Last June, the Canada Business Corporations Act was amended to include new provisions for the beneficial ownership of federally incorporated companies. It will soon be the turn of the Business Corporations Act (Quebec) (“QBCA“) to undergo profound changes.
Legislation will soon be put in place to implement the new requirements of the Quebec government’s Tax Fairness Action Plan to increase corporate transparency, by requiring companies to declare to the Quebec Enterprise Registrar (“REQ“) personal information (name, month and year of birth, residential address and address for service) relating to the ultimate beneficiaries of companies. This will make it possible to search for an individual in the REQ by name or address.
This obligation will apply to most companies currently required to register with the REQ, but not to legal entities whose shares are listed on the stock exchange, nor to legal entities governed by public law, nor to not-for-profit organizations.
It should be noted that the notion of “ultimate beneficiary” includes, in particular, natural persons holding, directly or indirectly, at least 25% of the shares, in the form of voting rights or in value, of the target company, or those exercising influence which could result in de facto control of the company.
The Quebec government is committed to improving corporate transparency while protecting privacy and personal information. The public will therefore have access to information subject to certain reservations. For example, REQ will not publish information about minors who are beneficiaries of trusts. REQ will also retain the right to prevent consultation of personal information if this poses a serious danger to the safety of the ultimate beneficiary.
In line with these corporate transparency measures, the Quebec government has also expressed its intention to expressly prohibit the issuance of warrants (which grant the right to subscribe to shares at a predetermined price) or stock options (which constitute a promise to sell shares at a predetermined price) to the holder, since these do not allow the issuing company to determine the ultimate beneficiary.
The provisions of the QBSA will therefore be harmonized with those of the federal law. For more information, please consult our article Beneficial ownership and the new corporate obligations of federal private companies coming into effect in June 2019 published last June.
