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Since February 14, 2011, all Canadian companies (incorporated in any jurisdiction or province in Canada or pursuant to the federal statute) which are registered in Québec must disclose whether there is a unanimous shareholders agreement amongst its shareholders that restrict the powers of its directors. This requirement is set forth in Section 35(6) of An Act respecting the legal publicity of enterprises which states:

The registration declaration of a legal person must also contain, if applicable,

(6) a statement as to the existence or not of a unanimous shareholder agreement, entered into in accordance with the laws of Québec or a Canadian jurisdiction other than Québec, that restricts the powers of the directors or withdraws all powers from the directors.

Last week, the Registre des entreprises which manages the online registration system of all companies required to register in the Province of Québec updated its form which now requires legal persons to answer yes or no as to whether there is a shareholders agreement. If yes, then there is a further question as to whether all of the powers of the directors are so restricted.

Québec corporations in particular are required, pursuant to the new Québec Business Corporations Act (“QBCA”), to allow creditors to examine the shareholders agreements which restrict the powers of their directors pursuant to Section 32 QBCA.

Accordingly, we recommend that any unanimous shareholders agreement restricting the powers of directors of Québec QBCA corporations be limited to only contain such restrictions in a separate agreement. This agreement would be available for examination by creditors.

We would be happy to discuss any of these requirements with you.

Alwynn Gillett is a commercial lawyer at Spiegel Sohmer with extensive experience in corporate and real estate matters.