Corporations: important new measures for disclosure of shareholder information

After launching consultations in the fall on ways to strengthen corporate transparency, the Government of Quebec proposed measures in its 2020-2021 budget, tabled on March 10, 2020 in the National Assembly. As we reported in our October 8, 2019 article entitled The Quebec Government Launches a Public Consultation on Corporate Transparency, the consultation focused on three main proposals: (1) mandatory disclosure of information on ultimate beneficiaries to the Enterprise Registrar of Quebec (“REQ”); (2) the ability to search the enterprise register using an individual’s name; and (3) disclosure of the ultimate owners of properties.

After receiving feedback from the public and corporate stakeholders, and in the interest of increasing corporate transparency, the Government of Quebec announced the implementation of specific changes to the enterprise register in its March budget. These changes are rooted in last autumn’s proposals and will serve two main objectives: 

1. Disclosure of information on ultimate beneficiaries: the Quebec government is introducing an obligation, similar to the one already imposed on companies governed by the Canada Business Corporations Act, on all corporations operating in Quebec and registered with the REQ in accordance with the Act respecting the legal publicity of enterprises (CQLR, c. P-44.1). This obligation requires companies to provide information on their ultimate beneficiaries to the REQ. This information will be public and accessible to anyone who consults the enterprise register. The government defines the notion of ultimate beneficiaries broadly, including any form of direct and indirect control of a corporate entity. Ultimate beneficiaries are individuals who have “significant control” over a corporation. Such individuals hold, directly or indirectly, 25% or more of the voting rights or the fair market value of the shares of a corporation. 

The Quebec government did state that this obligation will not be absolute, as it wants to avoid unnecessary intrusions into beneficiaries’ privacy. For instance, there are specific limits around disclosing a beneficiary’s birth year and residential address. Moreover, the government emphasized that the new obligation will not come into effect until one year after the relevant legislative amendments are given assent, in order to give businesses a reasonable adjustment period. 

2. Searches in the REQ using the name of a physical person: In line with developments on the international and national front, the Government of Quebec confirmed that specific modifications will be made to the enterprise register, in order to provide the ability to search for a physical person by name. 

This type of search should make it possible to identify all the companies to which an individual is related, whether as a director, officer, shareholder or ultimate beneficiary. 

With privacy being an ongoing concern, the government will be setting certain limits on this type of enterprise register search. 

Likewise, name searches will not be made available to the public until one year after the relevant legislative amendments are given assent. 

These changes will only take effect after the National Assembly enacts the legislation required to implement the new measures. Until then, the current rules will continue to apply. We will continue to keep an eye out for relevant initiatives and watch for a bill to be introduced in the coming months. It will be interesting to see what eventual changes to the measures might be proposed.

Written in collaboration with Rémi-Pier Fournier, articling student.