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Bill 78: What Impact Will it Have for Enterprises?

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Corporate Commercial Bulletin

Coming Into Force

Bill 78, entitled An act mainly to improve the transparency of enterprises (herein after “Transparency Act”), was assented to on June 8, 2021, and will come into force on March 31, 2023.[1] The coming into force of the Transparency Act will result in important amendments to the Act respecting the legal publicity of enterprises (“Publicity Act”).

The purpose of the Transparency Act is to optimize the transparency of enterprises registered in Quebec, and in so doing to enhance the protection of the public and prevent and fight tax evasion, money laundering and corruption.[2]

Following the coming into force of the Transparency Act, new obligations will become applicable to registrants under the Publicity Act when they file their initial declaration or registration declaration and when they file an updating declaration (annual or current) in the Enterprise Registrar of Quebec (“REQ”). The Publicity Act defines a “registrant” as any person or group of persons registered voluntarily to the REQ or any person, trust or partnership required to be registered.[3] All enterprises already subject to the Publicity Act, as well as those that will become so in the future, will therefore have to comply with the new obligations, as will their “ultimate beneficiaries”, a new concept introduced by the Transparency Act.

Ultimate Beneficiaries

In general, an ultimate beneficiary is [translation] “a natural person who holds a right that allows them to benefit from a portion of the income or assets of an enterprise or a right that allows them to direct or influence the activities of the enterprise.”[4] The Transparency Act specifies that an ultimate beneficiary of a registrant is, among other things, an individual who:

  1. Is a holder, even indirectly, or beneficiary of a number of shares or units of the registrant conferring on the person the power to exercise 25% or more of the voting rights attached to the shares or units;
  2. Is a holder, even indirectly, or beneficiary of a number of shares or units the value of which corresponds to 25% or more of the fair market value of all the shares or units issued by the registrant; or
  3. Has a direct or indirect influence that, if exercised, could result in control in fact within the meaning of sections 21.25 and 21.25.1 of the Taxation Act (chapter I-3), with the necessary adaptations.[5]

The Transparency Act provides for other situations where a natural person (individual) will be considered the ultimate beneficiary, including general partners of a limited partnership and trustees of a trust operating a commercial enterprise.

Moreover under the Draft Regulation respecting the legal publicity of enterprises published on December 21, 2022 (“Draft Regulation”), a natural person who controls, directly or indirectly, the number of a registrant’s shares or units that corresponds to 25% or more of the voting rights or the fair market value will be considered to be an ultimate beneficiary.[6] A natural person is party to a voting agreement that allows them to control, directly or indirectly, a number of the shares or units of an entity will also be considered to be an ultimate beneficiary.[7]

For details about ultimate beneficiaries, please consult our bulletin on ultimate beneficiaries.

Obligations of Registrants

In addition to the information relating to the ultimate beneficiaries, registrants under the Publicity Act will now have to disclose the following information to the REQ with their registration declaration:

  1. the dates of birth of the natural persons associated with the enterprise and registered in the REQ (the directors, certain officers, the three largest shareholders, and ultimate beneficiaries);
  2. the professional address, where applicable, in addition to the domicile, of the natural persons associated with the enterprise and registered in the REQ; and
  3. a copy of identification for each director.[8]

For information about the content of each of these disclosures, please consult our bulletin on disclosure obligations under the Transparency Act.

Moreover, registrants will have to disclose the type of control that each of their ultimate beneficiaries has, or the percentage of shares or units or interests each holds or is entitled to as an ultimate beneficiary, as well as the dates on which they became and ceased to be ultimate beneficiaries, where applicable. In addition to the disclosure obligations, registrants are subject to an additional obligation of diligence: they must take the necessary measures to locate and ascertain the identities of their ultimate beneficiaries. That obligation extends to updates of the information required by the Publicity Act, that must be executed on an annual basis as well as when a change occurs.[9]

An earlier version of the bill on transparency provided that the registrant’s diligence obligation would rather be to take reasonable measures to locate and ascertain the identities of their ultimate beneficiaries. As mentioned above, by imposing to the registrant the obligation to take the necessary measures to this effect, the government of Quebec has however confirmed that it wanted a more stringent standard.

On its transparency of enterprises website, the government of Quebec also states the following in this regard:

[translation] The enterprise 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.[10]

However, certain registrants, such as legal persons established in the public interest, non-profit legal persons established for a private interest, reporting issuers within the meaning of the Securities Act (chapter V‑1.1), certain financial institutions, trust companies, certain banks, and associations within the meaning of the Civil Code of Québec, will be exempt from disclosing information relating to their ultimate beneficiaries.[11] On this point, it is important to note that new categories of registrants could eventually be exempted by regulation.[12]

Finally, when an ultimate beneficiary is a minor, their name and domicile as declared to the REQ will not be available for public consultation.[13]

Obligations and Third Persons

For third parties, generally external to the registrants, the Transparency Act does have some consequences. The new disclosures required include information about ultimate beneficiaries (except their date of birth, which may not be consulted) and professional addresses that may be set up against third persons and will be proof of their content for the benefit of third persons in good faith.

In practice, that means:

  1. Third persons in good faith will be able to use the information declared or updated by registrants to assert their rights in a legal proceeding; and
  2. That information will be presumed to be true and only third persons in good faith will be able to challenge its truth. Given that registrants have an obligation to update the information with the REQ, they will not be able to challenge the truth of the information in court when third persons who relied on it acted in good faith.

Requests for Compilations 

Commencing on March 31, 2024, any interested person will be allowed to use the name of a natural person as a search criterion in the REQ and in requests for compilations. However, the address of a natural person may not be used as a search criterion.

Compilations may only contain information that may be consulted in the REQ. That means that the dates of birth of natural persons, the domiciles of natural persons who have declared a professional address, and the names and domiciles of ultimate beneficiaries who are minors may not be used as the basis for a search for or be contained in compilations of information in the REQ.[14]

Sanctions for Non-Compliance

The penalties and administrative measures already provided in the Publicity Act will apply in the case of non-compliance with the new obligations. Under the Publicity Act, the REQ may apply administrative sanctions such as ex officio cancellation for registrants that do not comply with an obligation and pecuniary penal sanctions ranging from $500 to $25,000, depending on the type of offence committed.

For example, for failure to file a registration declaration within the applicable time, a registrant will be liable to a fine of not less than $1,000 or more than $10,000 in the case of a natural person, and a fine of not less than $2,000 or more than $20,000 in other cases. The amounts of the fines provided by the Publicity Act will be doubled for subsequent offences.[15]

Next Steps

The Transparency Act allows the government to determine, by regulation, other information in the REQ that may not be consulted, new cases and conditions for determining ultimate beneficiaries, and new terms regarding the control exercised by ultimate beneficiaries.[16] In the future, the minister will also be able to exempt certain categories of registrants from payment of registration fees.[17] It will be wise to keep a close eye on regulatory developments in the coming months.

For more information about the practical consequences of the Transparency Act for your enterprise, we invite you to contact our corporate law team.


Disclaimer: This bulletin is of general application and is dependent on, among other things, the particular facts of each case; some criteria may have been simplified in the bulletin and the applicable law may have changed since the bulletin was issued.


[1]      With the exception of ss. 26 and 32, amending the Act respecting parental insurance, which came into force on June 8, 2021.

[2]      Bill 78, explanatory notes.

[3]      Transparency Act, s. 1, see new s. 0.2 of the Publicity Act.

[4]      Transparency Act, s. 1, see new s. 0.7 of the Publicity Act, and s. 8; Government of Quebec. “Trouver et identifier un bénéficiaire ultime d'une entreprise”, online: Page retrieved on February 5, 2023.

[5]      Ibid., see new s. 0.4 of the Publicity Act.

[6]      Draft Regulation, December 21, 2022, Gazette Officielle du Québec No. 51 (Page: 4300), s. 6.

[7]      Ibid., s. 6.

[8]      Transparency Act, s. 8.

[9]      Transparency Act, s. 12.

[10]    Government of Quebec. “Entreprises qui doivent déclarer un bénéficiaire ultime”, online: Page retrieved on February 5, 2023.

[11]    Transparency Act, s. 1, see new section 0.7 of the Publicity Act.

[12]    Ibid., s. 23.

[13]    Ibid., s. 17.

[14]    Ibid.¸ s. 18.

[15]    Publicity Act, s. 132 et seq.

[16]    Transparency Act, s. 23.

[17]    Ibid., s. 8

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