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CCCA_V4No1_Dept-CorpLaw-FIN.qxd:CCCA_V1No2_Dept-CourtLeg-V1.qxd 2/3/10 11:42 AM Page 14 Corporate Law A new era of company law in Quebec Changes to shareholders’ rights and recourses among highlights of new Quebec Business Corporations Act. By Maxime Cloutier n October 7, 2009, Quebec Finance an action against a cor- OMinister Raymond Bachand tabled poration in which they Bill 63, Business Corporations Act.The Bill have an interest to either was adopted on December 1, 2009 and rectify the situation or enacted on December 4, 2009, thus request the liquidation creating the Quebec Business Corporations and dissolution of the Act (“QBCA”).The QBCA will replace corporation. the Quebec Companies Act (“QCA”) as The QBCA also the primary corporate legislation in includes a new right to Quebec.The QBCA is not yet in force, demand the repurchase but it is anticipated that it could come of shares,similar in many into force around January 2011. respects to the right of The primary objective of the QBCA is dissent provided under the CBCA. the QCA thus harmonizing Quebec law to rectify the shortcomings of the QCA Finally, the QBCA grants the right for with the majority of other corporate legis- by modernizing Quebec corporate law, any shareholder of a reporting issuer,or of lation in Canada,including the CBCA.This following a wave of reforms already a corporation which has 50 or more vot- reorientation will undoubtedly be well undertaken elsewhere in Canada, and by ing shareholders, to propose questions to received by the legal community and busi- harmonizing the Quebec law with be discussed in a meeting. ness people. Canadian corporate legislation. The fol- The QBCA makes no reference to the lowing is an overview of some of the Directors’ liability accounting test of the QCA (nor to the most important features of the QBCA The QBCA formally allows the defences CBCA test based on the realization value of that contribute to the harmonization of of reasonable prudence and diligence (due a corporation’s assets). On the other hand, Quebec corporate law with the Canada diligence) already recognized by Quebec the solvency test of the QCA (not having Business Corporations Act (“CBCA”). and Canadian jurisprudence but not cod- reasonable grounds for believing that the ified in the QCA.The QBCA also con- corporation would be unable to pay its lia- Shareholders’ rights and recourses tains provisions outlining the circum- bilities as they become due),essentially sim- The QBCA will substantially change stances (similar to those contained in the ilar to the CBCA’s solvency test, remains shareholders’ rights and recourses, moving CBCA) in which a corporation must for certain actions that may have an impact closer to the CBCA and away from the indemnify a director or officer for on a corporation’s solvency. current provisions of the QCA. In fact, expenses reasonably incurred in the exer- unlike most other corporate legislation in cise of his or her functions, including Continuance Canada, the QCA does not contain an those arising from such person’s participa- Continuance under the QCA is essential- “oppression remedy” for minority share- tion in judicial actions. ly limited to companies governed by Part holders, debt holders and creditors. The 1 of the QCA. The QBCA now allows QBCA will introduce a recourse into Financial assistance corporations governed by the statute of Quebec law similar to that provided and financial tests another jurisdiction to be continued under section 241 CBCA, allowing secu- The legislator did not retain the restrictions ISTOCKPHOTO rity holders,directors and officers to bring relating to financial assistance provided in continued on page 45 14 CCCA Canadian Corporate Counsel Association SPRING 2010