The outcomes of the enactment of Bill No. 78 An Act mainly to improve the transparency of enterprises
On June 3, 2021, the Government of Québec passed its Bill 78 An Act mainly to improve the transparency of enterprises, which will effectively amend the Act respecting the legal publicity of enterprises (the “Act“).
In addition to the information that businesses required to register must currently report to the Québec Enterprise Register (Registraire des entreprises du Québec) (“REQ“), the Act will require businesses to disclose certain information relating to natural persons who are their ultimate beneficiaries, including:
- their name;
- their home address (the home address of the natural persons must be reported but will not be disclosed and available for consultation, if the enterprise also declares a business address for those persons);
- their date of birth;
- the date from which they became an ultimate beneficiary and, where applicable, the date on which they ceased to be an ultimate beneficiary;
- the type of control exercised by each beneficiary or the percentage of shares or units held or of which they are beneficiaries.
Aside from the dates of birth, this information will therefore be public and it will be possible to search by name of natural persons.
For the purposes of the Act, “ultimate beneficiary” means a natural person who :
- is the holder, even indirectly, or the beneficiary of a number of shares or units of the enterprise conferring on the natural person the power to exercise 25% or more of the voting rights attached to the shares or units;
- is the holder, even indirectly, or the beneficiary of a number of shares or units with a value corresponding to 25% or more of the fair market value of all the shares or units issued by the enterprise;
- exercises de facto control over the enterprise;
- is the general partner of a limited partnership.
Where natural persons holding shares or units of the enterprise have agreed to jointly exercise the voting rights attached thereto and the effect of this agreement is to confer on them the right to exercise 25% or more of these rights, each of them is considered to be an ultimate beneficiary of the enterprise.
In the case of a natural person operating a sole proprietorship, that individual shall be presumed to be the sole ultimate beneficiary of the sole proprietorship, unless he or she declares otherwise.
Businesses registered or required to register with the REQ, whether or not they are incorporated in Québec, will have until October 1, 2022, to comply with the Act and it will be their responsibility to take reasonable measures to trace and update the information to be reported on their ultimate beneficiaries, as well as to ensure their identity.
For more information on this subject, please refer to our previous articles
The beneficial ownership and new corporate obligations of the federal private corporations coming into force as of June 2019
The Québec government’s new requirements regarding corporate transparency