S-29.01 - Act respecting trust companies and savings companies

À jour au 17 décembre 2004

Ce document a valeur officielle.

chapter S-29.01

Act respecting trust companies and savings companies

CHAPTER I SCOPE AND DEFINITIONS

1. This Act applies to every company that is expressly authorized by its instrument of incorporation to act as tutor or curator to property, liquidator, syndic, sequestrator, adviser to a person of full age or trustee.

Every legal person authorized to carry on one of the activities mentioned in the first paragraph is a trust company.

1987, c. 95, s. 1; 1989, c. 54, s. 190; 1992, c. 57, s. 694.

2. This Act also applies to every company which borrows money from the public in the form of deposits for the purposes of loans and investments and which is required to register with the Autorité des marchés financiers pursuant to the Deposit Insurance Act (chapter A‐26) in order to carry on that activity.

Every legal person authorized to carry on the activity described in the first paragraph is a savings company.

1987, c. 95, s. 2; 2002, c. 45, s. 566; 2004, c. 37, s. 90.

3. Legal persons governed by the Act respecting insurance (chapter A-32) are not subject to those provisions of this Act which are applicable to trust companies.

Legal persons governed by the Act respecting financial services cooperatives (chapter C-67.3), by the Act respecting the sociétés d’entraide économique (chapter S-25.1), and the bank or the authorized foreign bank listed in Schedule I, II or III to the Bank Act (Statutes of Canada, 1991, chapter 46) are not subject to those provisions of this Act which are applicable to savings companies.

1987, c. 95, s. 3; 1988, c. 64, s. 587; 2000, c. 29, s. 722; 2002, c. 45, s. 567; 2002, c. 70, s. 186.

4. In case of inconsistency between this Act and the instrument of incorporation of a company, this Act prevails.

1987, c. 95, s. 4.

5. The provisions of Part I of the Companies Act (chapter C-38) that are consistent with this Act apply to companies incorporated by letters patent.

Section 88, paragraph 3 of section 89 and sections 89.1 to 89.4 of Part I and the provisions of Part II of the Companies Act that are consistent with this Act, except section 181 and paragraph 3 of section 182, apply to every company incorporated by a special Act.

Where, pursuant to Parts I and II of the Companies Act, any approval by the vote of at least two-thirds in value of the shares represented by the shareholders present at a special general meeting of the company is required, approval by at least two-thirds of the votes given by the shareholders at a special meeting called for that purpose is substituted therefor.

1987, c. 95, s. 5.

6. In this Act, unless otherwise indicated by the context,

“capital base” means the shareholders’ equity plus or minus the assets or liabilities prescribed by regulation of the Government;

“company” means a savings company or a trust company whether a Québec company or an extra-provincial company;

“deposit” means money received or borrowed by a company by virtue of section 172 or 177;

“extra-provincial company” means a company, other than a Québec company, incorporated in Canada;

“instrument of incorporation” means the incorporating Act, the letters patent, the supplementary letters patent, and any other instrument of incorporation;

“Québec company” means a company incorporated under the laws of Québec or continued under such laws;

“register” means the register instituted under the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P-45);

“senior officer” means the president, vice-president, chairman, vice-chairman, treasurer, assistant treasurer, secretary and assistant secretary of a company or of its board of directors, and any other person designated as such by by-law of the company or by resolution of the board of directors or any person who performs functions similar to those of such officers;

“spouse” means a person who

(1)  is married to, or in a civil union with, and cohabits with another person; or

(2)  lives in a de facto union with a person of the opposite or the same sex without being married or in a civil union and has been living with that person for at least three years, or for one year if a child has been or is to be born of their union, and is publicly represented as the person’s spouse;

For the purposes of this Act, the word “loan” includes a letter of credit or of guarantee.

For the purposes of sections 69, 72, 74 and 75, a person is an associate of another person where

(1)  the person is the spouse of the other, or is the minor child of either;

(2)  one person is a legal person and the other is a director or officer thereof or the spouse or minor child of that officer or director;

(3)  one person is a legal person and the other person, or the spouse or a minor child of the other person, or a group consisting of that other person, the spouse of that person or such a child, or, in the case of a legal person, a director or officer thereof, holds 10 % or more of the shares issued by the legal person;

(4)  one person is a partnership and the other is one of the partners;

(5)  they are legal persons controlled directly or indirectly by the same person or by persons associated with each other;

(6)  they are members of a trust created with a view to exercising voting rights attached to shares in the same legal person or have signed an agreement to that effect;

(7)  they are associated within the meaning of paragraphs 1 to 6 with the same person.

1987, c. 95, s. 6; 1993, c. 48, s. 467; 1999, c. 14, s. 29; 2002, c. 6, s. 207.

7. A legal person is controlled by another person where the latter person directly or indirectly holds shares therein to which are attached over 50% of the voting rights or where the votes attached to the shares held by the person are sufficient, if exercised, to elect a majority of the directors of that legal person.

1987, c. 95, s. 7.

8. A legal person is a subsidiary of another person if it is controlled by that person.

1987, c. 95, s. 8.

9. A legal person is affiliated with another legal person if it is the subsidiary of the other person or if both are controlled by the same person.

1987, c. 95, s. 9.

10. A legal person affiliated with another legal person is deemed affiliated with every legal person affiliated with that other person.

1987, c. 95, s. 10.

CHAPTER II INCORPORATION OF A COMPANY

11. From 18 May 1988, no company shall be incorporated in Québec otherwise than by virtue of Part I of the Companies Act (chapter C-38).

1987, c. 95, s. 11.

12. At least seven applicants are required for the presentation of an application for the incorporation of a company.

1987, c. 95, s. 12.

13. The applicants shall transmit to the Autorité des marchés financiers a notice signed by them indicating their wish to be incorporated as a trust company or a savings company, accompanied with the fees prescribed by regulation.

The Authority shall transmit the notice to the enterprise registrar who shall deposit it in the register of sole proprietorships, partnerships and legal persons.

The applicants shall submit the application to the Authority within six months of publication of the notice.

The notice shall indicate

(1)  the name of the company;

(2)  the name, citizenship and residential address of each applicant;

(3)  the locality in Québec where the head office of the company will be situated;

(4)  the locality in Québec where the main decision-making centre of the company will be situated;

(5)  the proposed capital stock and the projected capital surplus;

(6)  the proposed activities.

1987, c. 95, s. 13; 1993, c. 48, s. 468; 2002, c. 45, s. 568; 2004, c. 37, s. 90.

14. In addition to the documents and information required by regulation of the Government, the Authority may require such other documents and information as it considers necessary to evaluate the proposal of the petitioners.

1987, c. 95, s. 14; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

15. The company shall not be incorporated unless the petitioners show that

(1)  the common shareholders’ equity is at least $3,000,000 in the case of a savings company, and at least $5,000,000 in the case of a trust company, or at least $3,000,000 if it is provided that power to receive deposits will be explicitly excluded from its instrument of incorporation;

(2)   the subscription price of the common shares has been paid in cash which has been deposited in trust in Québec in a bank or an authorized foreign bank listed in Schedule I, II or III to the Bank Act (Statutes of Canada, 1991, chapter 46) or an institution registered with the Autorité des marchés financiers pursuant to the Deposit Insurance Act (chapter A‐26), to the account of the company;

(3)  it is expedient, for the convenience of the public, that a company be established in the locality where the head office of the proposed company will be situated;

(4)  each petitioner and each proposed director or officer is fit as to character and competence in view of the proposed activities;

(5)  the project is financially feasible;

(6)  the proposed activities will be carried on within a reasonable time.

1987, c. 95, s. 15; 2002, c. 45, s. 569; 2004, c. 37, s. 90.

15.1. The Minister shall refuse to authorize the incorporation of a company where the company’s application contains a name not in conformity with sections 59 to 63.

1993, c. 48, s. 469.

16. The Minister, if he considers it expedient and after obtaining the advice of the Authority, shall authorize the latter to issue letters patent to incorporate the company.

The Authority shall transmit the letters patent to the enterprise registrar who shall deposit them in the register of sole proprietorships, partnerships and legal persons.

1987, c. 95, s. 16; 1993, c. 48, s. 470; 2002, c. 45, s. 570; 2004, c. 37, s. 90.

17. From the date of the letters patent, the company is a legal person within the meaning of the Civil Code.

1987, c. 95, s. 17.

CHAPTER III AMENDMENT OF INSTRUMENT OF INCORPORATION

18. The Minister may, if he thinks it expedient and after obtaining the advice of the Authority, authorize the Authority to issue letters patent or supplementary letters patent to a Québec company incorporated before 18 May 1988 which applies therefor

(1)  to replace the provisions of its incorporating Act by the corresponding provisions of this Act or, subject to the provisions of this Act, by those of Part II of the Companies Act (chapter C‐38);

(2)  to repeal any provision of its incorporating Act for which there is no corresponding provision in this Act or in Part II of the Companies Act.

The Authority shall transmit the letters patent and a notice indicating their date of taking effect to the enterprise registrar who shall deposit them in the register of sole proprietorships, partnerships and legal persons. The Québec Official Publisher shall insert in each annual volume of the Statutes of Québec a table indicating the dates on which the letters patent issued before the volume was printed take effect and the legislative provisions they replace or repeal.

1987, c. 95, s. 18; 1993, c. 48, s. 471; 2002, c. 45, s. 571; 2004, c. 37, s. 90.

19. The application contemplated in section 18 must be signed by the president or the vice-president and the secretary of the company, and cannot be presented to the Authority unless

(1)  it is ratified by a by-law approved by 2/3 of the votes cast by the shareholders at a meeting called for that purpose;

(2)  a notice summarizing the by-law has been sent to the Authority, accompanied with the fees prescribed by regulation and transmitted to the enterprise registrar for deposit in the register of sole proprietorships, partnerships and legal persons, at least one week before the presentation of the application.

1987, c. 95, s. 19; 1993, c. 48, s. 472; 2002, c. 45, s. 572; 2004, c. 37, s. 90.

20. Where the letters patent or supplementary letters patent differ from the documents they replace, they prevail over them for any event that occurred from their date of issue, but the replaced documents prevail for any event that occurred before that date.

1987, c. 95, s. 20.

CHAPTER IV CONTINUANCE OF A COMPANY

21. Any Québec trust company may continue as a savings company, and vice versa.

1987, c. 95, s. 21.

22. Every company wishing to be continued must adopt a by-law to that effect.

The by-law shall indicate

(1)  the name of the company resulting from the continuance;

(2)  the locality in Québec where the head office of the company resulting from the continuance will be situated;

(3)  the locality in Québec where the main decision-making centre of the company resulting from the continuance will be situated;

(4)  the proposed activities;

(5)  the name, occupation, citizenship and address of each of the first members of the board of directors and the mode of election of subsequent directors;

(6)  the number of shares forming its capital stock, the par value of a share, where such is the case, and the mode of conversion of the capital stock;

(7)  the description of the authorized capital stock of the company resulting from the continuance.

1987, c. 95, s. 22.

23. The continuance by-law must be approved by a least two-thirds of the votes given by the shareholders at a meeting called for that purpose.

1987, c. 95, s. 23.

24. The company shall send a notice of the by-law to the Authority, which shall transmit it to the enterprise registrar who shall deposit it in the register of sole proprietorships, partnerships and legal persons. The company shall also cause a notice of the by-law to appear for four consecutive weeks in a daily newspaper published in the locality in which the head office of the company is situated.

1987, c. 95, s. 24; 1993, c. 48, s. 473; 2002, c. 45, s. 573; 2004, c. 37, s. 90.

25. Within six months after the date of deposit of the notice in the register, the company shall transmit to the Authority a certified true copy of the by-law approving the continuance and an application for ratification of the continuance by the Minister.

1987, c. 95, s. 25; 1993, c. 48, s. 474; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

26. In addition to the documents and information required by regulation of the Government, the Authority may require such other documents and information as it considers necessary to evaluate the proposal of the petitioner.

1987, c. 95, s. 26; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

27. A savings company cannot be continued as a trust company, or a trust company as a savings company, unless the petitioner shows that

(1)  in the case of a savings company continued as a trust company, the common shareholders’ equity is at least $5,000,000, or at least $3,000,000 if it is provided that power to receive deposits will be explicitly excluded from its instrument of incorporation;

(2)  in the case of a trust company continued as a savings company, the common shareholders’ equity is at least $3,000,000;

(3)  it is expedient, for the convenience of the public, that a company be established in the locality where the head office of the company will be situated;

(4)  each proposed director or officer is fit as to character and competence in view of the proposed activities;

(5)  the project is financially feasible;

(6)  the proposed activities will be carried on within a reasonable time;

(7)  in the case of a trust company continued as a savings company, arrangements have been made to the satisfaction of the Authority to transfer the business of the trust company that cannot legally be continued by a savings company, other than deposits, to another trust company having a licence and capable of carrying on that business.

1987, c. 95, s. 27; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

28. The Minister shall not grant the application unless he considers it expedient and has obtained the advice of the Authority. Where the Minister grants the application, he shall request the Authority to issue letters patent.

1987, c. 95, s. 28; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

29. The continuance is ratified from the date of the letters patent.

1987, c. 95, s. 29.

30. The Authority shall transmit the letters patent to the enterprise registrar who shall deposit them in the register of sole proprietorships, partnerships and legal persons.

1987, c. 95, s. 30; 1993, c. 48, s. 475; 2002, c. 45, s. 574; 2004, c. 37, s. 90.

31. The company resulting from the continuance has, under the name indicated in the by-law, all the rights and obligations of the continued company and proceedings pending may be continued by or against it without continuance of suit.

1987, c. 95, s. 31.

32. Sums borrowed by a savings company before its continuance in the form of deposits are deemed to have been received by a trust company in accordance with section 177.

1987, c. 95, s. 32; 1999, c. 40, s. 304.

33. Deposits received by a trust company before its continuance are deemed to have been received by a savings company in accordance with section 172.

1987, c. 95, s. 33; 1999, c. 40, s. 304.

CHAPTER V AMALGAMATION OF COMPANIES

34. Québec companies may amalgamate.

1987, c. 95, s. 34.

35. Companies proposing to amalgamate shall prepare an agreement in duplicate indicating

(1)  the terms and conditions of the amalgamation;

(2)  the kind of company resulting from the amalgamation;

(3)  the name of the company resulting from the amalgamation;

(4)  the locality in Québec where the head office of the company resulting from the amalgamation will be situated;

(5)  the locality in Québec where the main decision-making centre of the company resulting from the amalgamation will be situated;

(6)  the proposed activities;

(7)  the name, occupation, citizenship and address of each of the first members of the board of directors and the mode of election of subsequent directors;

(8)  the number of shares forming the capital stock of each amalgamating company, the par value of each share, and the mode of conversion of the capital stock;

(9)  the description of the authorized capital stock of the company resulting from the amalgamation;

(10)  the name, occupation, citizenship and address of each person who, upon the amalgamation, will hold 10% or more of the voting rights attached to the shares of the company.

The agreement may, in addition, set forth any other measure relating to the management and operation of the company resulting from the amalgamation.

1987, c. 95, s. 35.

36. Each company shall adopt the agreement by by-law of its board of directors. The by-law must be approved by at least two-thirds of the votes given by the shareholders at a meeting called for that purpose.

The approval of the shareholders shall be attested on each duplicate of the agreement by the secretary of each company.

1987, c. 95, s. 36.

37. The amalgamating companies shall transmit a notice of the agreement to the Authority, which shall transmit it to the enterprise registrar who shall deposit it in the register of sole proprietorships, partnerships and legal persons. The companies shall also cause a notice of the agreement to appear for four consecutive weeks in a daily newspaper published in the locality of the head office of each company.

1987, c. 95, s. 37; 1993, c. 48, s. 476; 2002, c. 45, s. 575; 2004, c. 37, s. 90.

38. Within six months after the date of deposit of the notice in the register, the amalgamating companies shall transmit to the Authority the duplicates of the agreement, a certified true copy of each by-law approving the amalgamation and a joint application for ratification of the amalgamation by the Minister.

1987, c. 95, s. 38; 1993, c. 48, s. 477; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

39. In addition to the information and documents required by regulation of the Government, the Authority may require such other documents and information as it considers necessary to evaluate the proposed amalgamation.

1987, c. 95, s. 39; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

40. The applicant companies cannot amalgamate unless they show that

(1)  where the company resulting from the amalgamation is a savings company, the common shareholders’ equity is at least $3,000,000;

(2)  where the company resulting from the amalgamation is a trust company, the common shareholders’ equity is at least $5,000,000 or, if it is provided that power to receive deposits is expressly excluded from its proposed activities, at least $3,000,000;

(3)  it is expedient, for the convenience of the public, that a company be established in the locality where the head office of the company resulting from the amalgamation will be situated;

(4)  each proposed director and officer is fit as to character and competence in view of the proposed activities;

(5)  the project is financially feasible;

(6)  the proposed activities will be carried on within a reasonable time;

(7)  where one of the applicants is a trust company and the company resulting from the amalgamation is a savings company, arrangements have been made to the satisfaction of the Authority to transfer the business of the trust company that cannot legally be continued by a savings company, other than deposits, to another Québec trust company having a licence and capable of carrying on that business.

1987, c. 95, s. 40; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

41. The Minister shall not grant the application unless he considers it expedient and has obtained the advice of the Authority. Where the Minister grants the application, he shall request the Authority to issue letters patent.

1987, c. 95, s. 41; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

42. The amalgamation is ratified from the date of the letters patent.

1987, c. 95, s. 42.

43. The Authority shall transmit the letters patent to the enterprise registrar who shall deposit them in the register of sole proprietorships, partnerships and legal persons.

1987, c. 95, s. 43; 1993, c. 48, s. 478; 2002, c. 45, s. 576; 2004, c. 37, s. 90.

44. From the date of the letters patent, the amalgamated companies shall be continued as one and the same company.

The company resulting from the amalgamation has, under the name indicated in the agreement, all the rights and obligations of the amalgamated companies, and proceedings to which either of the original companies is a party are continued by or against it without continuance of suit.

1987, c. 95, s. 44.

45. Where one of the applicants is a trust company and the company resulting from the amalgamation is a savings company, the deposits received by the trust company are deemed to have been received by the savings company in accordance with section 172.

1987, c. 95, s. 45; 1999, c. 40, s. 304.

46. Where one of the applicants is a savings company and the company resulting from the amalgamation is a trust company, the sums borrowed by the savings company in the form of deposits are deemed to have been received by the trust company in accordance with section 177.

1987, c. 95, s. 46; 1999, c. 40, s. 304.

CHAPTER VI CONTINUANCE OF AN EXTRA-PROVINCIAL COMPANY

47. An extra-provincial company may be continued as a savings company or a trust company, according as it is a savings company or a trust company, as though it had been incorporated under this Act, if it is so authorized under the Act that governs it.

1987, c. 95, s. 47.

48. A company wishing to be continued must pass a by-law to that effect.

The continuance by-law shall indicate

(1)  the name of the company resulting from the continuance;

(2)  the locality in Québec where the head office of the company resulting from the continuance will be situated;

(3)  the locality in Québec where the main decision-making centre of the company resulting from the continuance will be situated;

(4)  the proposed activities;

(5)  the name, occupation, citizenship and address of each of the first members of the board of directors and the mode of election of subsequent directors;

(6)  the number of shares forming its capital stock, the par value of each share, where such is the case, and the mode of conversion of the capital stock;

(7)  the description of the authorized capital stock of the company resulting from the continuance;

(8)  the name, address, occupation and citizenship of each person who holds 10% or more of the voting rights attached to the shares.

1987, c. 95, s. 48.

49. The continuance by-law must be approved by at least two-thirds of the votes given by the shareholders at a special meeting called for that purpose.

1987, c. 95, s. 49.

50. The company shall send a notice of the by-law accompanied with the fees prescribed by regulation to the Authority, which shall cause it to appear for four consecutive weeks in a daily newspaper published in the locality of the head office of the company. The Authority shall send the notice to the enterprise registrar for deposit in the register of sole proprietorships, partnerships and legal persons.

1987, c. 95, s. 50; 1993, c. 48, s. 479; 2002, c. 45, s. 577; 2004, c. 37, s. 90.

51. Within six months after publication of the notice and after the date of deposit of the notice in the register, the company shall transmit to the Authority a certified true copy of the by-law approving the continuance and an application for approval of the continuance by the Minister.

1987, c. 95, s. 51; 1993, c. 48, s. 480; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

52. In addition to the documents and information required by regulation of the Government, the Authority may require such other documents and information as it considers necessary to evaluate the proposed continuance.

1987, c. 95, s. 52; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

53. A company cannot be continued as a Québec company unless it shows that

(1)  in the case of a savings company, the common shareholders’ equity is at least $3,000,000;

(2)  in the case of a trust company, the common shareholders’ equity is at least $5,000,000 or, if it is provided that power to receive deposits will be expressly excluded from its instrument of incorporation, at least $3,000,000;

(3)  it is expedient, for the convenience of the public, that a company be established in the locality where the head office of the company will be situated;

(4)  each proposed director or officer is fit as to character and competence in view of the proposed activities;

(5)  the project is financially feasible;

(6)  the proposed activities will be carried on within a reasonable time.

1987, c. 95, s. 53.

54. The Minister shall not grant the application unless he considers it expedient and has obtained the advice of the Authority. Where the Minister grants the application, he shall request the Authority to issue letters patent.

1987, c. 95, s. 54; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

55. The continuance takes place on the date of the letters patent.

1987, c. 95, s. 55.

56. The Authority shall transmit the letters patent to the enterprise registrar who shall deposit them in the register of sole proprietorships, partnerships and legal persons.

1987, c. 95, s. 56; 1993, c. 48, s. 481; 2002, c. 45, s. 578; 2004, c. 37, s. 90.

57. No rights, obligations or acts of a company or of its shareholders are affected by the continuance.

1987, c. 95, s. 57.

58. The continued company is deemed, from the date of its letters patent, to be a company incorporated under this Act.

1987, c. 95, s. 58.

Not in force

CHAPTER VI.1 PROROGATION

2004, c. 37, s. 86.

Not in force

58.1. The Minister may authorize a company referred to in sections 1 and 2 to file for letters patent so that it may continue under the Trust and Loan Companies Act (S.C. 1991, c. 45).

2004, c. 37, s. 86.

CHAPTER VII NAME OF THE COMPANY

59. The name of a Québec trust company must include the word “fiducie”, “fidéicommis” or “trust”, except in the case of a company or trust created before 18 May 1988.

1987, c. 95, s. 59.

60. Only a trust company may include any of the words “fiducie”, “trust” or “fideicommis” in its name.

No other legal person may use any of those words in such a way as to lead the public to believe that it is a licensed trust company.

1987, c. 95, s. 60.

61. The first paragraph of section 60 does not apply to a legal person whose name includes the word “fiducie”, “trust” or “fidéicommis” on 18 May 1988.

1987, c. 95, s. 61.

62. Only a savings company may include the expression “savings company” in its name.

No other legal person may use the expression “savings company” in such a way as to lead the public to believe that it is a licensed savings company.

1987, c. 95, s. 62.

63. Notwithstanding sections 60 and 62, the name of a subsidiary of a company may include the name or part of the name of the company.

1987, c. 95, s. 63.

CHAPTER VIII CAPITAL STOCK

64. Shares of a Québec company shall not be issued until they are fully paid up in cash, except in the case of

(1)  the invoking of a right of conversion attaching to other securities of the company;

(2)  shares issued as dividends;

(3)  shares issued under an amalgamation agreement;

(4)  shares issued under a continuance by-law;

(5)  shares issued pursuant to a transfer or a purchase of the assets of a company authorized under Chapter XII of this Act.

Where the directors of a Québec company authorize the issue of shares as consideration for the assets of a company, they are jointly and severally liable towards the company for the difference between the market value of such assets and the equivalent cash amount the company would have been entitled to receive.

1987, c. 95, s. 64.

65. Québec companies are prohibited from issuing any bearer share certificate.

1987, c. 95, s. 65.

66. For the purposes of sections 18 to 20 of the Act respecting the special powers of legal persons (chapter P-16), the Minister responsible for the administration of this Act has the powers vested in the Government for the confirmation of a by-law for increasing or reducing the capital stock. In addition, such a by-law must be approved by at least two-thirds of the votes given by the shareholders at a special meeting called for that purpose.

1987, c. 95, s. 66.

67. No Québec company may effect the purchase or redemption of a share of its capital stock without prior authorization in writing of the Authority.

The first paragraph does not apply in the case of the purchase by a company of a share of its capital stock allotted to a director or employee within the scope of a share purchase plan. The company must, however, divest itself of or cancel such a share within two years of the purchase. The Authority may grant an extension on such conditions as it may fix.

1987, c. 95, s. 67; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

68. No Québec company may acquire or hold shares in the legal person by which it is controlled, or permit any of its subsidiaries to acquire or hold shares in itself or in the legal person by which it is controlled.

1987, c. 95, s. 68.

69. Except with authorization in writing of the Minister, no Québec company nor any legal person controlling a Québec company directly or indirectly has authority to allot its voting shares or register a transfer of its voting shares where the allotment or transfer would

(1)  directly or indirectly give to a person and his associates 10% or more of the voting rights attached to the shares if they do not already own over 50% of them and if the voting rights attached to the shares they own do not allow them to elect a majority of directors;

(2)  directly or indirectly increase the voting rights attached to the shares already owned by a person and his associates to at least 10% or at least a multiple of 10% if they do not already own over 50% of them and if the voting rights attached to the shares they own do not allow them to elect a majority of directors;

(3)  directly or indirectly give to a person and his associates control of the company or of the legal person that controls it directly or indirectly.

Subparagraphs 1 and 2 of the first paragraph do not apply where the voting shares of the company or of the legal person directly or indirectly controlling it are listed on a Canadian stock exchange.

1987, c. 95, s. 69.

70. The application for authorization made to the Minister must indicate the names and addresses of the persons concerned, the number and the particulars of the shares they hold of the capital stock of the company or of that of the legal person that controls it directly or indirectly, and, in respect of each person, the number and the particulars of the shares that it is proposed to allot or transfer.

1987, c. 95, s. 70.

71. The Minister shall render his decision after obtaining the advice of the Authority. The Minister may impose any conditions he deems advisable.

1987, c. 95, s. 71; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

72. No Québec company nor any legal person that controls it directly or indirectly and that is constituted under an Act of Parliament of Canada or of a Canadian province may allot voting shares in the company or register any transfer of voting shares in the company to a non-resident

(1)  where the non-resident, alone or with an associate, already has, directly or indirectly, 10% or more of the voting rights in the company or in the legal person that controls it, or where the allotment or transfer in effect gives him, directly or indirectly, more than 10% of the voting rights;

(2)  where all the non-resident shareholders and their associates already hold, directly or indirectly, 25% or more of the voting rights attached to the shares in the company or in the legal person that controls it or where the allotment or transfer in effect gives them, directly or indirectly, more than 25% of the voting rights;

(3)  where the allotment or transfer directly or indirectly gives control of the company or of the legal person that controls it to non-residents or their associates.

1987, c. 95, s. 72; 1999, c. 40, s. 304.

73. A non-resident, for the purposes of section 72, is a natural person who resides in Canada for fewer than 183 consecutive days a year, a legal person incorporated elsewhere than in Canada or a legal person directly or indirectly controlled by such a natural person or such a legal person.

Every liquidator of a succession, administrator, tutor, curator, guardian or trustee in possession of shares of any class belonging in the greater part to non-residents is deemed a non-resident respecting those shares.

The same applies to a trust created by a non-resident or in which non-residents together hold 50% of the interests.

1987, c. 95, s. 73.

74. No prohibition applies under section 72

(1)  where the allotment or transfer does not in effect increase the percentage of voting rights already held, directly or indirectly, by a non-resident or by all the non-residents and their associates;

(2)  to the allotment or transfer of voting shares where non-residents and their associates already hold over 50% of the voting rights;

(3)  to the allotment of shares carrying over 50% of the voting rights to non-residents and their associates at the incorporation of a company.

1987, c. 95, s. 74.

75. For the purposes of section 72, the Authority, after giving the persons concerned an opportunity to present observations, may by order deem a person to have voting rights attached to shares in a Canadian company or legal person that controls a company directly or indirectly, if in its opinion that person, alone or with his associate, is in a position to influence the way in which any shares in the company are voted.

1987, c. 95, s. 75; 1997, c. 43, s. 765; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

76. For the purposes of sections 69 and 72, where voting rights attached to shares in a company or shares in a legal person that controls the company, directly or indirectly, are held by another legal person, the shareholders of the latter are deemed to hold a percentage of the voting rights attached to the shares in the company or in the legal person that controls it, directly or indirectly, equal to the product of the percentage of voting rights they hold in the latter legal person and the percentage of voting rights held by the latter in the company or in the legal person that controls it directly or indirectly.

1987, c. 95, s. 76.

77. A company or the legal person that controls it directly or indirectly may request any information required for the application of sections 69 and 72.

Every person who is requested to furnish information shall comply with the request. If the person fails to comply, the allotment cannot be made nor the transfer registered in his favour.

Information obtained pursuant to the first paragraph must be communicated to the Authority at its request.

1987, c. 95, s. 77; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

78. A voting share that is held jointly is, for the purposes of this chapter, deemed held by a non-resident if at least one of the holders is a non-resident.

1987, c. 95, s. 78.

79. No person may exercise a voting right attached to a share of a company where the allotment or the registration of the transfer of the share was effected contrary to sections 69 and 72.

1987, c. 95, s. 79.

80. A legal person that controls a company directly or indirectly can no longer exercise voting rights attached to shares of the company where it has allotted its own shares or registered their transfer contrary to sections 69 and 72.

1987, c. 95, s. 80.

81. Where the allotment or the registration of the transfer of shares was effected contrary to section 69, the voting right may again be exercised if the Minister grants his authorization. The Minister’s authorization shall take effect on any date, even a date prior to the authorization, determined by the Minister.

1987, c. 95, s. 81.

CHAPTER IX SHAREHOLDERS’ MEETING

82. The sole attendance of a shareholder at a shareholders’ meeting is a waiver of notice of the meeting except where he attends it for the express purpose of objecting to the holding of the meeting on the ground that it was not lawfully called.

1987, c. 95, s. 82.

83. The shareholders of a Québec company that has not made a distribution of its securities to the public may participate and vote at a shareholders’ meeting by any means allowing all the participants to communicate with each other

(1)  if the instrument of incorporation or the by-laws of the company permit it;

(2)  if all the shareholders entitled to participate and vote at the meeting consent thereto.

1987, c. 95, s. 83.

84. A resolution in writing, signed by all the shareholders entitled to vote on that resolution at a shareholders’ meeting is as valid as if it had been passed at a meeting.

The resolution is kept with the minutes of the proceedings of shareholders’ meetings.

1987, c. 95, s. 84.

CHAPTER X DIRECTORS AND OFFICERS

DIVISION I RULES RELATING TO THE BOARD OF DIRECTORS

85. The board of directors of a Québec company shall consist of not fewer than seven directors.

The number of directors shall be determined by the by-laws of the company.

1987, c. 95, s. 85.

86. Three-quarters of the directors must be Canadian citizens and a majority of the directors shall reside in Québec.

1987, c. 95, s. 86.

87. Not more than one-third of the board of directors of a Québec company may be composed of remunerated officers or employees of the company or of a legal person with which it is affiliated, including any person employed by either of them in the two preceding years.

1987, c. 95, s. 87.

88. A majority of the directors constitutes a quorum at meetings of the board of directors, unless otherwise provided in the internal by-laws of the company. The quorum may not, however, be less than two-fifths of the number of directors.

1987, c. 95, s. 88.

89. A director present at a meeting of the board or of any of its committees is deemed to have approved any resolution passed or participated in any measure taken at that meeting, unless

(1)  he demands at the meeting that his dissent be recorded in the minutes, or

(2)  he notifies the secretary of the meeting in writing of his dissent before the adjournment or closing of the meeting.

Every director absent from a meeting is deemed to have approved or participated in every decision made or measure taken at that meeting unless, within seven days following the date on which he learns of the resolution or measure he transmits his dissent by certified mail or delivers it himself to the main decision-making centre or to the head office and demands that it be recorded in the minutes of the next meeting.

Written resolutions, signed by all the directors entitled to vote on such resolutions at meetings of the board or of its committees, have the same force as if they had been adopted at such meetings. A duplicate of the resolutions shall be kept with the minutes of the deliberations of the board of directors.

1987, c. 95, s. 89.

90. A director of a company is not required to hold shares issued by the company.

1987, c. 95, s. 90.

91. The following persons cannot be directors of a company or of a legal person by which it is controlled:

(1)  a minor;

(2)  a person of full age under tutorship or curatorship;

(3)  an undischarged bankrupt;

(4)  a legal person;

(5)  a person who holds, directly or indirectly, or on behalf of a non-resident, shares allotted or transferred in contravention of sections 69 to 75;

(6)  an officer or director of another company, unless the two companies are affiliated.

1987, c. 95, s. 91.

92. A natural person may be a director in his capacity as representative of a legal person.

1987, c. 95, s. 92.

93. The term of office of a director shall not exceed three years.

1987, c. 95, s. 93.

94. A decrease in the number of directors does not terminate the term of the directors then in office.

1987, c. 95, s. 94.

95. Notwithstanding the expiry of his term, a director remains in office until he is re-elected, replaced or removed.

A director may resign from office by giving notice to that effect.

1987, c. 95, s. 95.

96. A director of a Québec company who resigns his office for reasons connected with the conduct of the operations of the company shall submit to the company a written statement of his reasons where he has reason to believe that such conduct is in contravention of this Act, the regulations thereunder, a provision of any Act, an order or written direction of the Authority or the Criminal Code (Revised Statutes of Canada, 1985, chapter C-46).

He shall also submit such a written statement where he believes that such conduct will adversely affect the financial position of the company.

No director who in good faith makes such a statement may be prosecuted by reason of that fact.

1987, c. 95, s. 96; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

97. A Québec company must give notice to the Authority of the resignation of a director within 10 days of the resignation and must file a copy of the statement referred to in section 96. The Authority shall send the notice and the copy of the statement to the enterprise registrar who shall deposit them in the register of sole proprietorships, partnerships and legal persons.

1987, c. 95, s. 97; 1993, c. 48, s. 482; 2002, c. 45, s. 579; 2004, c. 37, s. 90.

98. No company or person referred to in section 107 incurs any liability by reason only of having transmitted a director’s statement to the Authority in compliance with section 97.

1987, c. 95, s. 98; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

99. Only the shareholders who are entitled to elect a director may remove him, at a meeting called for that purpose.

1987, c. 95, s. 99.

100. No director may be removed unless he has been informed in writing of the grounds for his removal and of the place, date and time of the meeting with the same advance time as that prescribed for calling the meeting.

A director who is to be removed may be heard at the meeting or give the reasons he objects to his removal in a written statement read by the chairman of the meeting.

1987, c. 95, s. 100.

101. A vacancy created by the removal of a director may be filled at the meeting at which the removal takes place or in accordance with paragraph 3 of section 89 of the Companies Act (chapter C-38).

The notice calling the meeting must mention that an election is to be held if the resolution for removal is adopted.

1987, c. 95, s. 101.

102. Within 30 days of any change in the composition of the board of directors of a Québec company, the company shall give notice of the change to the Authority and furnish a list of the directors indicating the name, occupation, citizenship and address of each.

The Authority shall register the notice in the register of trust companies and savings companies.

1987, c. 95, s. 102; 2002, c. 45, s. 580; 2004, c. 37, s. 90.

103. Every director is entitled to attend and be heard at shareholders’ meetings. The secretary shall transmit every notice of meeting to the directors.

1987, c. 95, s. 103.

104. The directors of a Québec company may, if they are authorized to do so by a by-law approved by at least two-thirds of the votes of the shareholders at a meeting called for that purpose, delegate their powers to one or several senior officers chosen from among themselves, who must be Canadian residents, or to one or several committees of the board of directors a majority of the members of which are Canadian residents. However, in no case may the following powers be delegated:

(1)  to submit to the shareholders a question requiring the approval of the shareholders;

(2)  to fill a vacancy among the directors or a committee of the board of directors;

(3)  to fill a vacancy in the office of auditor;

(4)  to issue or distribute shares;

(5)  to issue bonds or other debt securities described in subparagraphs 1 and 2 of the first paragraph of section 193, unless the board expressly determines the terms and conditions applicable in each case;

(6)  to declare dividends;

(7)  to purchase or redeem shares issued by the company;

(8)  to approve the statements referred to in paragraph 2 of section 287 or in sections 293, 299, 300 and 301;

(9)  to adopt by-laws;

(10)  to approve any other document or item requiring the approval of the directors under sections 118 and 217.

The directors of a Québec trust company may, by a by-law approved by at least two-thirds of the votes of the shareholders at a meeting called for that purpose, delegate to one or several senior officers of the company, with or without the power to subdelegate to other senior officers, the exercise of their powers relating to the management of the property of others.

1987, c. 95, s. 104.

105. Every Québec company shall fix by by-law the aggregate amount of remuneration which may be paid to the members of the board of directors for a given period. No director may receive any remuneration before the by-law is adopted.

1987, c. 95, s. 105.

106. The by-law requires the affirmative vote of at least two-thirds of the votes given by the shareholders at a meeting called for that purpose.

1987, c. 95, s. 106.

DIVISION II LIABILITY OF DIRECTORS AND OFFICERS

107. The directors and officers of a company are deemed to be mandataries of the company.

1987, c. 95, s. 107.

108. Every person contemplated in section 107 shall in discharging his duties act within the limits of the powers conferred on him.

He shall comply with this Act, the regulations thereunder made by the Government, the orders and written directions of the Authority, the instrument of incorporation and the by-laws of the company.

1987, c. 95, s. 108; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

109. Every person referred to in section 107 shall exercise the care, prudence, diligence and skill that a reasonable person would exercise in comparable circumstances.

He shall also act honestly and in good faith in the best interests of the company and in view of the company’s objects. In so doing, he shall take into account the interests of shareholders, depositors and, where such is the case, beneficiaries.

He shall avoid placing himself in situations where his personal interest is in conflict with his obligations.

1987, c. 95, s. 109.

110. The liability of a person referred to in section 107 is not involved under the second paragraph of section 64, section 109 or section 111 in respect of anything done in reliance on an expert’s report, if he has acted in good faith, on reasonable grounds and after reasonable inquiry.

1987, c. 95, s. 110.

111. Directors who authorize any investment or loan in contravention of this Act or any regulation thereunder made by the Government are jointly and severally liable for the resulting losses to the company.

Directors are also jointly and severally liable to restore to the company any amount paid to a shareholder or to a director where the effect of the payment of that amount has been to increase the debt ratio of the company to a higher limit than the limit authorized by this Act.

1987, c. 95, s. 111.

112. The sole fact that the loans or investments of a Québec company are in conformity with this Act and the regulations thereunder made by the Government does not exempt the persons contemplated in section 107 from liability.

1987, c. 95, s. 112.

113. A Québec company shall assume the defence of any person contemplated in section 107 who is prosecuted by a third person for an act done in the performance of his duties and shall pay damages, if any, in compensation for any injury resulting from that act, unless he has committed a grievous offence or a personal offence separable from the performance of his duties.

In penal or criminal proceedings, the company shall assume payment of the expenses of a person only where he had reasonable grounds to believe that his conduct was in conformity with the law, or if he has been freed or acquitted.

1987, c. 95, s. 113; 1999, c. 40, s. 304.

114. A Québec company shall assume the expenses of any person contemplated in section 107 whom it prosecutes for an act done in the performance of his duties, if it loses its case and the court so decides.

If the company wins its case only in part, the court may determine the amount of the expenses it shall assume.

1987, c. 95, s. 114.

115. A Québec company shall assume the obligations contemplated in sections 113 and 114 in respect of any person who acted at its request as director or officer of a legal person in which it is a shareholder or of which it is a creditor.

1987, c. 95, s. 115.

116. A Québec company may purchase insurance for the benefit of a person contemplated in section 107 or any person who acts at its request as director or officer of a legal person in which the company is a shareholder or of which it is a creditor, against any liability incurred by such person by reason of his duties except liability resulting from failure to act honestly and in good faith.

1987, c. 95, s. 116.

CHAPTER XI CONFLICTS OF INTEREST

DIVISION I ETHICS COMMITTEE

117. Every Québec company shall appoint an ethics committee from among the members of the board of directors. The committee shall be composed of not fewer than three directors, a majority of whom shall be persons who are neither officers nor employees of the company or of a legal person affiliated with the company nor persons holding 10% or more of the shares of any class issued by the company or by a legal person affiliated with the company.

1987, c. 95, s. 117.

118. The committee shall make rules for the enforcement of the provisions of this chapter by the company.

The rules shall concern, in particular, the formalities governing contracts with restricted parties, the obligation of the company or restricted parties to disclose information, the protection of confidential information held by the company on its clients and the conduct of the company in cases where the interests of the company or of a legal person affiliated with it may be in conflict with that of its clients or beneficiaries.

The rules require the approval of the board of directors of the company. A copy of the rules and any amendments thereto must be transmitted to the Authority within 30 days of their approval.

The committee must see to the enforcement of the rules made by it and notify the board of directors of the company without delay of any serious breach of any of these rules.

1987, c. 95, s. 118; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

119. The ethics committee shall each year transmit to the Authority a report of its activities ending with the closing date of the last fiscal period of the company.

The report must be submitted within two months of the closing date. The report must indicate

(1)  the composition of the committee;

(2)  any changes in the membership of the committee;

(3)  the content of any mandate referred to the committee;

(4)  the list of cases of conflict of interest and self dealing in which the committee has intervened;

(5)  the cases where the advice of the committee has not been followed by the board of directors.

1987, c. 95, s. 119; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION II SPECIAL RULES CONCERNING THE PROTECTION OF THE INTERESTS OF A COMPANY

§ 1 . — Rules concerning restricted parties

120. No Québec company or subsidiary of a Québec company shall make a loan to a restricted party or acquire shares or debt securities issued by a restricted party or be a party to any other contract with a restricted party even in its quality as administrator of the property of others.

1987, c. 95, s. 120.

121. The following are restricted parties:

(1)  a director or an officer of a company or of a legal person controlling it or the spouse or child of such director or officer or the child of such spouse;

(2)  a shareholder of a company holding, directly or indirectly, 10% or more of the voting rights and, in the case of a natural person, his spouse, his children and the children of his spouse or, in the case of a legal person, a director or an officer of the company and the spouse or child of such director or officer and the child of such spouse;

(3)  a shareholder of a company, his spouse and their minor children if they jointly hold, directly or indirectly, 10% or more of the voting rights;

(4)  a legal person in which a person described in paragraph 1 holds 10% or more of the voting shares;

(5)  an employee of a company;

(6)  the auditor of a company;

(7)  a legal person affiliated with a company other than a subsidiary of the company;

(8)  a person holding, directly or indirectly, 10% or more of the voting rights attached to the shares of a legal person affiliated with a company;

(9)  a person designated as a “restricted party” by the Authority.

1987, c. 95, s. 121; 1999, c. 40, s. 304; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

122. The Authority may designate a person to be a restricted party

(1)  if it is of the opinion that the person is acting in concert with another restricted party to participate in a transaction prohibited under section 120;

(2)  if it is of the opinion that there exists between the person and the company such an interest or relationship as might affect the exercise of the best judgment of the company with respect to an investment or transaction;

(3)  if the person is a shareholder of the company or of a legal person affiliated with the company and if the Authority is of the opinion that the shareholder is acting in concert with another shareholder of the company or of a legal person affiliated with the company to control 10% or more of the voting rights of the company.

For the purposes of this section, any shareholder of a legal person that is a shareholder of a company is deemed to hold a percentage of the voting rights attached to shares of the company equal to the product of the percentage of the voting rights he holds in the legal person multiplied by the percentage of the voting rights that the legal person holds in the company.

1987, c. 95, s. 122; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

123. The Authority shall notify its decision to the person it designates to be a restricted party and to the company.

The Authority may revise its decision on the application of the company or the designated person.

Before making any designation or refusing to revise its decision, the Authority shall give the person it proposes to designate or has designated, and the company, an opportunity to present observations.

1987, c. 95, s. 123; 1997, c. 43, s. 766; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

124. Section 120 does not apply in respect of securities of the Government of Canada or of a province traded at their market value, nor to loans fully guaranteed by such securities.

1987, c. 95, s. 124.

125. Section 120 does not apply in respect of the following transactions with a financial institution:

(1)  in respect of deposits made at market conditions where the depositary is an institution registered with the Autorité des marchés financiers pursuant to the Deposit Insurance Act (chapter A‐26) or is a member of the Canada Deposit Insurance Corporation;

(2)  in respect of assets consisting of securities in active trading through dealers in securities provided the transfer is made at the market price and that the issuer has not defaulted payment of the interest or dividends on the securities;

(3)  in respect of assets consisting of securities, including leasing contracts, on which the payments of principal and interest are regularly made at each due date;

(4)  in respect of agreements respecting the amalgamation, transfer or purchase of the enterprise of a company for the reorganization of its affairs, with the approval of the Authority, which may impose conditions.

1987, c. 95, s. 125; 2002, c. 45, s. 581; 2004, c. 37, s. 90.

126. Notwithstanding section 120, a company or its subsidiary may grant a loan to an officer or employee of the company or of an affiliated legal person, or to the spouse or child of such an officer, provided the aggregate amount of loans to the officer, spouse, child or employee is less than the annual salary of the officer or employee or that the loan is secured by hypothec on the principal residence of the officer or employee.

The limit provided in the preceding paragraph does not apply to a loan granted for the purchase of shares of the company under a purchase plan covered in the contract of employment of the senior officers or of the employees.

1987, c. 95, s. 126.

127. A trust company may be authorized by the instrument creating its administration to make exceptions to section 120 in its use of funds, other than deposits, that it administers for another.

The authorization must be expressly stated and must not leave any discretion to the company as to how the funds are to be used.

1987, c. 95, s. 127.

128. Notwithstanding section 120, a company may accept a deposit from a restricted party on terms not more favourable than it grants in the ordinary course of business or issue a debt security contemplated in subparagraphs 1 and 2 of the first paragraph of section 193 to such a party.

1987, c. 95, s. 128.

129. Notwithstanding section 120, a company or its subsidiary may be party to a contract with a restricted party where only nominal sums are involved or the object of the contract is

(1)  services connected with the management or carrying on of their activities;

(2)  business or professional services which they offer to the public in the ordinary course of business and not involving any loan, acquisition of securities or transfer of assets;

(3)  property which they use for their own requirements;

(4)  conditions of employment of an employee or officer, pension funds, insurance plans and anything else connected with a labour contract;

(5)  anything else that may be determined by regulation of the Government.

A contract contemplated in subparagraph 1, 2 or 3 of the first paragraph must be made on competitive terms or terms favourable to the company or the subsidiary.

1987, c. 95, s. 129; 1999, c. 40, s. 304.

130. Except if it involves only minimal amounts, every contract contemplated in section 129 must be in writing and receive the approval of the board of directors of the company after the board obtains the advice of the ethics committee.

The board of directors may by resolution delegate its power of approval to a committee composed of not less than three directors. A majority of the members of the committee must consist of directors other than remunerated officers, employees or members of the ethics committee of the company.

The Authority may demand a copy of such a contract.

1987, c. 95, s. 130; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

131. The approval of the board of directors is not required for a labour contract with employees other than directors or officers.

1987, c. 95, s. 131.

132. The onus is on the company or the subsidiary to show that the contract was made on competitive or favourable terms.

1987, c. 95, s. 132.

133. The Minister, after obtaining the advice of the Authority, may on the conditions he determines authorize a loan, an acquisition of securities or a contract contemplated in section 120. His authorization cannot contemplate funds administered for others, except deposits.

The Minister must be satisfied that the transaction is necessary for the improvement or maintenance of the financial situation of the company.

1987, c. 95, s. 133; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

§ 2 . — Disclosure requirements

134. Every director of a Québec company whose interest in an enterprise comes into conflict with that of the company or a subsidiary of the company shall, on pain of forfeiture of office, disclose his interest and abstain from voting on any matter related to the enterprise in which he has an interest. He shall also withdraw from the meeting while the board is deliberating or voting on the matter.

Every person contemplated in section 107, other than a director, who has an interest described in the first paragraph shall, on pain of forfeiture of office, disclose his interest in writing to the company. No such person shall attempt in any way to influence the decision of the directors.

1987, c. 95, s. 134.

135. A director is deemed to have an interest in any enterprise in which a person associated with him has an interest.

The same rule applies to any other person contemplated in section 107.

For the purpose of this section, a director or another person referred to in section 107 is associated with another person where that other person is

(1)  his spouse or child;

(2)  a legal person in which he holds 10% or more of the voting rights or of which he is a director;

(3)  a legal person controlled jointly by him and his spouse or child;

(4)  his partner or a partnership in which he is a partner.

1987, c. 95, s. 135.

136. Every person contemplated in section 107 forfeited of office for having contravened section 134 becomes disqualified for the office of director of the company for a period of five years from the act alleged.

1987, c. 95, s. 136.

137. Where a person contemplated in section 107 contravenes section 134, the court, at the request of the company, a shareholder, a depositor, a beneficiary or the Authority may, among other measures, order that person to render account and to remit to the company the profit realized.

1987, c. 95, s. 137; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

138. A Québec company shall, within 30 days of the election of a director or the appointment of any other person contemplated in section 107, and each year thereafter, require that director or other person to make a written declaration of his interest.

The declaration must be made under oath and be transmitted to the company within 60 days of the request.

1987, c. 95, s. 138.

139. Failure to transmit the declaration of interest in the prescribed time disqualifies the director or other person contemplated in section 107 from office until the situation is remedied.

1987, c. 95, s. 139.

DIVISION III SPECIAL RULES ON PROTECTION OF THE INTERESTS OF THIRD PERSONS

140. No company may, as administrator of the property of another, exercise its powers in its own interest or in the interest of a third person; nor may it place itself in a situation of conflict between its personal interest and its obligations as administrator.

If the company itself is the beneficiary, it must exercise its powers in the common interest giving the same consideration to its own interest as to that of the other beneficiaries.

1987, c. 95, s. 140.

141. A company shall without delay give notice in writing to the beneficiary of any interest it has in an enterprise and that might place it in a situation of conflict of interest, and of any rights it may claim against him or against the administered property, indicating the nature and value of such rights. It is not required to give notice of any interest or rights resulting from the act that gave rise to the administration.

Notification of interests or rights in property of a trust that is subject to the supervision of a person or body designated by law shall be given to the latter.

1987, c. 95, s. 141.

142. No company may during its administration enter into a contract affecting the administered property or acquire rights in the property or against the beneficiary except by succession.

A company may, notwithstanding the first paragraph, be expressly authorized by the beneficiary or the court to enter into such a contract or acquire such rights where a beneficiary is unable to act or fails to act.

1987, c. 95, s. 142.

143. No company may use for its own benefit property under its administration or information it obtains through its administration unless the beneficiary has consented to such use or unless such use is authorized by law or the instrument constituting its administration.

1987, c. 95, s. 143.

144. No trust company engaged in stock brokerage activities may acquire, on behalf of a beneficiary, securities owned by it or by a person affiliated with it in its quality as broker, except with the consent of the beneficiary after disclosing its interest to him.

1987, c. 95, s. 144.

145. Unless expressly authorized by the instrument creating the administration, a trust company shall not invest funds administered by it for another person in its own shares or in debt securities contemplated in subparagraphs 1 and 2 of the first paragraph of section 193 issued by it or in the shares or securities of legal persons affiliated with it, nor shall it lend such funds on the security of such securities.

1987, c. 95, s. 145.

146. Where a trust company holds, on behalf of another person, its own shares or shares of a legal person affiliated with it in respect of which it may exercise voting rights or of which it may freely dispose, every decision concerning the vote, the disposition or an offer to purchase shares requires the approval of the board of directors of the company if the aggregate of the shares it holds is equal to or exceeds 10% of the shares of one class or of all the shares of the company or of a legal person affiliated with it.

The reasons for the decision shall be entered in the minutes of the meeting of the board of directors.

1987, c. 95, s. 146.

147. Each year, the board of directors of a trust company shall prepare a report on the shares referred to in section 146 describing the shares and giving the reasons for their retention.

1987, c. 95, s. 147.

DIVISION IV MISCELLANEOUS PROVISIONS

148. Any loan, investment or contract granted or made in contravention of this chapter may be cancelled by the court on the application of the Authority, the company or any interested person.

The court may order every director or officer who is a party to a transaction made in contravention of this chapter or who facilitated the carrying out thereof to pay to the company, jointly and severally, either damages in compensation for the injury suffered or the amount paid by the company in view of the transaction.

1987, c. 95, s. 148; 1999, c. 40, s. 304; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

149. The auditor of a company shall promptly report to the board of directors any breach of any provision of this chapter of which he is aware during the audit or of which he is made aware by a person referred to in section 150. If the board does not act to rectify the breach within a reasonable time, the auditor shall promptly report the breach to the Authority.

1987, c. 95, s. 149; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

150. Any person, other than an employee of the company, who in providing professional services to the company is aware of a breach of any provision of this chapter shall promptly report the breach to the auditor and to the board of directors of the company.

The first paragraph does not apply to an attorney or notary providing professional services to a company.

1987, c. 95, s. 150.

151. Sections 149 and 150 apply notwithstanding section 9 of the Charter of human rights and freedoms (chapter C-12).

1987, c. 95, s. 151.

152. No person providing professional services may provide services to a company in relation to a loan, investment or contract to which he is a party or in which he has a direct or indirect interest.

1987, c. 95, s. 152.

153. No person who in good faith makes a report under sections 149 and 150 shall incur any civil liability thereby.

1987, c. 95, s. 153.

CHAPTER XI.1 EXAMINATION OF COMPLAINTS AND DISPUTE RESOLUTION

2002, c. 45, s. 582.

153.1. Every company must provide equitable resolution of complaints filed with the company. To that end, a company must establish a policy dealing with

(1)  the examination of complaints and claims filed by persons having an interest in a product or service it has provided ;

(2)  the resolution of disputes pertaining to a product or service it has provided.

2002, c. 45, s. 582.

153.2. Every company shall, each year within two months of the closing date of its fiscal year or on any other date determined by the Authority, submit to the latter a report to that date concerning the policy it has established pursuant to section 153.1.

The report shall mention, in particular, the number and nature of the complaints filed.

2002, c. 45, s. 582; 2004, c. 37, s. 90.

153.3. The Authority may, if it considers it appropriate, give written instructions to a company concerning the policy referred to in section 153.1.

Before exercising the power provided for in the first paragraph, the Authority must notify the company of its intention and give it the opportunity to present observations.

2002, c. 45, s. 582; 2004, c. 37, s. 90.

153.4. Every company shall inform each complainant, in writing and without delay, that a complainant may, if he or she is dissatisfied with the complaint examination procedure or its outcome, request the company to forward a copy of the complaint file to the Authority.

Where requested by a complainant, the company shall forward a copy of the complaint file to the Authority.

The Authority shall examine the complaint file and may, where it considers it appropriate, act as a mediator if the interested parties agree. It may also retain the services of a natural person to act as a mediator or, with the authorization of the Government, enter into an agreement for that purpose with a body or a legal person.

2002, c. 45, s. 582; 2004, c. 37, s. 87.

153.5. Notwithstanding sections 9 and 83 of the Act respecting Access to documents held by public bodies and the Protection of personal information (chapter A‐2.1), the Authority may not communicate a complaint file without the authorization of the company that has transmitted it.

2002, c. 45, s. 582; 2004, c. 37, s. 90.

153.6. The Authority may, with the authorization of the Government, enter into an agreement with any body or legal person in respect of the examination of complaints filed by persons dissatisfied with the complaint examination procedure or its outcome.

Such an agreement may also provide that the body or legal person may, where they consider it expedient, act as a mediator if the interested parties agree thereto.

2002, c. 45, s. 582; 2004, c. 37, s. 90.

153.7. A mediator may not be compelled to disclose anything revealed to or learned by the mediator in the exercise of his or her functions or to produce a document prepared or obtained in the course of such exercise before a court of justice or before a person or body of the administrative branch exercising adjudicative functions.

Notwithstanding section 9 of the Act respecting Access to documents held by public bodies and the Protection of personal information (chapter A-2.1), no person may have access to a document contained in the mediation record.

2002, c. 45, s. 582.

CHAPTER XII SALE OR PURCHASE OF A COMPANY

154. A Québec company shall not sell all of its property or of its enterprise except to another Québec company. It may purchase all of the property or enterprise of any other company.

1987, c. 95, s. 154.

155. The sale or purchase shall be made on the following conditions:

(1)  the vendor company and the purchasing company must draw up in duplicate an agreement on the terms and conditions of the transaction, which agreement must be approved by at least 2/3 of the votes given by the shareholders at the shareholders’ meeting of each company called for that purpose;

(2)  the approval of the shareholders must be attested on each copy of the agreement by the secretary of each company;

(3)  notice of the agreement must be published in a daily newspaper published in the locality where the head office of each company is situated;

(3.1)  a notice of the agreement, accompanied with the fees prescribed by regulation, must be transmitted to the Authority, which shall transmit it to the enterprise registrar for deposit in the register of sole proprietorships, partnerships and legal persons;

(4)  the purchasing company must be the holder of a licence issued under this Act for the carrying on of the purchased enterprise;

(5)  the purchasing company must assume the obligations of the vendor company;

(6)  the applicants must show to the satisfaction of the Minister that

(a)  it is expedient, for the convenience of the public, that the sale or purchase take place;

(b)  the sale or purchase is not likely to affect the security of depositors or beneficiaries;

(7)  where a savings company purchases the property or enterprise of a trust company, agreements must be made to the satisfaction of the Authority so that the operations of the trust company that cannot be legally continued by a savings company, except deposits, be transferred to another Québec trust company that holds a licence and is capable of carrying on such operations.

1987, c. 95, s. 155; 1993, c. 48, s. 483; 2002, c. 45, s. 583; 2004, c. 37, s. 90.

156. After obtaining the advice of the Authority, the Minister may, if he considers it expedient, approve the agreement, which shall take effect only from the time of the approval or on any later date he determines.

1987, c. 95, s. 156; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

157. Where a savings company purchases the property or enterprise of a trust company, the deposits received by the trust company are deemed to have been received by the savings company in accordance with section 172.

1987, c. 95, s. 157; 1999, c. 40, s. 304.

158. Where a trust company purchases the property or enterprise of a savings company, the sums borrowed by the savings company as deposits are deemed to have been received by the trust company in accordance with section 177.

1987, c. 95, s. 158; 1999, c. 40, s. 304.

159. The name of the purchasing company is deemed to be substituted for the name of the vendor company in all documents prior to the date of purchase.

1987, c. 95, s. 159.

160. A Québec company which sells all of its enterprise shall, from the time the Minister approves the agreement, carry on its activities only for the purpose of winding up its affairs.

1987, c. 95, s. 160.

CHAPTER XIII WINDING-UP OF A COMPANY

161. The Winding-up Act (chapter L-4) applies to the winding-up of any Québec company, subject to the provisions of this chapter.

1987, c. 95, s. 161.

162. From the time the winding-up takes effect, every action or suit against the property of the company, particularly by seizure by garnishment, seizure before judgment or seizure in execution, shall be suspended.

The costs incurred by a creditor, after he has become aware of the winding-up, by himself or through his attorney, shall not be collocated out of the proceeds of the property of the company which are distributed by reason of the winding-up.

A judge of the Superior Court for the district in which the head office of the company is situated may, however, upon the conditions that he considers suitable, authorize the institution or continuance of any action or suit.

1987, c. 95, s. 162.

163. Every company that has decided to effect its winding-up shall give notice of it to the Authority and forward to the Authority a copy of the resolution passed to that effect by the general meeting; the notice shall be transmitted to the Authority, which shall send it to the enterprise registrar who shall deposit it in the register of sole proprietorships, partnerships and legal persons, and be published in a daily newspaper published in the locality where the head office of the company is situated.

The notice shall indicate the date on which the company will cease to carry on its activities, the name and address of the liquidator and the address where interested persons may send him their claims.

1987, c. 95, s. 163; 1993, c. 48, s. 484; 2002, c. 45, s. 584; 2004, c. 37, s. 90.

164. In order to guarantee the performance of his duties before taking possession of the property of the company, the liquidator shall give sufficient security and maintain it thereafter. At the request of the Authority or of any other interested person, a judge of the Superior Court may determine the amount and nature of the security and increase it according to circumstances.

1987, c. 95, s. 164; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

165. The liquidator appointed to the property of a company shall act under the control and direction of the Authority which may, even if it alleges no particular interest, act before the courts in all matters respecting the winding-up and exercise, on behalf of any shareholder, depositor, beneficiary or creditor of the company, the rights which those persons have against the company.

1987, c. 95, s. 165; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

166. The liquidator shall, within seven days after the end of any three month period, transmit to the Authority a summary report of his activities for that period. The report shall indicate the income and expenses of the winding-up and a statement of his assets and liabilities at the end of that period.

1987, c. 95, s. 166; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

167. The liquidator shall, at the end of each year, transmit to the Authority a copy of the report contemplated in section 15 of the Winding-up Act (chapter L‐4).

1987, c. 95, s. 167; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

168. The assets referred to in the second paragraph of section 180 shall not be used except for the repayment of the deposits received by the company. Any balance shall be used for the repayment of the other obligations of the company.

1987, c. 95, s. 168.

CHAPTER XIV DISSOLUTION OF A COMPANY

169. The Authority may dissolve a Québec company

(1)  if it has remained inactive for at least two years from the date of its incorporation;

(2)  if it has ceased to carry on its activities for more than one year;

(3)  if it has failed to apply for the renewal of its licence or, where such is the case, for the issue of a new licence within three months after the expiry of the suspension period of its licence, if it expires after 30 June, or within three months after the date of cancellation of its licence.

1987, c. 95, s. 169; 1993, c. 48, s. 485; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

169.1. Before dissolving a company, the Authority shall give the company at least 60 days’ notice of the omission giving rise to dissolution and of the penalty prescribed, and shall send the notice to the enterprise registrar who shall deposit it in the register of sole proprietorships, partnerships and legal persons.

The Authority shall send one copy by registered mail to the last directors of the company mentioned in the register, at the last address mentioned in the register.

1993, c. 48, s. 486; 2002, c. 45, s. 585; 2004, c. 37, s. 90.

169.2. The Authority shall dissolve the company by drawing up an act of dissolution and transmitting it to the enterprise registrar who shall deposit it in the register of sole proprietorships, partnerships and legal persons. The company is dissolved from the date of such deposit.

However, the Authority may, upon the application of any interested person, and on the conditions the Authority determines, retroactively revoke the dissolution of the company by drawing up an order to that effect which it shall send to the enterprise registrar who shall deposit it in the register of sole proprietorships, partnerships and legal persons. The revocation of the dissolution of the company causes the company to resume existence on the date of deposit of the order. Subject to the rights acquired by any person, the company is deemed to never have been dissolved.

1993, c. 48, s. 486; 2002, c. 45, s. 586; 2004, c. 37, s. 90.

CHAPTER XV OBJECTS AND POWERS OF A COMPANY

DIVISION I GENERAL PROVISIONS

170. Every Québec trust company and, if its instrument of incorporation so authorizes, every extra-provincial trust company may, in addition to its activities as tutor or curator to property, liquidator, syndic, sequestrator, adviser to a person of full age, trustee or fiduciary provided for in its instrument of incorporation, carry on any accessory activity or activity related to that of administrator of the property of others or of financial intermediary and, in particular,

(1)  act as mandatary and administer any property for the account of others;

(2)  act as depositary for the safekeeping of securities, collection agent, real estate broker or agent for the registration or transfer of securities;

(3)  offer and administer savings plans registered under the Taxation Act (chapter I-3) or the Income Tax Act (Revised Statutes of Canada, 1985, chapter 1, 5th Supplement);

(4)  enter into contracts for the payment of fixed-term annuities;

(5)  offer investment counselling services and portfolio management services and act as securities dealer, on such conditions as the Minister may impose;

(5.1)  act as a firm or distributor or hold a restricted certificate in accordance with the Act respecting the distribution of financial products and services (chapter D-9.2);

(6)  furnish judicial recognizances for the benefit of parties requiring them, and extra-judicial security for the performance of contracts;

(7)  engage in leasing operations;

(8)  issue debit or credit cards and assume the management thereof.

The Government may also, after obtaining the advice of the Minister, authorize a company, a specific group of companies or all the companies subject to this Act to carry on any other activity. The Government shall publish in the Gazette officielle du Québec, at least 45 days before the passing of an order to that effect, a notice stating its intention. An order passed to authorize the carrying on of additional activities comes into force 15 days after its publication in the Gazette officielle du Québec.

1987, c. 95, s. 170; 1989, c. 54, s. 190; 1992, c. 57, s. 695; 1998, c. 37, s. 532; 1999, c. 40, s. 304.

171. Every Québec savings company and, if so authorized by its instrument of incorporation, every extra-provincial savings company may, in addition to borrowing funds from the public in the form of deposits for the purposes of loans and investments, carry on the activities contemplated in paragraphs 7 and 8 of section 170.

The Government may also, after obtaining the advice of the Minister, authorize a company, a specific group of companies or all the companies governed by this Act to carry on any other activity. The Government must publish, in the Gazette officielle du Québec, at least 45 days before an order is passed to that effect, a notice indicating its intention. Any order to authorize the carrying on of additional activities comes into force only 15 days after its publication in the Gazette officielle du Québec.

1987, c. 95, s. 171.

172. Every Québec savings company and any other savings company that has capacity to do so may borrow money from the public in the form of deposits within the meaning of the Deposit Insurance Act (chapter A‐26) and the regulations thereunder.

The company may issue debt securities in respect of the money received under the first paragraph.

The company may also borrow money by an issue of bonds.

In the event of the winding-up of the company, all such debt securities and bonds rank equally.

The company may exercise such powers, however, only if it is registered with the Autorité des marchés financiers pursuant to the Deposit Insurance Act.

1987, c. 95, s. 172; 1999, c. 40, s. 304; 2002, c. 45, s. 587; 2004, c. 37, s. 90.

173. The Minister may require a Québec company to establish a subsidiary in order to carry on a particular activity where he is of the opinion that with the carrying on of that activity, considering its nature or extent in relation to the other activities of the company, the application of supervision and control norms would be ineffective.

1987, c. 95, s. 173.

174. A trust company is entitled to remuneration for services rendered, including services that are gratuitous according to law.

1987, c. 95, s. 174.

175. A trust company may be the sole trustee of a trust of which it is settlor.

1987, c. 95, s. 175.

176. Unless required by law, by the instrument constituting its administration or by the court, a trust company is not required to give any security to guarantee the performance of a charge entrusted to it.

1987, c. 95, s. 176.

177. Every Québec trust company and any other trust company that has capacity to do so may receive deposits within the meaning of the Deposit Insurance Act (chapter A‐26) and the regulations thereunder.

The company may issue investment certificates or other evidences of the deposits received.

The funds so received are deemed to be held in trust by the company and the company is deemed to guarantee their repayment.

The company may exercise such powers, however, only if it is registered with the Autorité des marchés financiers pursuant to the Deposit Insurance Act.

1987, c. 95, s. 177; 1999, c. 40, s. 304; 2002, c. 45, s. 588; 2004, c. 37, s. 90.

178. Moneys constituting fixed-term annuities are unseizable in the hands of the trust company as fixed-term annuities transacted by insurers.

1987, c. 95, s. 178.

179. Notwithstanding the third paragraph of section 177, a trust company may retain the income and interest from the investment of deposits in excess of the amount of interest it has undertaken to pay on the money.

1987, c. 95, s. 179.

180. In no case may a trust company allow the assets it administers for another person to be mixed with its own assets. It shall keep in its books a separate account for each administration.

It shall earmark and keep in a separate account assets equal to the aggregate amount of money received as deposits.

It may make investments in its sole name, without indicating its quality.

1987, c. 95, s. 180.

181. A company shall not dispose gratuitously of property entrusted to it unless the power to do so results from the nature of its administration, or except in the case of objects of little value disposed of in the interest of the beneficiary or the object pursued.

A company shall not, without valuable consideration, waive a right belonging to the beneficiary or forming part of the patrimony under administration.

1987, c. 95, s. 181.

182. A company may bring an action in respect of any matter affecting its administration. It may also intervene in any action respecting the property under administration.

1987, c. 95, s. 182.

183. Where there are several beneficiaries of the administration, simultaneously or successively, the company is bound to act in their regard with impartiality, taking into account the rights of each.

1987, c. 95, s. 183.

184. In appraising the extent of the liability of a company and fixing resultant damages in compensation for the injury suffered, the court may reduce or abate them taking into account the circumstances under which the administration was assumed.

1987, c. 95, s. 184; 1999, c. 40, s. 304.

185. A trust company may entrust securities in its safekeeping or records kept thereon to another person.

1987, c. 95, s. 185.

186. A trust company may lend or invest in its own name money it administers for other persons. It must make the proper book entries to allot to each administration its fair share in the loan or investment so made.

1987, c. 95, s. 186.

187. Unless prohibited by the instrument constituting the administration, a trust company may

(1)  group together moneys which it administers for others for the purposes of loans or investments;

(2)  invest moneys from different accounts which it administers or holds for others, except deposits, in a mutual investment fund which it creates and manages.

The company must obtain the consent of every person acting jointly with it as administrator of the property of others to make a loan or investment under this section.

1987, c. 95, s. 187.

188. A trust company may establish and manage a mutual investment fund governed by the Securities Act (chapter V-1.1) and offer units in the fund to the public.

1987, c. 95, s. 188.

189. A company may require 30 days’ notice for the partial or full withdrawal of a deposit repayable on demand received after 18 May 1988.

1987, c. 95, s. 189.

190. A company is not required to see to the performance of a trust to which a deposit is subject.

Notwithstanding the foregoing, if the company is advised of the existence of a trust to which a deposit entered in the name of several persons is subject, the only valid quittance is the receipt or the order for payment given by all such persons or by those among them who, under the instrument or Act creating the trust, may be entitled to the sums payable in respect of the deposit.

1987, c. 95, s. 190.

DIVISION II ESTABLISHMENT OF SECURITY

191. No Québec company may hypothecate its property or the property allocated to the payment of deposits unless it does so

(1)  to secure a loan contracted to meet its short-term liquidity needs;

(2)  to acquire or improve an immovable intended for its own use, in which case the security must affect only the immovable;

(3)  in respect of an advance made under the Canada Deposit Insurance Corporation Act (Revised Statutes of Canada, 1985, chapter C-3) or the Deposit Insurance Act (chapter A-26);

(4)  in favour of the Gouvernement du Québec or the Government of Canada in respect of the subscription of savings bonds;

(5)  in cases provided for by regulation of the Government.

1987, c. 95, s. 191; 1992, c. 57, s. 696.

192. A company shall promptly notify the Authority of any security granted under paragraph 1, 2, 3 or 5 of section 191, stating the name of the creditor, the amount of security, the property affected and any other information determined by regulation of the Government.

1987, c. 95, s. 192; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION III LOANS

193. In addition to the loans contracted by a company in cases where it is authorized to grant security on its property and the deposits it receives, no Québec company may

(1)  issue bonds or other debt securities unless they are unsecured and they stipulate that the indebtedness will, in the event of winding-up of the company, rank after the other debts, equally with the other unsecured evidences of indebtedness issued by it and before the subordinated loans it has contracted;

(2)  borrow by the acceptance of subordinated loans unless they are granted by the shareholders of the company or of a legal person affiliated with it for a fixed term and the debt security stipulates that the loan will, in the event of winding-up of the company, rank with the other similar loans but after all the other debts.

1987, c. 95, s. 193.

194. Subject to sections 191 and 193, no Québec trust company may borrow except from a bank or an authorized foreign bank listed in Schedule I, II or III to the Bank Act (Statutes of Canada, 1991, chapter 46), an institution registered with the Canada Deposit Insurance Corporation or an institution registered with the Autorité des marchés financiers pursuant to the Deposit Insurance Act (chapter A‐26).

1987, c. 95, s. 194; 2002, c. 45, s. 589; 2004, c. 37, s. 90.

DIVISION IV CAPITAL BASE AND LIQUID ASSETS

195. A company shall, in relation to its operations, maintain an adequate capital base and adequate liquidities suitable for its needs. It shall comply in that respect with the regulations of the Government and the written directions of the Authority.

The company shall comply with the directions within the time fixed by the Authority.

1987, c. 95, s. 195; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

196. Before giving directions to a company, the Authority shall give it the opportunity to present observations within a reasonable period of time.

1987, c. 95, s. 196; 1997, c. 43, s. 767; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

197. In determining whether the capital base of a Québec company is adequate, the Authority must exclude from it the value of loans or investments or of a part of a loan or investment made by the company contrary to this Act or the regulations of the Government unless they were made before 18 May 1988 and recognized as assets by the Authority for the period and on the conditions it determines.

1987, c. 95, s. 197; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION V DEBT RATIO

198. The aggregate of deposits, borrowings and other commitments specified by regulation of the Government, except borrowings contemplated in subparagraphs 1 and 2 of the first paragraph of section 193 to the extent that they are assigned to the capital base and hypothecs on immovables which a Québec company holds for its own requirements, must not exceed ten times the capital base of the company.

Notwithstanding the foregoing, the Authority, on the application of the company and on such conditions as it determines, may authorize a higher limit but not over 25 times the capital base of the company. The application of the company must be accompanied with a resolution of the board of directors.

The Authority may also, where it considers it necessary, reduce the limit it has authorized, but not to less than ten times the capital base of the company.

1987, c. 95, s. 198; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

199. On the application of a company, the Authority may allow the limit authorized under section 198 to be exceeded temporarily.

The application of the company must be accompanied with a resolution of the board of directors approving the exceeding of the limit.

The resolution must indicate the limit of the excess, which must not be greater than 3% of the deposits, borrowings and other commitments of the company. The excess amounts must be invested as prescribed by regulation of the Government.

The resolution is valid for not over three months and takes effect on the date of its approval by the Authority, with or without amendment.

1987, c. 95, s. 199; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION VI LOANS AND INVESTMENTS

200. Every company shall, in exercising its loan and investment powers, act as a prudent and reasonable person would act in similar circumstances, honestly and faithfully and in the best interests of the shareholders, the depositors and, as the case may be, the beneficiaries.

1987, c. 95, s. 200.

201. Every trust company shall invest the funds it administers for other persons, other than deposits, in accordance with the Civil Code, except to the extent provided in the instrument creating the administration.

It shall invest its own funds, as well as the deposits it receives, in accordance with this chapter.

1987, c. 95, s. 201.

202. A Québec company may, in accordance with this Act and the regulations of the Government, make investments and secured or unsecured loans. It may make loans on the security of conditional sales agreements and acquire property relating to such agreements and to leasing contracts.

1987, c. 95, s. 202.

203. At least 60% of the assets of a Québec company must consist of

(1)  hypothecary claims which meet the criteria contemplated in section 205;

(2)  securities issued or guaranteed by the government of Canada or of a province or territory of Canada or by any of their agencies or by a municipality in Canada;

(3)  securities on which payment in principal and interest is guaranteed by the grant of a subsidy by the Gouvernement du Québec payable out of the sums voted each year for that purpose by the National Assembly;

(4)  securities on which payment is insured by the levy of a tax by a municipality, by a school board or by the Comité de gestion de la taxe scolaire de l’île de Montréal under a law of Canada or a Canadian province or territory on property situated in the territory of the municipality, the school board or a school board of the island of Montréal;

(5)   bank deposits and debt securities the payment of which is guaranteed by a bank listed in Schedule I, II or III to the Bank Act (Statutes of Canada, 1991, chapter 46) and registered with the Canada Deposit Insurance Corporation;

(6)  debt securities issued or secured by an institution registered with the Autorité des marchés financiers pursuant to the Deposit Insurance Act (chapter A‐26) or that is a member of the Canada Deposit Insurance Corporation, and deposits with those institutions;

(7)  interest bearing debt securities traded on the market.

The Government may, by regulation, determine a minimum or maximum limit for each class of items described in subparagraphs 1 to 7 of the first paragraph.

1987, c. 95, s. 203; 1988, c. 84, s. 695; 1996, c. 2, s. 938; 2002, c. 45, s. 590; 2002, c. 75, s. 33; 2002, c. 45, s. 590; 2004, c. 37, s. 90.

204. No Québec company may, directly or indirectly, by the purchase of shares or the granting of loans, including financing by leasing, invest an amount exceeding $500,000 or 1% of the assets, whichever is greater, or 11/2% of the assets, if the assets exceed $500,000,000, in one person or a group of associated persons.

In computing that amount, no account shall be taken of securities contemplated in subparagraphs 2, 3, 5 and 6 of the first paragraph of section 203 nor of hypothecary claims the repayment of which is approved or insured within the meaning of the National Housing Act (Revised Statutes of Canada, 1985, chapter N-11) or the excess amount of which is guaranteed or insured by the government of Québec, of another Canadian province, of Canada or of a territory of Canada, or by any agency thereof, or under a hypothec insurance policy issued by an insurance company authorized to carry on business in Canada.

For the purposes of this section, a person is an associate of another person where

(1)  the person is the spouse of the other, or is the minor child of either;

(2)  one person is a legal person and the other is a director or officer thereof or the spouse or minor child of that officer or director;

(3)  one person is a partnership and the other is one of the partners;

(4)  they are legal persons affiliated with one another.

This section does not apply to a loan to or a placement or other investment in a subsidiary of the company.

1987, c. 95, s. 204.

205. For the purposes of section 203, no loan secured on immovable property may be granted in an amount which, together with any other claim of the same rank or prior rank against such property, is greater than 75 % of the market value of the charged property at the time the loan is granted, except in the case of a loan approved or insured within the meaning of the National Housing Act (Revised Statutes of Canada, 1985, chapter N-11) or unless the excess amount is guaranteed or insured by the government of Québec, of another Canadian province, of Canada or of a territory of Canada, or by any agency thereof, or under a hypothec insurance policy issued by an insurance company authorized to carry on business in Canada.

1987, c. 95, s. 205.

206. Section 205 does not apply where a company makes a loan to the purchaser of an immovable it is disposing of and that it had acquired to protect its interests.

1987, c. 95, s. 206.

207. No Québec company may invest in shares, bonds or other debt securities an amount in excess of 25% of its assets consolidated with the assets of its subsidiaries other than a subsidiary whose business consists in offering shares in an investment portfolio or in dealing in securities.

In computing the amount, no account shall be taken of securities contemplated in paragraphs 2 to 6 of section 203 or securities determined by regulation of the Government.

1987, c. 95, s. 207; 1999, c. 40, s. 304.

208. No Québec company may acquire or hold more than 10% of the voting shares of a legal person other than its subsidiary.

Shares held by the subsidiary, except in the case of a subsidiary whose business consists in dealing in securities, are deemed held by the company.

A company may exceed the limit fixed in the first paragraph where it acquires shares following the liquidation of a security. It shall, however, dispose of the shares after the expiry of a two-year period if, at that time, it exceeds the prescribed limit.

1987, c. 95, s. 208.

209. Any part of a loan granted to an individual, including financing by way of leasing, but not including loans secured on immovable property, which exceeds $250,000 or one-tenth of 1% of the assets of the company, whichever is less, shall be limited to the market value of the security at the time of the grant of the loan.

1987, c. 95, s. 209.

210. Loans granted to enterprises for commercial purposes, including financing by way of leasing, letters of credit and letters of guarantee granted by an enterprise other than a subsidiary, but not including loans secured on immovable property in accordance with section 205, must not exceed 5% of the assets of a Québec company consolidated with the assets of its subsidiaries which are not companies within the meaning of this Act, except with the authorization of the Authority.

1987, c. 95, s. 210; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

211. In examining the application for authorization, the Authority shall take into account the experience and solvency of the company and the competence of its directors and officers.

The Authority may attach conditions, particularly the requirement for greater capitalization than that prescribed by section 15.

1987, c. 95, s. 211; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

212. A Québec company shall, each year, prepare a statement of its overdue loans and unproductive investments as at the end of its financial year.

The statement shall be tabled at a meeting of the board of directors and attached to the minutes of the meeting. A copy of the statement must be transmitted to the Authority within 60 days of the date of the statement.

The Government, by regulation, shall define the expressions “overdue loan” and “unproductive investment” for the purposes of this section.

1987, c. 95, s. 212; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

213. No Québec company may purchase immovables for an amount exceeding 10% of its consolidated assets.

The amount that may be so invested in an individual immovable is limited to 2% of the consolidated assets of the company, and to 1% where the immovable is not income producing.

For the purposes of this section, an income producing immovable is an immovable on which the rate of net annual income computed for a financial year is at least 50% of the annual yield of a sum equal to the market value of the immovable invested in that financial year in long term Government of Canada bonds.

1987, c. 95, s. 213.

214. No account shall be taken of immovables charged with a hypothec or otherwise in favour of the company and which it acquires to protect its interests within the meaning of section 213. However, a company cannot hold such an immovable for over seven years from the date of acquisition or beyond any additional period the Authority may allow.

The immovable must be sold or alienated otherwise during that period so that the company retains no interest in it other than as security.

1987, c. 95, s. 214; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

215. A company shall hold only so much movable property for its own use as it needs.

1987, c. 95, s. 215.

216. A Québec company may make deposits in an institution registered with the Autorité des marchés financiers pursuant to the Deposit Insurance Act (chapter A‐26) or that is a member of the Canada Deposit Insurance Corporation, or in a bank.

1987, c. 95, s. 216; 2002, c. 45, s. 591; 2004, c. 37, s. 90.

217. A Québec company must adopt an investment policy approved by the board of directors, establishing rules to be followed in making decisions concerning loans and investments and the management thereof.

1987, c. 95, s. 217.

218. A Québec company may, on the conditions prescribed by regulation of the Government, have the following subsidiaries:

(1)  a company within the meaning of this Act;

(2)  a legal person whose principal activity is the purchase, management or sale of immovable property, or which acts as mandatary for the sale or purchase of such property;

(3)  a legal person whose principal activity consists in offering shares in an investment portfolio;

(4)  a legal person whose principal activity consists in leasing;

(5)  a legal person whose business consists in dealing in securities;

(6)  any other legal person, with the approval of the Minister.

1987, c. 95, s. 218.

219. A Québec company may guarantee the debt securities of its subsidiary.

1987, c. 95, s. 219.

220. No Québec company may accept, as security for a loan,

(1)  shares of its capital stock, except in the case of a security granted by an officer or an employee within the scope of a share purchasing program;

(2)  debt securities contemplated in subparagraphs 1 and 2 of the first paragraph of section 193 issued by it;

(3)  shares or debt securities of a legal person affiliated with it.

1987, c. 95, s. 220.

CHAPTER XVI SUPERVISION AND CONTROL OF COMPANIES

DIVISION I LICENCES

§ 1 . — Issuance of licences

221. Every company shall hold a licence to carry on its activities in Québec.

1987, c. 95, s. 221.

222. Every company applying for a licence shall furnish the Authority with the following documents and information:

(1)  the name of the company;

(2)  the name, occupation, citizenship and address of each director and officer of the company;

(3)  the locality in Québec where the head office or principal place of business of the company will be situated;

(4)  the locality where the main decision-making centre of the company will be situated;

(5)  the activities it intends to carry on;

(6)  a copy of the instrument of incorporation of the company and of its by-laws;

(7)  a certified copy of the audited financial statements of the company for each of the last three years and, at the request of the Authority, of each legal person affiliated with it and, where the end of the last financial year dates back to more than 120 days but to less than one year before the application for a licence, a certified copy of the unaudited statements to not later than 90 days before the date of the application for a licence;

(8)  any other information or documents required by the Authority.

1987, c. 95, s. 222; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

223. Every extra-provincial company applying for a licence shall also furnish

(1)  a copy of the licence or other certificate issued by the administrative authority in the place where the company was incorporated;

(2)  a copy of the business statement that the company is required to file with the administrative authority in the place where the company was incorporated;

(3)  a copy of the last inspection report given to the company by the administrative authority in the place where the company was incorporated, or authorization to obtain the report.

1987, c. 95, s. 223.

224. Every company shall keep up to date the documents and information furnished with the application for a licence.

1987, c. 95, s. 224.

225. No extra-provincial company may exercise more powers in Québec than are granted to a Québec company under this Act.

1987, c. 95, s. 225.

226. Every extra-provincial company which does not have its head office in Québec shall, to obtain a licence, appoint a chief representative in Québec.

The company shall send a certified copy of the power of attorney designating its chief representative in Québec to the Authority. The power of attorney shall indicate, in particular, the name and address in Québec of the chief representative and his duties or powers.

The representative shall ensure that the policy referred to in section 153.1 is applied and that a response is given to all requests for information.

The company shall facilitate the representative’s access, at its head office and at any establishment, to any information and document the representative considers useful for the accomplishment of his or her duties.

1987, c. 95, s. 226; 2002, c. 45, s. 592; 2004, c. 37, s. 90.

227. The Authority shall issue the licence if the company

(1)  furnishes all the required documents and information;

(2)  complies with this Act and the regulations of the Government thereunder and, in the case of an extra-provincial company, with any Act of another legislative authority governing its activities, and the regulations thereunder;

(3)  adheres to sound and prudent management practices, in particular those relating to commercial practices;

(4)  has a sufficient capital base, in the opinion of the Authority, to provide adequate protection of the depositors or to operate efficiently, and common shareholders’ equity of at least $5,000,000 in the case of a trust company, or of at least $3,000,000 in the case of a savings company or of a trust company whose instrument of incorporation explicitly excludes the power to receive deposits;

(5)  shows that, in the locality where its head office or principal place of business will be situated, it is expedient for the convenience of the public that a company be established;

(6)  shows that each director or officer is fit as to character and competence in view of the proposed activities;

(7)  shows that its directors and the directors of the legal person by which it is controlled fulfil the conditions prescribed in section 91;

(8)  shows that the proposed activities will be carried on within a reasonable time;

(9)  holds a fidelity insurance policy for an amount deemed sufficient by the Authority according to generally accepted practices and to the volume of the company’s operations.

A Québec company shall also establish that its main decision-making centre is in Québec.

The Authority may impose conditions and restrictions in respect of the issuance of a licence to an extra-provincial company if it is of the opinion that the law governing it or its instrument of incorporation does not provide guarantees to third persons equivalent to those required of Québec companies under this Act.

1987, c. 95, s. 227; 2002, c. 45, s. 593; 2004, c. 37, s. 90.

228. In addition to the requirements of section 227, an extra-provincial company applying for a licence must

(1)  give the Authority written authorization to carry out such inspections and examinations as it deems necessary, in accordance with sections 305 to 308, at the head office of the company or of its subsidiary, wherever that may be, or in the branch offices, and undertake in its own name and in the name of its subsidiaries by resolution of the board of directors to furnish any information to the Authority that it requires and to observe the prescriptions of this Act, the regulations thereunder of the Government, the written orders and directives of the Authority and the terms and conditions attached to the licence;

(2)  show that its name or the French version of its name appearing in its instrument of incorporation conforms to the norms applicable to the name of a Québec company or that it has adopted, subject to the Acts that are applicable to it, an assumed name that conforms to the above requirements;

(3)  undertake not to carry on any activity authorized by the law governing it or its instrument of incorporation that Québec companies are not authorized to carry on under this Act, except with authorization given by the Minister, on the conditions he determines, after obtaining the advice of the Authority.

1987, c. 95, s. 228; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

229. The authorization contemplated in paragraph 1 of section 228 is also required of a Québec company for examinations and inspections in its branches outside Québec and in its subsidiaries.

1987, c. 95, s. 229.

230. The assumed name of an extra-provincial company must appear on the licence in addition to its name or the French version of its name. The company shall then identify itself and be identified in Québec under the assumed name and shall then be designated by that name with the same validity as by its name.

1987, c. 95, s. 230.

231. Every company which, on 18 May 1988, is registered under the Trust Companies Act (chapter C-41) or with the Régie de l’assurance-dépôts du Québec and which does not fulfil the requirements of subparagraph 4 of the first paragraph of section 227 has five years from 18 May 1988 to comply therewith.

1987, c. 95, s. 231.

232. No licence may be issued to a company whose name does not conform to law.

1987, c. 95, s. 232.

233. Where the name of a company does not conform to law, the Authority may, after giving the company an opportunity to present observations, order it to change its name within 60 days of service of the order.

1987, c. 95, s. 233; 1997, c. 43, s. 768; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

234. Where a company fails to change its name within the prescribed time, the Authority may of its own initiative assign it another name in the case of a Québec company or suspend or revoke its licence in the case of an extra-provincial company.

Where of its own initiative, the Authority assigns a name to a Québec company, it shall issue supplementary letters patent in duplicate and send one copy to the enterprise registrar who shall deposit it in the register of sole proprietorships, partnerships and legal persons.

1987, c. 95, s. 234; 1993, c. 48, s. 487; 2002, c. 45, s. 594; 2004, c. 37, s. 90.

235. The Authority may refuse to issue a licence to a company having a name identical to that of another legal person carrying on business in Québec or that so resembles another name that the public may be confused or misled as to its identity or the nature of its activities.

1987, c. 95, s. 235; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

236. If an extra-provincial company holding a licence changes its corporate name, it must transmit to the Authority a certified copy of the document establishing that such change has been legally obtained.

The Authority shall change the licence accordingly and send a notice of name change to the enterprise registrar who shall deposit it in the register of sole proprietorships, partnerships and legal persons.

1987, c. 95, s. 236; 1993, c. 48, s. 488; 2002, c. 45, s. 595; 2004, c. 37, s. 90.

237. The Authority shall, on refusing to issue a licence, give notice of the refusal in writing to the applicant, specifying the reasons for its refusal.

1987, c. 95, s. 237; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

238. The Authority may, at the request of any company, replace its licence to enable it to carry on other activities authorized by its instrument of incorporation.

The company shall fulfil the same requirements as for the issue of a licence.

1987, c. 95, s. 238; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

239. Every extra-provincial company resulting from an amalgamation shall obtain a licence to carry on its activities in Québec even if one of the companies that were party to the amalgamation was a licence holder.

1987, c. 95, s. 239.

240. The licence of a company shall be valid until 30 June following its date of issue. It may be renewed each year upon application and on the conditions prescribed by this Act and the regulations of the Government thereunder.

The licence may be issued for a period of less than one year and contain such restrictions and conditions as the Authority deems necessary to give effect to this Act and the regulations thereunder.

1987, c. 95, s. 240; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

241. After the issuance of a licence, the Authority may

(1)  reduce the period of its validity;

(2)  impose such conditions and restrictions as it deems necessary to give effect to this Act and the regulations thereunder;

(3)  change or cancel the conditions or restrictions attached to the licence.

Before exercising its powers under this section, the Authority shall notify the company in writing as prescribed by section 5 of the Act respecting administrative justice (chapter J‐3) and allow the company at least 10 days to present observations.

The Authority shall also give notice in writing of its decision and the reasons therefor to the company.

1987, c. 95, s. 241; 1997, c. 43, s. 769; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

242. Upon issuing a licence, the Authority shall publish a notice in the Gazette officielle du Québec and in the bulletin of the Authority indicating the corporate name and the address of the head office of the company and, as the case may be, the address of its principal place of business, and the name and address in Québec of its chief representative.

The Authority shall publish, before 1 August each year, in the Gazette officielle du Québec and in the bulletin of the Authority, the list of companies whose licences are renewed and those whose licences have not been renewed, and the addresses of their head offices and, as the case may be, of their principal places of business, and the names and addresses in Québec of their chief representatives.

1987, c. 95, s. 242; 2002, c. 45, s. 596; 2004, c. 37, s. 90.

243. The Authority shall

(1)  keep a register of trust companies and savings companies holding licences in which shall be entered the name of each company, the address of its head office, the address of its principal place of business, and the name and Québec address of its chief representative;

(2)  keep a duplicate of every licence issued;

(3)  keep a copy of every power of attorney filed under section 226.

The register and the documents are public.

1987, c. 95, s. 243; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

§ 2 . — Suspension and cancellation of licences

244. The Authority may suspend the licence of any company

(1)  which no longer complies with the conditions prescribed for the issuance of a licence or with the conditions or restrictions attached to its licence;

(2)  whose capital base is insufficient, in the opinion of the Authority, to provide adequate protection of the depositors or to operate efficiently;

(3)  which does not, in the opinion of the Authority, adhere to sound and prudent management practices, in particular those relating to commercial practices;

(4)  which has committed an offence or which, in the opinion of the Authority, contravenes this Act, another Act of Québec, the laws of another province or an Act of the Parliament of Canada which governs its activities or any regulation made under any such Act or law;

(5)  which refuses to authorize the Authority to carry out the examinations and searches he deems necessary in accordance with sections 305 to 308 or fails to honour its commitments under paragraph 1 of section 228 or section 229;

(6)  which contravenes an order or a written direction of the Authority, notwithstanding any appeal or extraordinary recourse in respect of the order or direction, or any injunction issued under section 328.

1987, c. 95, s. 244; 2002, c. 45, s. 597; 2004, c. 37, s. 90.

245. The Authority may cancel the licence of any company whose licence was obtained in reliance on false or inaccurate information and which in its opinion is in an unsatisfactory financial condition that cannot be remedied.

1987, c. 95, s. 245; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

246. The Authority may suspend or cancel the licence of any company whose licence issued by a competent authority other than Québec has been suspended or cancelled. The Authority may review its decision to suspend or cancel any licence.

1987, c. 95, s. 246; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

247. The Authority shall, before ordering the cancellation or suspension of a licence, notify the holder in writing as prescribed by section 5 of the Act respecting administrative justice (chapter J‐3) and allow the holder at least 10 days to present observations. The Authority shall also give notice in writing of its decision to the holder, with the reasons on which it is based.

1987, c. 95, s. 247; 1997, c. 43, s. 770; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

248. The Authority shall also give notice in the Gazette officielle du Québec of any suspension or cancellation of a licence.

1987, c. 95, s. 248; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

249. The licence of any company ceases to have effect where

(1)  its instrument of incorporation is repealed or cancelled or expires, as the case may be;

(2)  a resolution ordering its winding-up has been adopted;

(3)  a winding-up order has been made against it.

1987, c. 95, s. 249; 1999, c. 40, s. 304.

250. A company whose licence has been suspended or cancelled or has not been renewed shall no longer carry on business in Québec except to wind up its business. However, the suspension, cancellation or non-renewal of a licence does not affect the obligations of the company.

1987, c. 95, s. 250.

§ 3 . — Proceeding before the Administrative Tribunal of Québec

1997, c. 43, s. 771.

251. Any company whose application for a licence is refused or whose licence is suspended or cancelled may contest the decision of the Authority before the Administrative Tribunal of Québec.

1987, c. 95, s. 251; 1997, c. 43, s. 771; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

252. The motion must be filed at the secretariat of the Tribunal within 30 days of notification of the contested decision to the applicant.

1987, c. 95, s. 252; 1988, c. 21, s. 66; 1997, c. 43, s. 771.

253. Notwithstanding the second paragraph of section 15 of the Act respecting administrative justice (chapter J-3), the Tribunal may only confirm or quash the contested decision.

1987, c. 95, s. 253; 1988, c. 21, s. 66; 1997, c. 43, s. 771.

254. (Replaced).

1987, c. 95, s. 254; 1997, c. 43, s. 771.

255. (Replaced).

1987, c. 95, s. 255; 1997, c. 43, s. 771.

256. (Replaced).

1987, c. 95, s. 256; 1992, c. 61, s. 588; 1997, c. 43, s. 771.

257. (Replaced).

1987, c. 95, s. 257; 1997, c. 43, s. 771.

258. (Replaced).

1987, c. 95, s. 258; 1988, c. 21, s. 66; 1997, c. 43, s. 771.

259. (Replaced).

1987, c. 95, s. 259; 1997, c. 43, s. 771.

260. (Replaced).

1987, c. 95, s. 260; 1997, c. 43, s. 771.

DIVISION II BOOKS, REGISTERS AND AUDIT

§ 1 . — Books and registers

261. Every Québec company shall keep

(1)  the books and registers necessary for the preparation of statements referred to in sections 287, 293, 299, 300 and 301;

(2)  a register containing the names and addresses of depositors and the amounts of their deposits;

(3)  in the case of a trust company, a register of the operations concerning the property it administers for others;

(4)  any other book or register prescribed by regulation of the Government.

1987, c. 95, s. 261.

262. Every Québec company shall keep at its head office the books and registers contemplated in section 261.

Every extra-provincial company shall keep at its principal place of business in Québec a copy of the books and registers prescribed by regulation of the Government.

1987, c. 95, s. 262.

§ 2 . — Audit

263. Every Québec company shall have its books and accounts audited every year by an auditor who has the qualifications required under this division.

1987, c. 95, s. 263.

264. Every company shall, within 10 days, inform the Authority of the resignation, non-renewal of the mandate or decision to propose the dismissal, during his mandate, of the auditor.

1987, c. 95, s. 264; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

265. If a company fails to have its books and accounts audited in accordance with section 263, the Authority may appoint an auditor to make such audit at the expense of the company.

1987, c. 95, s. 265; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

266. The auditor of a company must be an accountant qualified to practise public accounting. He must be a member in good standing of an institute or association of accountants incorporated under the laws of a province of Canada or a firm of accountants in which one or more of the officers or employees fulfil those requirements.

1987, c. 95, s. 266.

267. The auditor shall be disqualified to act as such where he or an associate or the spouse or child of either living with him or the associate

(1)  is a director or officer of the company or of a legal person affiliated with it;

(2)  holds, directly or indirectly, 10% or more of the voting shares of one class or of all the voting shares of the company or of a legal person affiliated with it or can control the election of a majority of the directors of the company or of a legal person affiliated with it;

(3)  has been the sequestrator, liquidator or trustee in bankruptcy of any legal person affiliated with the company within the two years preceding his appointment as auditor.

The auditor is also disqualified from acting as such where he or an associate is an employee of the company or of a legal person affiliated with the company.

1987, c. 95, s. 267.

268. On the application of any interested person, a judge of the Superior Court may, on such terms as he thinks fit, exempt, even with retroactive effect, an auditor from the application of section 267 if no harm is caused to the shareholders.

1987, c. 95, s. 268.

269. An auditor of a company who ceases to be qualified shall resign forthwith.

1987, c. 95, s. 269.

270. The Authority or any interested person may apply to the Superior Court for the dismissal of an auditor who does not fulfil the requirements of sections 266 and 267.

1987, c. 95, s. 270; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

271. The auditor of a company shall be appointed auditor of its subsidiaries. Where such appointment is not possible, the company shall inform the Authority of the circumstances that prevent such appointment.

The Authority may agree to the appointment of an auditor for the company who is not the auditor of its subsidiary.

1987, c. 95, s. 271; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

272. Every auditor shall have access to all the books, registers and accounts of the company and of the legal persons affiliated with it; every person having custody of those documents must facilitate his examination of them.

The auditor is also entitled to require from the company, from the legal persons affiliated with it, and from their directors, officers, employees and other representatives the information and explanations necessary for the carrying out of his mandate.

1987, c. 95, s. 272.

273. The auditor’s report forms part of the annual report.

1987, c. 95, s. 273.

274. The auditor shall indicate in his report

(1)  whether he has carried out his audit in accordance with generally accepted auditing standards;

(2)  whether, in his opinion, the financial statements give a faithful account of the financial position of the company, the income from its operations and the changes in its financial position according to generally accepted accounting principles applied in the same manner as during the preceding fiscal year;

(3)  any other information prescribed by regulation of the Government.

The auditor shall also give sufficient explanations in his report of any reservations he expresses in the report.

1987, c. 95, s. 274.

275. If, in the normal course of his audit, the auditor acquires knowledge of facts that may lead him to believe that the company is in contravention of this Act or the regulations of the Government thereunder or is engaging in practices that may be harmful to the company’s business, he must report the facts to the board of directors.

1987, c. 95, s. 275.

276. If the board of directors fails to take measures in a reasonable time to remedy the situation, the auditor shall inform the Authority.

This section applies notwithstanding section 9 of the Charter of human rights and freedoms (chapter C‐12).

1987, c. 95, s. 276; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

277. The auditor is entitled to attend any shareholders’ meeting and be heard thereat on any question related to his mandate.

1987, c. 95, s. 277.

278. A director or shareholder of the company may, by means of a notice sent 10 days before the holding of a meeting, convene the auditor. The latter is then bound to attend the meeting.

1987, c. 95, s. 278.

279. Where the directors become aware, after the annual general meeting of shareholders, of facts that may have entailed important amendments to the company’s financial statements, they shall forthwith inform the auditor and send him financial statements amended accordingly.

1987, c. 95, s. 279.

280. If the auditor is notified or becomes aware of an error or misstatement in a financial statement on which he reported, and if in his opinion the error or misstatement is material, he shall inform each director accordingly.

The directors who are informed of the error or misstatement shall, within 60 days, prepare and publish amended financial statements or inform the shareholders and the Authority accordingly.

Where the auditor considers it necessary to amend his report, the board of directors shall send the shareholders a copy of the amended report within 15 days of receiving it.

1987, c. 95, s. 280; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

281. An auditor who in good faith makes a report under section 275 or 276 shall not be liable in any civil action arising therefrom.

1987, c. 95, s. 281.

§ 3 . — Audit committee

282. Every Québec company shall form an audit committee within its board of directors. The committee shall be composed of not less than three directors, the majority of whom are not officers, employees of the company or of a legal person affiliated with it or shareholders holding 10% or more of the shares of any class or of all the shares of the company or of a legal person affiliated with it.

The committee shall examine every financial statement intended for the shareholders and the annual statement referred to in section 293 before they are approved by the board of directors or certified by two directors.

The committee shall also examine every auditor’s report contemplated in section 275 and any matter prescribed by regulation of the Government.

1987, c. 95, s. 282.

283. The audit committee may be convened by one of its members, by the auditor or by a director. The auditor shall attend any meeting to which he is convened to answer any questions relating to his mandate.

At the request of the auditor, the chairman of the audit committee shall call a meeting of the committee on matters which, in the auditor’s opinion, ought to be submitted to the directors or shareholders.

1987, c. 95, s. 283.

284. The committee shall cause any error or misstatement in a financial statement to be corrected and inform the general meeting thereof.

1987, c. 95, s. 284.

285. The audit committee shall each year transmit a report of its activities to the Authority to the close of the last fiscal period of the company.

The report shall be transmitted within two months from the closing date. It must indicate the composition of the committee, any changes in its membership and the content of any mandate entrusted to it.

1987, c. 95, s. 285; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION III ANNUAL REPORT TO THE SHAREHOLDERS

286. The fiscal period of a Québec company shall end on 31 December each year. The Authority may, on the application of a company, allow the fiscal period to end at the expiration of the last day of a different month.

1987, c. 95, s. 286; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

287. The accounts of a Québec company shall be closed at the end of the fiscal period and, during the ensuing two months, the board of directors shall prepare the annual report, which shall set forth, in particular,

(1)  the names and addresses of the directors;

(2)  the consolidated financial statements, including a statement of assets and liabilities, a statement of transactions with an income statement, a statement of changes in the cash on hand and a statement of retained earnings, presented on a comparative basis with the statements for the corresponding period of the preceding fiscal period;

(3)  the report of the auditor on the consolidated financial statements referred to in paragraph 2;

(4)  the unconsolidated financial statements of the company;

(5)  any other information required by the instrument of incorporation, the regulations of the Government or the company by-laws.

1987, c. 95, s. 287.

288. The financial statements shall be prepared in accordance with generally accepted accounting principles, subject to this Act and the regulations of the Government thereunder.

The company shall take into account in the financial statements presented by it to its shareholders or distributed by it to the public the value assigned to certain property under sections 319 to 323.

1987, c. 95, s. 288.

289. The financial statements contemplated in paragraph 2 of section 287 must be approved by the board of directors and the approval shall be evidenced by the signature of two directors designated by the board of directors.

1987, c. 95, s. 289.

290. The annual report shall be submitted to the annual general meeting of shareholders.

1987, c. 95, s. 290.

291. No company may publish or circulate the statements contemplated in paragraph 2 of section 287 unless they have been approved and signed in accordance with section 289 and are accompanied by the report of the auditor of the company.

1987, c. 95, s. 291.

292. Every holder of debt securities issued by the company and every depositor applying therefor in writing may obtain a copy of the annual report of the company free of charge; the company must give such a copy to the applicant.

1987, c. 95, s. 292.

DIVISION IV ANNUAL STATEMENT FOR THE AUTHORITY

2002, c. 45, s. 598; 2004, c. 37, s. 90.

293. Every company shall prepare each year a statement of the position of its affairs to the date of the close of its last fiscal period. The statement shall be presented on the form provided by the Authority.

The statement shall also contain any other information required by the Act respecting the legal publicity of sole proprietorships, partnerships and legal persons (chapter P‐45) for the annual updating of information relating to a registered legal person.

The company shall transmit the statement, with the auditor’s report on the statement, to the Authority within two months of the date to which the annual statement refers or on any later date approved by the Authority.

The Authority shall transmit to the enterprise registrar the information referred to in the second paragraph.

1987, c. 95, s. 293; 1993, c. 48, s. 489; 2002, c. 45, s. 599; 2004, c. 37, s. 90.

294. The annual statement of a company must be certified by at least two of its directors and must be accompanied with the consolidated and unconsolidated financial statements of the company and of its subsidiaries.

1987, c. 95, s. 294.

295. The auditor’s report on the annual statement of a Québec company shall indicate

(1)  whether he has performed his work in accordance with generally accepted auditing standards;

(2)  whether, in his opinion, the financial statements appearing in the annual statement give a faithful account of the financial position of the company, the income from its operations and the changes in its financial position in accordance with generally accepted accounting principles applied in the same manner as in the preceding fiscal period;

(3)  whether, in his opinion, the method used to present particulars that affect the security of the depositors is adequate;

(4)  whether, in the normal course of his audit, he has become aware of situations or transactions leading him to believe that the company has not adhered to sound and prudent management practices;

(5)  whether, in his opinion, the methods of management adopted by the company concerning the administration and safekeeping of property administered for other persons are adequate and whether the controls over such property are effective;

(6)  whether, in his opinion, the methods of management adopted by the company to comply with the law as regards self-dealing and conflicts of interest are adequate and whether the company is complying therewith;

(7)  any other information prescribed by regulation of the Government.

1987, c. 95, s. 295; 2002, c. 45, s. 600.

296. The Authority may order that the annual audit of the operations of a company be carried on or extended or that a special audit be made.

For such purposes, the Authority may appoint an auditor to carry out the audit at the company’s expense.

1987, c. 95, s. 296; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

297. Every company shall, at the request of the Authority, make a report indicating the names and addresses of the persons authorized to represent it in Québec and of the persons it has remunerated or promised to remunerate for having acted in that capacity.

1987, c. 95, s. 297; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

298. The Authority may require the board of directors of a company to examine a request for information at its next meeting.

The letter of the Authority and the reply of the company thereto shall be attached to the minutes of the meeting. A certified copy of the extract from the minutes shall be sent to the Authority and to all the directors within 30 days of the meeting.

1987, c. 95, s. 298; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

299. On 30 June and 31 December each year, every company shall prepare statements showing the changes in investments and loans of the company during the preceding half year.

1987, c. 95, s. 299.

300. Every company shall prepare a statement of its assets and liabilities as at 31 March, 30 June, 30 September and 31 December each year, indicating the type and date of maturity thereof.

The company shall also prepare statements of its liquid assets as at the dates set out in the first paragraph.

1987, c. 95, s. 300.

301. Every company shall also prepare quarterly financial statements, including a statement of assets and liabilities, the statement of transactions with an income statement and the statement of retained earnings. These statements shall be presented on a comparative basis with the statements for the corresponding period of the preceding fiscal period, and shall be accompanied with a statement establishing the debt ratio on the last day of the quarter.

1987, c. 95, s. 301.

302. The statements contemplated in sections 299, 300 and 301 shall be sent to the Authority within 30 days after the date in respect of which they are prepared. Those contemplated in sections 299 and 300 shall be presented on the forms provided by the Authority.

1987, c. 95, s. 302; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

303. Every company and, where such is the case, the legal person by which it is controlled shall transmit to the Authority a copy of every financial statement furnished to its shareholders within five days after the distribution of the statement to the shareholders.

1987, c. 95, s. 303; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

304. Every company shall, in addition to the statements and information required by this Act and the regulations thereunder, provide to the Authority, at its request, such statements, statistics, other information and reports as it deems appropriate, on the dates and in the form the Authority determines.

1987, c. 95, s. 304; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION V INSPECTION

305. The Authority shall, at least once a year, carry out or commission such examination and search as it considers necessary or expedient into the internal affairs and activities of a company.

The Authority may, in the case of an extra-provincial company, accept instead of the inspection, the report of an inspection into the company made by another competent administrative authority.

1987, c. 95, s. 305; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

306. In order to facilitate an examination, audit or inspection of the books and registers of a company, the Authority may require it to produce the books and records at its principal place of business in Québec, or at such other place as it may direct.

1987, c. 95, s. 306; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

307. The Authority may address any inquiries to a company or an officer of a company for the purpose of investigating a complaint directly or indirectly involving the company.

The company or the officer shall reply promptly in writing to the Authority’s inquiries.

1987, c. 95, s. 307; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

308. The Authority or a person it designates in writing to represent the Authority may, in carrying out an inspection,

(1)  enter the place of business of a company or of its subsidiary at any reasonable time;

(2)  examine and make copies from the books, registers, accounts, records and other documents with respect to the activities of a company or of its subsidiary;

(3)  require any information or document with respect to the administration of this Act.

Every person entrusted with the keeping, possession or supervision of the books, registers, accounts, records and other documents shall communicate them to the Authority or its representative at the request of either and facilitate examination of them.

1987, c. 95, s. 308; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

309. The Authority or its representative, in exercising its powers of inspection, may, if it has reasonable grounds to believe an offence has been committed under this Act or another Act under the administration of the Authority or a regulation of the Government thereunder, seize any relevant document provided it leaves a copy with the person from whom it is seized; the Authority shall have the safekeeping of the seized document.

The Authority shall not detain the seized document for over 90 days unless proceedings are instituted within that time. The chief judge of the Court of Québec or the judge he designates may order the detention period reduced or extended for a further 90 days.

1987, c. 95, s. 309; 1988, c. 21, s. 66; 1992, c. 61, s. 589; 1995, c. 42, s. 60; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

310. The Authority or its representative shall produce identification on request and produce a certificate of quality when exercising powers under sections 308 and 309.

1987, c. 95, s. 310; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

311. No person may hinder the work of any person exercising his powers under sections 308 and 309, or mislead or attempt to mislead him.

1987, c. 95, s. 311.

312. The Authority may order an inquiry into any matter within its jurisdiction, if it is of the opinion that the public interest requires it.

The Authority and any person appointed by it in writing have the powers and immunity of commissioners appointed under the Act respecting public inquiry commissions (chapter C‐37), except the power to order imprisonment.

1987, c. 95, s. 312; 1992, c. 61, s. 590; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION VI REPORT OF THE AUTHORITY

2002, c. 45, s. 601; 2004, c. 37, s. 90.

313. The Authority must, no later than 31 July of each year, submit a report on the financial position of the companies to the Minister. Such report shall include all the information that the Authority considers appropriate.

1987, c. 95, s. 313; 2002, c. 45, s. 602; 2004, c. 37, s. 90.

314. The Minister shall table the Authority’s report on the state of the affairs of companies in Québec in the National Assembly within 30 days of its receipt or, if the Assembly is not sitting, within 30 days of resumption.

1987, c. 95, s. 314; 2002, c. 45, s. 603; 2004, c. 37, s. 90.

DIVISION VII GUIDELINES AND ORDERS OF THE AUTHORITY

2002, c. 45, s. 604; 2004, c. 37, s. 90.

314.1. The Authority may, after consulting with the Minister, issue guidelines applicable to companies.

The guidelines are not regulations. They are indicative of the exercise of the discretionary powers conferred on the Authority by this Act concerning:

(1)  the adequacy of the capital base;

(2)  the adequacy of liquid assets;

(3)  the policy that companies must adopt in compliance with section 153.1;

(4)  any other sound and prudent management practices, in particular those relating to commercial practices.

2002, c. 45, s. 605; 2004, c. 37, s. 90.

314.2. A company that does not comply with the guidelines is presumed, for the purposes of sections 328 and 337 to 349, not to be adhering to sound and prudent management practices.

2002, c. 45, s. 605.

315. Where, in the opinion of the Authority, a company or other person contemplated in section 107 does not adhere to sound and prudent management practices or is not complying with this Act, the regulations of the Government thereunder, a voluntary compliance program or an undertaking given under this Act, the Authority may order the company or person to cease such practices and to remedy the situation.

The Authority shall, as prescribed by section 5 of the Act respecting administrative justice (chapter J‐3), notify the company or person contemplated in section 107 at least 15 days in advance, indicating the reasons in support of the order, the date on which the order takes effect and the right of interested persons to present observations.

1987, c. 95, s. 315; 1997, c. 43, s. 772; 2002, c. 45, s. 606; 2004, c. 37, s. 90.

316. Where in the opinion of the Authority the interests of the company, depositors or beneficiaries may be gravely affected by any delay resulting from allowing the company or any other person time to present observations, the Authority may, without prior notice, make an order.

The company or any other person contemplated in the order may, within six days of receipt thereof, present observations to the Authority.

1987, c. 95, s. 316; 1997, c. 43, s. 773; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

317. The Authority shall send a copy of the order to each director of the company.

1987, c. 95, s. 317; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

318. The Authority may revoke an order made under this division.

1987, c. 95, s. 318; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION VIII APPRAISAL OF ASSETS

319. Where the Authority is of the opinion that the value assigned by a Québec company to an immovable property held by the company or by its subsidiary is too high, the Authority may require the company to cause an appraiser approved by the Authority to appraise the property or cause it to be appraised itself. Following the appraisal, the Authority may assign the value it deems appropriate to the immovable property or change the book value of the investment of the company in its subsidiary.

1987, c. 95, s. 319; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

320. Where the Authority is of the opinion that the value of an immovable property securing a claim of a Québec company or its subsidiary is less than the amount of the loan granted, including accrued and current interest, or where the Authority considers the immovable property to be insufficient security, it may require the company to cause an appraiser approved by it to appraise the property or cause it to be appraised itself. Following the appraisal, the Authority may reduce the book value of the loan or change the book value of the investment of the company in its subsidiary to an amount that in its opinion may be realized on that security.

1987, c. 95, s. 320; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

321. Where the Authority is of the opinion that the market value of any other asset of a Québec company or of its subsidiary is less than the book value, the Authority may require the company to cause an appraiser approved by it to appraise that asset or cause it to be appraised itself. Following the appraisal, the Authority may reduce the book value of the company to the value determined by the appraisal or change the book value of the investment of the company in its subsidiary.

1987, c. 95, s. 321; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

322. Before requiring an asset to be appraised or appraising it itself in accordance with section 319, 320 or 321, the Authority shall notify the company in question of its intention and give it a reasonable opportunity to present observations. The Authority must do the same before assigning a different value from that proposed by the appraiser approved by it.

The Authority must give notice in writing to the company and to its auditor of any assignment or reduction of value pursuant to section 319, 320 or 321.

1987, c. 95, s. 322; 1997, c. 43, s. 774; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

323. Every appraisal made under section 319, 320 or 321 shall be at the expense of the company, unless the Authority decides otherwise.

1987, c. 95, s. 323; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION IX VOLUNTARY COMPLIANCE PROGRAM

324. Where, in the opinion of the Authority, a Québec company is having financial difficulties such that it may become insolvent, the company may, with the approval of the Authority, adopt a voluntary compliance program to remedy the situation.

1987, c. 95, s. 324; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

325. The voluntary compliance program shall be in writing and must be approved by the Authority prior to its implementation.

1987, c. 95, s. 325; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

326. Notwithstanding the approval of a voluntary compliance program, the Authority may issue the order contemplated in section 315 if the Authority deems it expedient.

1987, c. 95, s. 326; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

327. The Authority may, upon the application of the company, approve any alteration to the voluntary compliance program.

1987, c. 95, s. 327; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION X INJUNCTION

328. The Authority may, by a motion, apply to a judge of the Superior Court for an injunction in respect of any matter relating to this Act or the regulations of the Government thereunder.

The motion for an injunction is an action.

The procedure prescribed in the Code of Civil Procedure (chapter C‐25) applies, except that the Authority cannot be required to give security.

1987, c. 95, s. 328; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION XI FREEZE ORDERS

329. The Authority may, in view of or in the course of an investigation pursuant to section 9.1 of the Act respecting the enterprise registrar (chapter R‐17.1) or where the Authority has suspended or cancelled or is about to suspend or cancel a licence or where a complaint has been made or is about to be made by reason of an offence under this Act or the regulations of the Government thereunder, order the person who is or is about to be investigated, the company that is the object of the complaint or whose licence has been or is about to be suspended or cancelled, any person being a party to an offence under this Act or the regulations of the Government thereunder or any other person who has in his possession, in safekeeping or under his control assets of the company or assets he holds or administers for others, not to dispose of those assets or the refrain from withdrawing those assets from the person having them on deposit, under control or in safekeeping.

1987, c. 95, s. 329; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

330. The order is effective for a renewable period of 90 days from the time the person concerned is notified.

1987, c. 95, s. 330.

331. Every person contemplated in an order because he has the safekeeping or possession of assets of the person concerned shall, if he has rented or placed a safe deposit box at the disposal of the person, notify the Authority.

At the request of the Authority, the person contemplated in the order shall break open the safe deposit box in the presence of a witness certified by the Authority, draw up an inventory of the contents in triplicate, and give one copy to the Authority and one copy to the person concerned.

1987, c. 95, s. 331; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

332. No order applies to funds or securities in a clearing-house or with a transfer agent, unless the order so states.

1987, c. 95, s. 332.

333. Where an order concerns a bank or a foreign authorized bank listed in Schedule I, II or III to the Bank Act (Statutes of Canada, 1991, chapter 46) or a company, it applies only to the places of business mentioned therein.

1987, c. 95, s. 333; 2002, c. 45, s. 607.

334. An order applies also to funds, securities and other assets received after the effective date of the order.

1987, c. 95, s. 334.

335. Every person concerned by an order may apply to the Authority for clarification as regards the funds, securities or other assets contemplated by the order.

1987, c. 95, s. 335; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

336. The Authority may notify the registry office of the order for registration.

An order registered under this section may be set up against any person whose right is registered subsequently.

1987, c. 95, s. 336; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

DIVISION XII PROVISIONAL ADMINISTRATION, CONTROL AND POSSESSION OF ASSETS

337. The Authority or, at its request or if it is absent or unable to act, any person designated by the Minister may provisionally assume the administration of a company or, in the case of an extra-provincial company, take control or possession of its assets in Québec for a period of seven working days if the Authority has reason to believe

(1)  that the assets have been misappropriated or that there is an inexplicable deficiency in the assets;

(2)  that there has been a serious offence, especially malfeasance or breach of trust by one or more directors, or that the board of directors has been seriously remiss in the performance of the obligations imposed upon it by this Act or the regulations of the Government thereunder or engages in administrative practices which endanger the rights of shareholders, depositors or beneficiaries or that the assets or controls over the assets are insufficient to provide adequate protection of the rights of the shareholders, depositors or beneficiaries.

The Authority or the person designated by the Minister may authorize any person to perform the functions contemplated in the first paragraph.

1987, c. 95, s. 337; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

338. The Minister may extend the period prescribed in section 337.

1987, c. 95, s. 338.

339. When assuming provisional administration of a company or the control and possession of its assets, the Authority or the person designated by the Minister to perform such functions shall, as soon as possible, present a complete report of his findings to the Minister, together with his recommendations.

1987, c. 95, s. 339; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

340. The costs, fees and expenses incurred by the provisional administration or by the control and possession of assets shall be assumed by the company which is subject to it unless the Minister orders otherwise.

1987, c. 95, s. 340.

341. If the report of the Authority or the person designated by the Minister confirms the existence of any situation contemplated in section 337, the Minister shall submit it to the Government after giving the company an opportunity to present observations.

The Minister may, where it is imperative to do so and after obtaining the advice of the Authority, submit the report to the Government before having allowed the company to present observations, provided that the company is given the opportunity to do so within 15 days of submission of the report.

1987, c. 95, s. 341; 1997, c. 43, s. 775; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

342. Before submitting the report to the Government, the Minister may make any inquiry he deems expedient.

1987, c. 95, s. 342.

343. The company may present observations to any public servant designated by the Minister.

1987, c. 95, s. 343; 1997, c. 43, s. 776.

344. The Minister shall attach to the report of the Authority or the person designated by him a summary of the representations that the company has made to him and his own recommendations.

1987, c. 95, s. 344; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

345. The Authority or, at its request, in its absence or if the Authority is unable to act, any person designated by the Minister may also assume provisional administration of any Québec company or, in the case of an extra-provincial company, take control and possession of its assets in Québec

(1)  if the licence of the company has been cancelled;

(2)  if the licence of the company has been suspended and the causes of the suspension have not been remedied within 30 days of its taking effect;

(3)  if in the opinion of the Authority the company is carrying on any activity without the required licence.

Sections 339 to 344, adapted as required, also apply to the provisional administration or the taking of control prescribed under this section.

1987, c. 95, s. 345; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

346. When the Authority or the person designated by the Minister assumes administration of a company, the powers of the board of directors of the company are suspended and the Authority or the person designated by the Minister shall assume the powers thereof and those of the general meeting.

In no case may the Authority or the person designated by the Minister be prosecuted by reason of any act performed in good faith in carrying out duties.

1987, c. 95, s. 346; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

347. After receiving the report from the Minister, the Government may take one or more of the following measures:

(1)  terminate the provisional administration or the control and possession of the assets;

(2)  declare the directors of the company forfeited of office and order the holding of an special meeting of shareholders to elect new directors;

(3)  order, on the conditions it determines, the winding-up of the company and appoint a liquidator.

Every member of the board of directors forfeited of office pursuant to this section is disqualified for office as a director for a period of five years.

1987, c. 95, s. 347; 1999, c. 40, s. 304.

348. The decision of the Government ordering the winding-up of the company has the same effect as an order made by a judge of the Superior Court under section 24 of the Winding-up Act (chapter L-4). Sections 161 to 168 of this Act apply, adapted as required.

Notwithstanding the foregoing, the Government may terminate the winding-up if the interests of the depositors, beneficiaries or shareholders justify it.

1987, c. 95, s. 348.

349. No appeal lies from the order in the case of such a winding-up.

1987, c. 95, s. 349.

CHAPTER XVII REGULATIONS

350. The Government, by regulation, may for the purposes of this Act determine which assets or liabilities may be added to or subtracted from the shareholders’ equity to determine the capital base of a company, what assets the capital base is composed of and their relative proportions, the conditions and restrictions attached to different assets and liabilities and to the other components of the capital base, and define the expressions “overdue loan” and “unproductive investment” for the purposes of section 212.

1987, c. 95, s. 350.

351. The Government, by regulation, may also prescribe

(1)  the fees exigible for the constitution of a company as a legal person, issuance of letters patent or supplementary letters patent, licences and licence renewals;

(2)  the fees exigible for any formality or measure prescribed by this Act or the regulations thereunder;

(3)  the documents and information that must be transmitted to the Minister or the Authority in addition to those required by the Act, the date or the prescribed time for their transmission, the form and content of such documents and the number of copies required;

(4)  when and how depositors must be informed of the fees relating to their deposits and the other requirements for their valid information;

(5)  when and how depositors must be informed of the rates of interest on their deposits and the mode of computing interest and the other requirements for their valid information;

(6)  the matters that may be the object of contracts between a company or its subsidiary and a restricted person, the standards governing such contracts and the conditions under which they may be entered into;

(7)  the conditions and restrictions governing the circulation of information within a company or between a company and a restricted person, in view of reducing the risk of conflicts of interest;

(8)  the terms and conditions governing declarations of interests under section 138, and the matters which must be declared;

(9)  the conditions and limits to the exercise of the activities of a company;

(10)  the standards of protection of the public and confidentiality of information where a company offers for sale the products of a financial institution;

(11)  the standards governing arrangements between a company and a financial institution for the sale of products of the latter, and the conditions under which they may be made;

(12)  the conditions respecting the custody of property by a company, including its own property and the property it holds for others, or by a third person for the company, and respecting the keeping of the pertinent records;

(13)  standards and conditions for the creation of a mutual investment fund by a company, the composition and administration and membership of the fund and authorized investments;

(14)  other cases where, in respect of paragraph 5 of section 191, a company may give security on its property or, as the case may be, on property charged with payment of deposits;

(15)  the additional information that must be indicated in the notice to be given by a company to the Authority pursuant to section 192;

(16)  the terms, conditions, restrictions and limits respecting the subordinated loans which a company may accept and the bonds or other debt securities that it may issue and the conditions and restrictions in respect of the issue of such bonds or debt securities and in respect of the acceptance or transfer of such subordinated loans;

(17)  standards of adequacy of the capital base and liquidity of a company;

(18)  the undertakings that must be posted to the liabilities of a company for the purposes of section 198;

(19)  the conditions and restrictions as to investment of the excess amounts contemplated in section 199;

(20)  conditions, restrictions and prohibitions respecting the exercise of the loan and investment powers of a company or its related financial and administrative practices, applicable to all loans and investments or any specified category thereof or any specified kind of loan or investment of that category and, where a condition or limit is imposed by this Act, prescribe more stringent conditions or limits;

(21)  the time allowed a company whose loans and investments do not fulfil the requirements of this Act and the regulations thereunder at the coming into force of this Act to comply therewith;

(22)  the securities not taken into account in establishing the amount contemplated in section 207;

(23)  the conditions to be met by a company and by a subsidiary contemplated in section 218 in order for the latter to be held by the company;

(24)  the conditions for the issuance and renewal of licences;

(25)  the books and registers to be kept by a Québec company, and the content of such registers;

(26)  the books and registers of which copies must be kept by an extra-provincial company in its principal place of business in Québec;

(27)  the additional information that must be indicated by the auditor in the reports contemplated in sections 274 and 295;

(28)  any matter that must be examined by the audit committee pursuant to section 282;

(29)  the cases where the Authority may or must communicate information to the auditor, the audit committee and the board of directors of a company, and the nature of such information;

(30)  the cases where the auditor, the members of the board of directors, the officers and the members of the audit committee of a company may or must communicate information to the Authority and the nature of such information;

(31)  the additional information that must appear in the annual report of a company to the shareholders;

(32)  the mode of calculating the gross income of a company in Québec for the purposes of section 406;

(33)  the provisions of the regulations under this section which it will be an offence to contravene;

(34)  the form and content of financial statements;

(35)  the policy that companies must adopt in compliance with section 153.1 or elements of such policy.

1987, c. 95, s. 351; 1999, c. 40, s. 304; 2002, c. 45, s. 608; 2004, c. 37, s. 90.

CHAPTER XVIII PENAL PROVISIONS

352. Every person who contravenes any of sections 60, 62, 64, 65, 67, 68, 69, 72, 77, 117, 120, 134, 140, 141, 142, 143, 144, 145, 149, 150, 152, 164, 180, the second paragraph of section 187, any of sections 191, 195, 201, 217, 220, 221, 262, 263, 275, 282, the second paragraph of section 288 or section 291, 292 or 382 is guilty of an offence.

1987, c. 95, s. 352.

353. Every company that makes a loan or investment or enters into any other contract in contravention of this Act or the regulations thereunder and every director who authorizes such a loan, investment or other contract is guilty of an offence.

1987, c. 95, s. 353.

354. Every legal person, other than a company holding a licence, that carries on any of the activities described in sections 1 and 2 is guilty of an offence.

1987, c. 95, s. 354.

355. Every director or officer of a company or of a legal person affiliated with it who is party to an act prohibited under section 120 or who participated in the decision of the company or of the subsidiary is guilty of an offence. The same is true of every person holding 10% or more of the voting rights in a company and every shareholder of the company holding 10% or more of the voting rights in a legal person affiliated with the company.

1987, c. 95, s. 355.

356. Every person who knowingly gives the Minister, the Authority or any other person false or misleading information required under this Act or the regulations of the Government thereunder is guilty of an offence.

1987, c. 95, s. 356; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

357. Every person who neglects or refuses to supply information or documents required under this Act or the regulations of the Government thereunder is guilty of an offence.

1987, c. 95, s. 357.

358. Every person who knowingly makes a false or misleading entry in a book or register is guilty of an offence.

1987, c. 95, s. 358.

359. Every person who refuses or neglects to make, in a book or register, an entry required under this Act or a regulation of the Government thereunder is guilty of an offence.

1987, c. 95, s. 359.

360. Every person who hinders or attempts to hinder in any way a person who performs an act required under this Act or a regulation of the Government thereunder or authorized by it is guilty of an offence.

1987, c. 95, s. 360.

361. Every person who fails to comply with a written direction given by the Authority under this Act is guilty of an offence.

1987, c. 95, s. 361; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

362. Every person who contravenes a provision of a regulation that it is an offence to contravene, pursuant to paragraph 33 of section 351, is guilty of an offence.

1987, c. 95, s. 362.

363. Every person found guilty of an offence described in sections 352 to 362 is liable to a fine of not less than $200 nor more than $2 000 in the case of a natural person and of not less than $600 nor more than $30 000 in the case of a legal person. However, persons contemplated in section 355 are liable to the fines prescribed for a legal person, whether found guilty or not.

In the case of a second or subsequent conviction, the minimum and maximum fines for a first offence shall be doubled.

In determining the fines, the court shall take particular account of the damage involved and the benefits derived as a result of the commission of the offence.

1987, c. 95, s. 363; 1990, c. 4, s. 837.

364. Every person who, by act or omission, aids another in committing an offence may be found guilty of the offence as if he had committed it himself, if he knew or should have known that his act or omission would probably result in aiding in the commission of the offence.

1987, c. 95, s. 364.

365. Every person who abets, counsels or commands another to commit an offence may be found guilty of the offence and of any other offence committed by the other as a result of the abetment, counsel or command, if he knew or should have known that his action would probably result in the commission of the offence.

1987, c. 95, s. 365.

366. (Repealed).

1987, c. 95, s. 366; 1990, c. 4, s. 838; 1992, c. 61, s. 591.

367. In any proceedings brought under this Act, the documents prescribed thereunder that appear to have been signed, furnished or produced by the accused are deemed to have been so in fact.

1987, c. 95, s. 367.

CHAPTER XIX AMENDMENTS

368. (Amendment integrated into c. A-26, s. 1).

1987, c. 95, s. 368.

369. (Amendment integrated into c. A-26, s. 25 — French).

1987, c. 95, s. 369.

370. (Amendment integrated into c. A-26, s. 28).

1987, c. 95, s. 370.

371. (Amendment integrated into c. A-26, s. 31.1).

1987, c. 95, s. 371.

372. (Amendment integrated into c. A-26, s. 31.4).

1987, c. 95, s. 372.

373. (Amendment integrated into c. A-26, s. 34.2).

1987, c. 95, s. 373.

374. (Amendment integrated into c. A-26, s. 43).

1987, c. 95, s. 374.

375. (Amendment integrated into c. C-38, s. 6).

1987, c. 95, s. 375.

376. (Amendment integrated into c. C-38, s. 124).

1987, c. 95, s. 376.

377. (Amendment integrated into c. C-46, s. 2).

1987, c. 95, s. 377.

378. (Amendment integrated into c. R-22, s. 2).

1987, c. 95, s. 378.

379. (Amendment integrated into c. R-22, s. 4).

1987, c. 95, s. 379.

380. (Amendment integrated into c. S-30, s. 1).

1987, c. 95, s. 380.

CHAPTER XX MISCELLANEOUS AND TRANSITIONAL PROVISIONS

381. (Repealed).

1987, c. 95, s. 381; 1993, c. 48, s. 490.

382. A company whose loans or investments do not comply with this Act on 18 May 1988 has two years from that date to conform.

The Authority may extend the period, for such time and on such conditions as it determines, if the Authority considers it expedient.

1987, c. 95, s. 382; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

383. A société d’entraide économique governed by the Act respecting the sociétés d’entraide économique (chapter S-25.1) may be continued as a savings company governed by this Act in accordance with sections 48 to 58 and upon such conditions as the Minister may impose.

1987, c. 95, s. 383.

384. Section 52 of the Act respecting the sociétés d’entraide économique (chapter S-25.1) continues to apply to a société d’entraide économique continued as a savings company.

Section 60 of the said Act, as well as any regulation thereunder, continues to apply in respect of shares held at the time of the continuation.

1987, c. 95, s. 384.

385. Notwithstanding section 9 of the Charter of human rights and freedoms (chapter C‐12), the auditor of a company may or shall transmit information to the Authority in accordance with the provisions of the regulations made under this Act.

1987, c. 95, s. 385; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

386. Any document the service of which is prescribed by this Act may be sent by certified or registered mail to the last known address of the person for whom it is intended.

1987, c. 95, s. 386.

387. Any written proceeding may be validly served on the chief representative of an extra-provincial company whose head office is not in Québec at the address indicated in the power of attorney.

1987, c. 95, s. 387.

388. It shall not be necessary in any proceedings to produce the original of any book, document, order or register in the possession of the Authority; a copy or extract certified true by it shall be sufficient proof of the original.

1987, c. 95, s. 388; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

389. The production of the affidavit of a member of the personnel of the Authority makes proof before the court of the signature and quality of the signatory.

1987, c. 95, s. 389; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

390. A document signed by the Authority attesting the existence or lack of a licence makes proof of its content.

1987, c. 95, s. 390; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

391. The Authority may, of its own motion and without notice, intervene in any civil action respecting a provision of this Act or the regulations of the Government thereunder to take part in the investigation or hearing as if the Authority were a party.

1987, c. 95, s. 391; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

392. The Authority may extend the time prescribed under this Act or a regulation of the Government thereunder for the furnishing of information or transmission of documents.

1987, c. 95, s. 392; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

393. The Authority has all the necessary powers for the administration of this Act and the regulations of the Government thereunder. The Authority may, in particular,

(1)  enter into agreements with companies respecting their management;

(2)  accept undertakings from extra-provincial companies and enter into agreements with them;

(3)  enter into agreements with third persons according to law respecting the administration of this Act, particularly with regard to section 305.

1987, c. 95, s. 393; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

394. The Authority may act out of Québec for the administration of this Act.

1987, c. 95, s. 394; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

395. No person employed by the Government or authorized by the Authority to exercise powers of inspection and investigation shall disclose or allow the disclosure to anyone of any information obtained by virtue of this Act or the regulations of the Government thereunder nor allow any document produced by virtue thereof to be examined except so far as authorized by the Authority. The same applies to any information or document relating to the application of guidelines and provided voluntarily to the Authority.

Notwithstanding sections 9, 23, 24 and 59 of the Act respecting Access to documents held by public bodies and the Protection of personal information (chapter A‐2.1), only a person generally or specially authorized by the Authority itself may have access to information or a document contemplated in the first paragraph.

No person may be prosecuted on the basis of information transmitted in good faith to the Authority in accordance with this Act.

1987, c. 95, s. 395; 2002, c. 70, s. 175; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

396. (Repealed).

2002, c. 45, s. 609.

397. The Minister shall not later than 18 May 1993 make a report to the Government on the implementation of this Act, and thereafter, every five years, on the advisability of maintaining in force and, if necessary, of amending it.

The report must be tabled within the following 15 days before the National Assembly or, if it is not sitting, the report must be filed with the President of the National Assembly.

1987, c. 95, s. 397.

398. The register of trust companies kept at the office of the Inspector General under the Trust Companies Act (chapter C-41) becomes the Register of trust companies and savings companies.

1987, c. 95, s. 398.

399. Trust companies holding a certificate of registration under the Trust Companies Act (chapter C-41) on 18 May 1988 are deemed to hold on that date a licence issued under this Act to carry on business as a trust company, subject to the conditions or restrictions on the certificate.

1987, c. 95, s. 399.

400. Legal persons registered with the Régie de l’assurance-dépôts du Québec on 18 May 1988 that are savings companies by virtue of this Act are deemed to hold on that date a licence issued under this Act to carry on business as a savings company.

1987, c. 95, s. 400.

401. Notwithstanding sections 399 and 400, the Authority may issue a licence to a company including conditions or restrictions to the exercise of its activities, if the Authority deems it expedient for the administration of this Act.

1987, c. 95, s. 401; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

402. In any Act, or statutory instrument, or in any contract or other document,

(1)  a reference to the Trust Companies Act (chapter C-41) or to any of its provisions is considered to be a reference to this Act or to the equivalent provision of this Act;

(2)  the expression “compagnie de fidéicommis” or “compagnie de fiducie” means a “société de fiducie”;

(3)  the expression “registered trust company” means “licensed trust company”;

(4)  the expression “certificate of registration” where it means a certificate under the Trust Companies Act means a licence issued to a trust company under the Act respecting trust companies and savings companies (chapter S-29.01);

(5)  the expression “company incorporated by an Act of the Legislature or authorized to carry on its activities in Québec” or the expression “loan and investment society incorporated under an Act of Québec or registered in accordance with the Loan and Investment Societies Act” or “loan society incorporated by an Act of the Legislature or authorized to carry on business in Québec under the Loan and Investment Societies Act” means, as the case may be, “a savings company holding a licence under the Act respecting trust companies and savings companies and a loan and savings society registered in accordance with the Loan and Savings Societies Act”.

1987, c. 95, s. 402.

403. Every Québec company shall, if its fiscal period does not, on 9 June 1988, correspond to the calendar year, extend its fiscal period to the end of the calendar year, subject to section 286.

1987, c. 95, s. 403.

404. Sections 86 and 87, paragraphs 5 and 6 of section 91 and section 105 do not apply to directors in office on 18 May 1988 until 18 May 1991.

1987, c. 95, s. 404.

405. The sums required for the administration of this Act shall be taken, for the fiscal year 1987-88 and so far as the Government may determine, out of the Consolidated Revenue Fund.

1987, c. 95, s. 405.

406. The expenditures incurred for the administration of this Act, as determined each year by the Government shall be charged to the companies holding licences. These expenditures shall be calculated in respect of each company on the basis of a minimum share fixed each year by the Government and in accordance with the ratio of the gross revenues of the company in Québec during the preceding year to the aggregate gross revenues in Québec of all the companies holding licences.

The certificate of the Authority shall definitively establish the amount payable by each company under this section.

1987, c. 95, s. 406; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

406.1. The costs incurred by the Government for the administration of this Act, as determined each year by the Government, shall be borne by the Authority.

2004, c. 37, s. 88.

407. The Autorité des marchés financiers is responsible for the enforcement of this Act.

1987, c. 95, s. 407; 2002, c. 45, s. 611; 2004, c. 37, s. 90.

408. The Minister of Finance is responsible for the application of this Act.

1987, c. 95, s. 408; 2002, c. 45, s. 610.

409. (Omitted).

1987, c. 95, s. 409.

410. (Omitted).

1987, c. 95, s. 410.

411. (Omitted).

1987, c. 95, s. 411.

REPEAL SCHEDULE

In accordance with section 9 of the Act respecting the consolidation of the statutes and regulations (chapter R-3), chapter 95 of the statutes of 1987, in force on 1 March 1989, is repealed, except section 411, effective from the coming into force of chapter S-29.01 of the Revised Statutes.