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New ownership transparency requirements for corporations operating in Quebec

Effective March 31, 2023, new ownership transparency requirements for enterprises conducting a business in Quebec will come into effect as a result of the recently passed Bill 78 entitled An Act Mainly to Improve the Transparency of Enterprises (“Bill 78”), thereby amending, inter alia, the Act Respecting the Legal Publicity of Enterprises (the “Act”). Businesses should take steps prior to the March 31, 2023 implementation date to gather the information required when preparing their Annual Updating Declaration.

All businesses to which the Act applies will have to follow the new obligations introduced by Bill 78. However, some enterprises will be exempted from the obligation to declare their ultimate beneficiaries to the Quebec Enterprise Registrar (the “QER”), including but not limited to the following:

  • a not-for-profit corporation;
  • a financial institution pursuant to the Insurers Act;
  • a trust company governed by provincial or federal law, or by the law of another province or territory of Canada;
  • a bank or an authorized foreign bank listed in Schedules I, II and III of the Bank Act; and
  • a reporting issuer within the meaning of sections 68 and following of the Securities Act

Overall, the concept of "ultimate beneficiary" is intended to target individuals who have a right to benefit from the income or assets of an enterprise or a right to direct or influence the activities of such an enterprise. Ultimate beneficiaries are (1) any individual that is a registered holder, beneficial owner or has direct or indirect control or direction of any number of shares or units that (a) carry 25% or more of the voting rights attached to all of the corporation’s outstanding voting shares or units or (b) is equal to 25% or more of the corporation’s outstanding shares measured by fair market value; (2) an individual who has any direct or indirect influence that, if exercised, would result in control in fact of the corporation[1]; or (3) is a general partner of a limited partnership; or (4) is a trustee of trust. Moreover, it includes individuals parties to a voting agreement which confers aggregate voting rights exceeding 25%.

The concept of "ultimate beneficiary" also applies in particular to general partnerships, limited partnerships, co-operatives, and trusts who operate a business.

Businesses will be required to file the following information with the QER in respect of each of their ultimate beneficiaries: 

  1. name, date of birth and residential address when the ultimate beneficiary is an individual;
  2. name and registered office address when the ultimate beneficiary is a business;
  3. any other name they use in Québec and by which they are identified;
  4. the date on which the individual became or ceased to be an ultimate beneficiary;
  5. business address, if any;
  6. type of control exercised or percentage of shares or units owned or beneficially owned and the date on which they became an ultimate beneficiary.

In addition, enterprises will be required to file and/or declare with the QER:

  1. in respect of each of their directors, a copy of an identity document;
  2. in respect of each individuals registered with the QER, a date of birth (which will not be published on the QER’s website) and a business address.

Please note that the residential address of an individual is mandatory. However, a business address can be declared if you do not want an individual's residential address to be published. An individual can only have one business address, and it must be the same, regardless of the enterprise in which the individual is located.

As an important side note: compliance with Bill 78 will require the handling of personal information, and subjected parties should ensure to only collect the minimum required to comply with Bill 78 and that such data is adequately protected in accordance with the applicable legal requirements which were updated further to the coming into force of the Act to modernize legislative provisions as regards the protection of personal information (Québec) between September 2022 and September 2024.

Failure to comply with the new requirements of Bill 78 can result in a fine varying between C$500 and C$25,000, which can be doubled in case of a subsequent offence and may also lead to the cancellation of the business registration in Québec


[1] See ss. 0.3 of the Act and 21.25 and 21.25.1 of the Taxation Act (chapter I-3)