Since March 31, 2023, in order to improve transparency, protect the public and fight against fraud, money laundering and tax evasion, enterprises incorporated and/or registered in Quebec have to declare new information to the Registraire des entreprises du Québec (hereinafter “REQ”).
It is important to understand these issues in order for your business to be compliant.
Who is affected by these new obligations?
All Quebec, Canadian and foreign enterprises must comply with these new obligations and ensure the identity of their ultimate beneficiaries regardless of their place of constitution.
Here are the enterprises that must declare their ultimate beneficiaries:
What are the new obligations?
Several pieces of information must now be declared to the REQ in addition to those that already appeared in the REQ.
1. ABOUT THE ULTIMATE BENEFICIARIES
The name, domicile address and date of birth of the ultimate beneficiaries of the enterprise must be provided to the REQ.
What is an ultimate beneficiary?
An ultimate beneficiary is an individual who has either:
- A right to benefit from a portion of the income or assets of the business.
- A right to direct or influence the activities of the business in a significant manner that can be identified as control in fact.
In Quebec, the ultimate beneficiary of a corporation is the one who either:
- Holds 25% or more of the voting shares of the corporation.
- Holds less than 25% of the voting rights but is connected to a group of shareholders who have agreed to exercise the voting rights jointly and severally.
- Holds 25% or more of the fair market value of all the shares of the corporation, voting or not.
- Has a significant influence in the decision making of the corporation (de facto control).
Please note that in some situations, an ultimate beneficiary may be an enterprise. This is only the case if a law provides for it. Therefore, the name of the enterprise must be declared as the ultimate beneficiary. It is also possible that the ultimate beneficiaries may be different from the shareholders of the corporation. If you are not sure who the ultimate beneficiaries of your corporation are, we recommend that you contact a Lexstart lawyer.
Finally, it is possible for an entreprise to have multiple ultimate beneficiaries. If this is the case, it will be necessary to declare them all to the REQ.
2. ABOUT THE INFORMATION OF THE NATURAL PERSONS RELATED TO THE BUSINESS
The date of birth and the professional address of any natural person linked to the enterprise and registered in the file of your enterprise with the REQ must be communicated to the REQ.
The date of birth of proxies and administrators of the property of others is not required.
What is a professional address?
Reporting a personal address implies the home address of an individual such as a director or shareholder.
However, if you do not wish to publish a personal address in the REQ since it will be visible, it is possible to replace this home address with the professional address of the natural person provided that it is one. It is then this person’s main place of work or business that will appear on the register.
Attention: a natural person can only have one professional address.
3. ABOUT THE DIRECTORS IN OFFICE
It is mandatory to provide a copy of an identity document, with or without photo, of each current director declared to the REQ and of each newly elected director, regardless of their nationality or place of residence. The copy of the ID must be legible, displaying the first and last name, date of birth and be government issued. This could be a passport or driver’s license, for example. An expired ID cannot be submitted.
What is the purpose of these new legal requirements?
One of the priorities of the Quebec government is to fight against fraud and tax evasion by businesses. Thus, these new obligations provide more transparency on enterprises, which allows Quebec to align itself with certain international standards in this area.
Will all this informations be accessible to the public?
As a result of this amendment, it is possible since March 31, 2023 to find, on the REQ, the persons related to a registered entreprise by the first and last names of these individuals. The name of the enterprise will also be accessible when the ultimate beneficiary is an enterprise, the date of taking and ceasing the status of ultimate beneficiary, the professional address if declared or the domicile address and the shares, the control or the percentage of shares held by the ultimate beneficiary. The public will therefore have access to this information for the purpose of strengthening public protection in socio-economic relations.
However, the Act respecting the legal publicity of entreprises protects certain information. Thus, the public will not have access to the date of birth of natural persons, nor to the home address if a valid and declared business address is provided, and to certain information if the ultimate beneficiary is a minor. When the ultimate beneficiary is a minor, the existence of an ultimate beneficiary will simply be recorded in the REQ.
It is possible to ask the REQ not to disclose certain personal information provided that it is established that such disclosure could constitute a serious threat to the security of the beneficiary. The REQ will consider the request.
How do I comply with these new obligations?
If your corporation is already incorporated and/or registered with the REQ, you only need to provide this information during your annual update declaration period or by making a current update declaration at any time before. The deadline for compliance is no later than the end of the filing period for your company’s annual update declaration.
If you are not yet incorporated and/or registered in Quebec, you need only provide this information on your initial declaration, declaration of registration or declaration of re-registration. By choosing to incorporate with Lexstart, we ensure that these requirements are met from the moment your business is created.