The Government of Quebec is implementing new measures and enhancing the information available at the Registraire des entreprises du Québec (REQ). The aim is to improve corporate transparency, strengthen public protection and prevent/fight tax evasion.

These new measures will come into effect on March 31, 2023 and, with a few rare exceptions, all Quebec businesses will have to comply with them. Here’s what its about.

Submit information to REQ regarding ultimate beneficiaries

You must now master this new notion of “ultimate beneficiary”. In Quebec, an ultimate beneficiary is, most commonly, a person who holds 25% or more of the voting rights, 25% or more or of the fair market value, or who has an influence which could result in a de facto control of the business.

Businesses must take the necessary steps to trace and to identify their ultimate beneficiaries.

As a result, a business must carry out a legal, documentary and factual analysis of its situation. For example, in the case of a corporation, it must analyze its share capital and any agreements that may influence the way voting rights are exercised.

Moreover, the ultimate beneficiaries are sometimes different from the corporation’s shareholders. This would be the case when its shares are wholly owned by a holding company. The shareholding of this holding company would then have to be analyzed .

Information to be provided on ultimate beneficiaries:

• Full name;
• Date of birth;
• Other used names (ex: a pseudonym);
• Start and end date of ultimate beneficiary status;
• Home address (option to also provide a professional address and thus prevent the home address from being accessible to the public);
• Type of control exercised or percentage of shares, interests or units held.

Will this new information be made public by the REQ?

The following information is declared to the REQ and accessible to the public:

• full name;
• business name when the ultimate beneficiary is a business;
• other name(s) used in Quebec and under which (s)he identifies (eg, pseudonym);
• date on which (s)he became and ceased to be an ultimate beneficiary;
• professional address if declared, otherwise the home address;
• type of control exercised or the percentage of shares, interests or units held.

The following information is declared to the REQ but not accessible to the public:

• date of birth;
• home address, if a valid professional address is declared;
• certain information relating to a minor who is the ultimate beneficiary. However, a notice will still be entered in the REQ to the effect that there is an ultimate beneficiary.

Unlike federal corporations, the new Quebec Law does not impose the obligation to keep a register of persons exercising significant control in the minute book.

Other new REQ obligations

In addition to the new measures regarding the concept of ultimate beneficiary, here are some other obligations that businesses must comply with:

Provide IDs for all directors

Whether (s)he is already a registered director or newly elected, every director must provide the REQ with an identity document. The ID must be valid, that is to say, it must not have expired, and the copy sent to the REQ must be legible.

The copy of the ID will be kept until the date of registration of the business or the filing of its updating declaration. It will then be destroyed.

Note that this obligation only applies to directors. No other related person (eg ultimate beneficiaries, shareholders, partners) has this obligation.

The copy of the ID must be submitted to the REQ by the end of your business’ annual declaration period.

Declaring the date of birth of registered individuals

The date of birth of all individuals registered with the REQ (except for attorneys and third part administrators) must be declared to the REQ.

However, the date of birth will not be published at the REQ.

This information must be declared by the end of your business’ annual declaration period.

Possibility of declaring an individuals’ professional address

The declaration of an individual’s home address of (eg directors, shareholders, partners) is mandatory.

However, if you do not want an individual’s home address to be published and publicly accessible at the REQ, you will be able to also declare their business address, if they have one. The individual’s professional address corresponds to his/her principal place of work or business. It is not possible to submit a post office box as a business address.

A new search tool for 2024

Finally, note that after several years of discussion regarding this issue, REQ searches using the surname and first name of an individual will be possible as of March 31, 2024. However, the Law provides that certain personal information (such as date of birth) will not be part of such a search.

If you need assistance navigating these new rules and ensuring your business complies with the new Law, please do not hesitate to contact me at (514) 856-5601 or by email at sam@malekavocat.com

Important new legal obligations for Quebec businesses

The Government of Quebec is implementing new measures and increasing the information available at the Registraire des entreprises du Québec (REQ). According to Québec, the goal is to improve corporate transparency, strengthen public protection and to prevent/fight tax evasion. These new measures will come into effect on March 31, 2023 and, with a few rare exceptions, all businesses in Quebec will have to comply with them. Here's what its about.

Sam Tardif Malek