THE QUÉBEC GOVERNMENT’S NEW REQUIREMENTS REGARDING CORPORATE TRANSPARENCY
Last June, the Canadian Business Corporations Act was amended to include new provisions regarding the identification of beneficial ownership of federal private corporations. It will soon be the turn of the Québec’s Business Corporations Act (“QBCA”) to undergo profound changes.
Legislative measures will be put in force to implement the new requirements of the Québec Government under the Tax Fairness Action Plan designed to enhance corporate transparency, including requiring businesses to provide personal information (name, month and year of birth, residential address and address for service) of beneficial owners in the Quebec Enterprise Register (“QER”). This will allow searches for a physical person, using a name or address.
This requirement will apply to most companies currently obligated to be registered with the QER, however not to corporations listed on the stock exchange, public corporations, nor non-profit organizations.
It should be noted that the notion of “beneficial owner” encompasses, namely, individuals who hold, directly or indirectly, at least 25% of the concerned company’s voting shares or in fair market value, or an individual who exercises direct or indirect influence that would, in effect, result in control of the company.
The Québec government has committed to improving corporate transparency while protecting privacy and personal information. The public will have access to this information subject to restrictions. For example, the QER will not publish information regarding minors who are beneficiaries of a trust. The QER will also maintain the right to prevent consultation of personal information if it poses a serious threat to the safety of the beneficial owner.
In line with these measures aiming greater corporate transparency, the Québec government also announced its intention to prohibit the issuance of subscription warrants (which grant the right to purchase shares at a predetermined price) or stock options (which grant a commitment to sell shares at a predetermined price) in bearer form, as such warrants and options do not allow a corporation to identify the beneficial owner.
The QBCA provisions will, therefore, be harmonized with the federal law. For more information on this subject, please refer to our article The beneficial ownership and new corporate obligations of the federal private corporations coming into force as of June 2019 published last June.