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Law Column

March 2010 Law Column

TAXATION

Business Corporations Act

Nancy Perrault, paralegal

 

Our November 2009 edition included an overview of Bill 63, the Business Corporations Act, which is set to replace the Québec Companies Act. The numerous differences between Bill 63 and the old law make it virtually impossible to provide an in-depth assessment of each aspect. Therefore, during the course of the upcoming months, we will be publishing a series of articles on the various amendments, the first of which is presented below.
 

Taxation and the Business Corporations Act (Québec)

 

Tax experts and accountants should be delighted with the following changes:
 

• The accounting test has been abolished; only the solvency test remains.
 

• It is now possible to indicate a commencement time for all types of articles.
 

• It is now possible to stop issuing shares during legal organization.
 

• There are still no requirements with regards to the place of residence of the administrators (unlike the federal law).
 

• The authorized capital may still include no par value shares.
 

• Fractional shares may be issued. 
 

• Several share classes and series may have the same rights and restrictions.
 

• The shares of a company or its holding body corporate may be held by one or several of its subsidiaries for a period of 30 days.
 

• Companies incorporated in Québec may continue to exist in another jurisdiction and vice-versa.
 

• Short-form mergers will now be more permissive: it will be possible to keep the corporate name of one of the merging companies, and horizontal mergers will be possible between i) companies whose only shareholder is an individual; ii) companies whose shares are held entirely by the controlling shareholder and one or several of the merging companies; and iii) sub-subsidiaries. Vertical mergers will be possible between i) a parent company and several subsidiaries or sub-subsidiaries (limitless); and ii) a company and its subsidiaries when all of the subsidiary shares are held by one or several of the merging companies.
 

• Voluntarily dissolved companies may be revived.
 

• By unanimous agreement, shareholders may terminate or restrict the powers of the board of directors. Shareholders may choose not to appoint a board of directors when holding all powers (and ensuing responsibilities). The company must therefore declare the name(s) and address(es) of the individual(s) who will exercise the said powers to the enterprise registrar. The new law gives creditors the right to consult the unanimous shareholders agreement. 
 

• The sole shareholder may choose not to appoint a board of directors or auditor and is not obligated to meet the by-law requirements (e.g. meetings). 
 

• The financial statements must be kept at the company’s head office and every shareholder may access the documents.
 

Be sure to read the upcoming editions of the Law Column for the next installments in our series on the Business Corporations Act. If you have any questions on the amendments, please do not hesitate to contact one of our corporate law experts.