The new rules on corporate transparency require most entities registered with the Quebec Enterprise Register (REQ) to produce a declaration of Ultimate Beneficiaries (UB) to identify the individuals who exercise real control over them.
An equivalent obligation also exists for companies under federal jurisdiction, in the form of a Significant Control Person (SCP) declaration.
As of March 31, 2023, this declaration of BUs must be made with your company’s annual update declaration or current update declaration to REQ.
Reminder letter and risk of deregistration
To reinforce the application of the new rules, an increasingly systematic verification of files is carried out by REQ. A reminder letter is issued to companies in default, giving them 30 days to comply.
Under the Act respecting the legal publicity of enterprises, administrative penalties may be imposed for non-compliance. Several entities have recently been struck off by the REQ for this reason, resulting in their dissolution.
If your ultimate beneficiaries are “Waiting to be declared” and you have received a letter from REQ “Demande de mise à jour faite à un assujetti”, it is essential that you take the necessary steps to rectify the situation as soon as possible, since the company will soon be struck off the register. It’s also important to understand that a company that has been struck off automatically can no longer operate legally, with all that this implies, including the personal liability of directors in the future, blocked access to bank accounts, the entity’s name no longer protected, and so on. There is a fix available to remedy and reverse the situation, however this process is more costly than the simple update required to comply with the new obligations.
Whether you’re making your first BU declaration or updating it, the process is fast and essential for :
- Comply with applicable regulations;
- Avoid costly administrative penalties;
- Protect your company’s reputation and credibility;
- Facilitate banking, tax and commercial relations.
In a context where corporate transparency has become an unavoidable standard, BU reporting is not only a legal obligation, but also a key element of sound and responsible management.
An article from the tax team
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