On June 8, 2021, the Québec National Assembly adopted the Act mainly to improve the transparency of enterprises1 (the “Act”), the purpose of which is to amend the Act respecting the legal publicity of enterprises2 (the “ALPE”). Among other things, Québec legislators introduced the notion of ultimate beneficiary to the ALPE. Although the coming into force date of the Act has not yet been determined by the government and a grace period will be granted to allow businesses to comply, this change will undoubtedly have a significant impact on businesses.
It is well known that in Québec, businesses are required to register and declare certain information relating to shareholders, directors and their residences to the enterprise registrar. However, following the coming into force of the legislative amendments mentioned above, businesses subject to the ALPE will also have to declare the identity of their ultimate beneficiary.
The question arises: what is an ultimate beneficiary? Legislators have provided a broad definition of this term. Any natural person who meets any of the following criteria is an ultimate beneficiary:
- He/she holds shares or units conferring at least 25% of the voting rights
- He/she holds shares or units whose value corresponds to at least 25% of the fair market value of all shares or units issued
- He/she exercises such direct or indirect influence over the business that, if exercised, would result in de facto control of the business
- He/she is the general partner of a limited partnership; or
- He/she is the trustee of the business.
To comply with the ALPE, businesses will have to declare the following information regarding their ultimate beneficiaries, namely their names, residences, dates of birth as well as the type of control they exercise or the percentage of shares or units they hold or of which they are beneficiaries.
However, the Act provides that certain reporting companies will be exempted from reporting this information, namely non-profit legal persons, legal persons governed by public law, reporting issuers within the meaning of the Securities Act3 and associations.
It should be noted that, with the exception of the date of birth, the information thus declared will be public and may be consulted on the Enterprise Registrar’s website. The objective is to promote the transparency of businesses and to follow the lead of Canadian legislators who added the notion of a person having significant control to the Canada Business Corporations Act4.
The Act will also put an end to the obligation of shareholders, partners, officers and directors to declare their residence address as their domicile. They will be able to provide the Enterprise Registrar with a business address. In addition, the Act will also require directors to provide a copy of a valid identification document issued by a government authority to the Enterprise Registrar, who will have to destroy it once the registration or update is completed.
If you have any questions regarding these new requirements, please do not hesitate to contact your Dunton Rainville lawyer.
In collaboration with Mykam Lemire-Théberge, stagiaire.
1 L.Q. 2021, c 19.
2 RLRQ c P-44.1.
3 RLRQ c V-1.1.
4 L.R.C. 1985 c C-44.