Corporate transparency has been a prominent topic for the past decade as governments world-wide combat tax evasion, money laundering, and terrorist financing. In December 2020, Québec followed suit with Bill 78, An Act mainly to improve the transparency of enterprises (the "Bill"), which passed first reading in the National Assembly. Public hearings and consultations have just been held and the Committee on Labour and Economy is studying the Bill (the "Committee"). The provisions described in this post therefore remain subject to amendment before the Bill becomes law.


The Canadian federal and provincial finance ministers signed the Canadian Transparency Agreement in 2017, agreeing, among other things, to pursue legislative amendments to "ensure corporations hold accurate and up to date information on beneficial owners that will be available to law enforcement, and tax and other authorities" as has been done in some European countries and in the United Kingdom. To date, the following progress has been made:

  • In 2019, the federal Canada Business Corporations Act ("CBCA") was amended to require disclosure of individuals who were the beneficial owners of a CBCA corporation with significant control (as defined in the CBCA).
  • A number of provinces, including British Columbia, Saskatchewan, Manitoba, Nova Scotia, and Saskatchewan, have followed suit with amendments of their own statutes.

Until now, all of the Canadian legislative changes to date have taken the approach of amending the business corporations statute of the particular jurisdiction and, as a result, apply only to corporations incorporated under that statute. Further, these regimes currently only require the subject corporations to maintain a private register of beneficial owners and make it available for inspection by certain regulatory authorities and stakeholders for specified purposes (there have, however, been indications in some jurisdictions that at least some of the disclosed information may be made public in the future). 

A Different Approach

With Bill 78, Québec is proposing to take an approach that differs from other Canadian jurisdictions, in the following respects:

  • transparency requirements are to be implemented by amendments to Québec's Act respecting the legal publicity of enterprises ("Québec Legal Publicity Act") rather than the Québec Business Corporations Act;
  • the disclosure requirement will apply to "registrants" under the Québec Legal Publicity Act, which includes Québec corporations as well as all other corporations, partnerships, or business trusts which are required to register in the Québec enterprise register. Entities which "carry on an activity" (such as operating a business) in Québec are subject to the registration requirement; and
  • the information to be disclosed respecting ultimate beneficiaries is to be accessible to the public (subject to certain restrictions). This is the case for most of the information on registrants currently in the register.

Key Concepts

The core concepts in the Bill are generally similar to those in the CBCA and the legislation of the other Canadian provinces, although there are differences in detail. The concept of "ultimate beneficiary" and the extent of the information to be disclosed are set out below.

Ultimate beneficiary

The definition of ultimate beneficiary in the Bill is similar to the definition of "beneficial owner" in the CBCA and includes:

  • an individual who holds, directly or indirectly
    • at least 25% of the voting rights of shares or units; OR
    • 25% of the fair market value of all shares or units of the registrant;
  • an individual who exercises direct or indirect influence that would, in effect, result in control in fact of the registrant;
  • an individual who is general partner of a limited partnership registrant;
  • joint holders of 25% of votes of a registrant under a voting agreement (this differs slightly from the CBCA equivalent).

Certain key details regarding ultimate beneficiaries, including how (or if) the new requirements will apply to reporting issuers and charities, remain unclear and are expected to be dealt with in the regulations.

Information to be disclosed

This information will include:

  • the names, domiciles (and a business address may also be disclosed, in which case only the business address will be publicly listed) and dates of birth of the ultimate beneficiaries;
  • the type of control exercised; and
  • the date(s) the person became and/or ceased to be an ultimate beneficiary.

As with other information on registrants filed in the register, the disclosed information in respect of ultimate beneficiaries can be "set up" (used as proof) against third parties and for the benefit of good faith third parties. However, a person may submit proof to refute this information.

It will be possible to search the register by an individual's name as well as by the name of the registrant (the former is currently not possible). 

Next Stages

Once the Committee is finished with its review, the Bill will go to second and third reading, with or without amendments. 

It is unclear whether the Québec government will agree to substantial amendments to the bill despite numerous concerns having been raised about privacy and security issues, among others. Further, as noted above, in contrast to other Canadian transparency legislation, the Bill is applicable to all enterprises operating in Québec, even if not incorporated in Québec and the information on ultimate beneficiaries is to be made public. It has also been suggested that the broad-ranging scope of the legislation may be a disincentive to foreign companies which otherwise are considering doing business in Québec or using Québec corporations as the jurisdiction of choice for doing business in Canada, particularly if other Canadian jurisdictions do not have the same level of public disclosure.

Once in force, it is expected that registrants will have a year to comply with the new disclosure requirements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.