New Obligations for Legal Entities

About the new obligations for corporate transparency

On June 3rd, 2021, the Québec Government enacted Bill 78, An Act mainly to improve the transparency of enterprises (the “Act“), with the objective of providing better protection to the public by contributing to the prevention and fight against tax evasion, money laundering and corruption. The Act will come into force on March 31, 2023, resulting in the addition of important disclosure requirements to the Act Respecting the Legal Publicity of Enterprises. All entities currently registered with the Québec Enterprise Register (the “REQ“) or to be registered with the REQ (with certain exceptions), regardless of their jurisdiction of incorporation, shall be required to publicly disclose specific information regarding their ultimate beneficiaries as well as provide new information on their directors and officers.

According to the Québec Government, in general terms, an ultimate beneficiary is a natural person who has a right, whether directly or indirectly, allowing them to benefit from part of the income or assets of an entity or a right allowing them to direct or influence the activities of such entity, more specifically any natural person who has 25% or more of the voting rights or of the fair market value or exercises de facto control over the entity.

The new information on the ultimate beneficiaries will be requested when filing the Quebec Annual Declaration in 2023 or a Quebec Updating Declaration after March 31, 2023, and includes the following for each natural person:

  • their full name;
  • their their residential and/or business address (please note the residential address will only be disclosed to the public if no business address is provided);
  • their date of birth (please note this information will not be made available to the public);
  • the date on which they became or, as applicable, ceased to be an ultimate beneficiary;
  • the type of control exercised, or the percentage of shares or units held or of which they are a beneficiary.

Entities will also be required to provide the date of birth and residential addresses of any individual who has only filed a professional address, for all natural persons registered on the REQ, including directors, officers and shareholders. Additionally, a copy of a valid government issued identification for each active director currently indicated on the REQ, as well as, for any newly elected director must be provided.

The information resulting from these new obligations must be provided to the REQ no later than by the end of the filing period of an entity’s first annual updating declaration following March 31st, 2023. In addition, for any Québec tax return filed following such date, entities should check “no”in box 39 or 436 and file their annual updating declaration directly with the REQ to declare the new information. After this declaration with the REQ, entities will once again be able to file their annual updating declaration via their tax return.

To obtain further information, to verify how these new requirements may apply to your situation or for assistance with the filing of the annual updating declaration, please do not hesitate to contact our corporate department: corpo@snrlegal.com.

Additionally, you may also refer to the new website published by the Québec Government (available in French only: obligations-transparence-entreprises) for further details on the implementation of these amendments.