Jun 1st, 2021
Jun 7th, 2021
By Daniel Frajman
The Quebec government enacted on June 3, 2021 Bill 78 to update the rules relating to the Quebec Enterprise Register (the “REQ”) by promoting, in the terms of the bill, “transparency of enterprises”. The Quebec government’s press release indicates that it wants to be a world leader in transparency.
This is the bill that in general terms will put ultimate beneficiaries (physical persons with a significant stake (25% or more) in votes or value, or control, after looking through holding companies, trusts, prete-nom agreements and shareholders agreements, among others) on the REQ for each company (other than public companies) or partnership or other REQ registrant, and allow searches on the REQ by name of physical persons who are ultimate beneficiaries, directors or officers.
The bill was first tabled in December 2020. A brief technical review of the bill is in my Tax Topics article attached of January 2021, published by Wolters Kluwer. The bill was amended at the end of May 2021 to apparently confirm for example that when a trust is a significant shareholder in votes or value, essentially all trust beneficiaries – even discretionary beneficiaries - are named on the REQ as ultimate beneficiaries. Perhaps future guidance from Quebec will limit reporting of discretionary trust beneficiaries. (Trust beneficiaries whose rights are contingent on a death occurring will not have to be listed, and beneficiaries who are minors will not have to be listed. Individuals with significant privacy concerns or a fear of being targeted may be given the ability to apply to not have their names listed.) (Notably, non-profits will also be exempt from this law, so it appears that for example private foundations and other charities will be exempt.)
Though enacted, the bill will come into force on a day to be determined by the Quebec government. Previous Quebec government statements were to the effect that the government would let a year or so pass from the time of the June 3, 2021 enactment to allow there to be familiarity with the law, and also to allow the government to issue guidance and regulations to help apply the law, and the government appeared to reiterate in its news release of June 3, 2021 that it will be issuing guidance.
Notably, these new Quebec rules apply to every private corporation and partnership or other registrant with Quebec activity that therefore obliges them to be on the REQ, no matter where in the world the registrant has been formed, and the ultimate beneficiaries are publicly named on the public REQ website which is freely available to all, worldwide. Compare this to the more limited rules of the Canada Business Corporations Act (“CBCA”) in force since 2019, which apply only to CBCA corporations, provide for a private register internal to the corporation accessible only to the CRA, Revenue Quebec or the police in the context of an investigation, and which likely does not include discretionary trust beneficiaries as persons to be listed as having significant control.
Rest assured that Spiegel Sohmer is here to help you comply with the new Quebec rules when they come into force (perhaps in 2022) and to prepare for the new rules in advance. Please feel free to contact me if you have any questions on this or related corporate/business/trust matters.