons are associated within the meaning of paragraphs 1 to 6 with the same person.

As can be seen from the above, an interested person is a person who may not be the applicant or in the case of a corporate application, be an officer or director of the corporation, but who nonetheless exercises influence or control over the operation of the applicant or registrant. The interested person’s influence may be the result of direct or indirect financial controls, but it is important to note that an interested person does not necessarily need to have any formal ownership position or financial arrangement related to a registrant to be considered an interested person for the purposes of the above clauses. The key concept is that the person may be exercising control over the applicant or registrant.

The interested person concept enables the Registrar to consider the conduct of persons who, while they may not be registrants themselves, are exercising control or influence over the conduct and operation of the business. For example, the Registrar might determine through investigation that a former registrant, whose registration was revoked because of conduct in contravention of the Act, is attempting to continue to trade in real estate with a front person acting as the official registrant. Although the official applicant in question might technically be eligible for registration, evidence of control by the formerly revoked registrant (i.e. through financial arrangements or other conduct) would be a factor in the application as the previously revoked registrant would be considered an interested person in respect of the application.

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