[BUYING AND SELLING REAL ESTATE IN CANADA - QUÉBEC]
65
territory (in Québec, the Business Corporations Act or “QBCA”). A federal corporation “carrying on business in Québec”, which definition includes owning immovable property, must register with the Québec Register of Enterprises (the “REQ”), and update that information at least annually, as well as within 15 days of any change. One disadvantage to incorporating federally is therefore the requirement to file 2 annual returns and pay 2 annual filing fees, whereas only 1 return and 1 annual filing fee are required for a Québec corporation. Additionally, 25% of a CBCA’s corporation’s directors must be Canadian residents; there is no residency requirement for Canadian provincial corporations (other than Manitoba). All Canadian corporations which are not publicly traded are required to maintain “a register of individuals with significant control over the corporation” (an “ISC”). This is defined as any individual who, as registered holder or beneficial owner, controls any number of shares carrying 25% or more of the voting rights attached to all of the corporation’s outstanding voting shares or equal to 25% or more of all of the corporation’s outstanding shares measured by fair market value. Two or more individuals can each be considered an ISC if they have joint ownership or control of 25% or more of the shares in votes or value. The federal and provincial statutes oblige the corporation to keep information pertaining to, amongst other things, the shareholder's name, date of birth, jurisdiction of residence for tax purposes, address for service (or residential address, if no address for service has been provided), the day such individual became an individual with significant control over the corporation, as well as a description of how such individual is an individual with significant control over the corporation.. One point of distinction between the federal and provincial acts is with respect to who may access the information on
the register and for what purpose. For example, both Ontario's corporate legislation and the CBCA permit certain law enforcement officials, tax investigators and other regulatory bodies/officials to access the register. However, the CBCA permits shareholders and creditors of the corporation to access the register whereas the Ontario statute does not. This information must be confirmed, and updated, if necessary, at least annually and may be maintained at the corporation’s registered office or at any other place in Canada designated by the corporation’s directors (such as the law firm where the minute books are maintained). The information is accessible to shareholders and creditors of the corporation or their personal representatives upon request during the corporation’s usual business hours, and they may obtain an extract from the register on payment of a reasonable fee. The information may not be used by any person except in connection with (i) an effort to influence the voting of shareholders of the corporation ( e.g. , a proxy solicitation); (ii) an offer to acquire securities of the corporation; or (iii) any other matter relating to the affairs of the corporation. Failure by the corporation as well as its directors and officers to establish or maintain the register without reasonable cause, the recording or provision by a director or officer of false information, and the failure by a shareholder to reply accurately and completely to a corporation’s request for information are all punishable by fines and a maximum of 6 months’ imprisonment. Under the CBCA, the information sent in the ISC Register must be sent to the Director of Corporations Canada (the “DCC”) on an annual basis, and within 15 days of any change filing, The DCC may provide all or any part of this information with any investigative body, including without limitation the police, the Canada Revenue Agency and the Financial
ILN Real Estate Group – Buying and Selling Real Estate Series
Made with FlippingBook Online newsletter