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 FRANÇAIS  

December 2012

A word from Annie
 

Dear friends,

The end of the year is already upon us, keeping our offices busy with the closing of many transactions! And what of the Holiday frenzy that took over several weeks ago already—stores overflowing with shimmering decorations and Christmas songs… You can’t escape it!

Despite a long list of things to do and a very full calendar, I invite you to take a moment to think about those who are less fortunate... Although it may sometimes be difficult to consistently give of ourselves throughout the year, the month of December is full of opportunities for us to give back to society. Whether you donate some of your time to help prepare Christmas baskets for the YMCA, drive partygoers home with Opération Nez Rouge, shop for new toys for disadvantaged children for Opération Père Noël or help make Christmas better for women with breast cancer with the SAFIR program, many organizations just need a hand to help make the Holidays a little better for their beneficiaries. And is there a better gift than the sense of accomplishment you get from helping others?

I wish you truly magical Holidays with your loved ones. May the New Year bring health and happiness to you and your family!

Thank you for your trust.

Annie

Annie Fredette
Director, CRAC Operations
D+H

Articles of Consolidation and Restated Articles of Incorporation – Simplifying Due Diligence!
Me Patric Besner - Besner, Avocats d’affaires - November 6, 2012

From the firm of Besner, Avocats d’affaires, Me Patric Besner, author of the text below and Me Madeleine Cadieux, Manager – Corporate Services at CRAC and editor of Info-CRAC newsletter.

Every time a company files articles of amendment, it makes its own corporate documentation that much more cumbersome. Rather than generate a new document, these articles overlap in accordance with the provisions amended, added or repealed with each operation and must be consulted together when attempting to determine the content of a company’s articles in their entirety. Such an exercise can quickly take on considerable proportions and become quite laborious.

It is possible to simplify this process and thus minimize the time and effort needed to perform a due diligence audit. Both the Business Corporations Act (RSQ, c S-31.1) (hereinafter the “BCA”) and the Canada Business Corporations Act (RSC 1985, c C-44) (hereinafter the “CBCA”) offer the possibility of consolidating bundles of accumulated articles in a single document through “articles of consolidation” (in Quebec) or “restated articles of incorporation” (federal).

1) Legislative framework

1.1) Quebec legislation

The Quebec legislation on business corporations addresses articles of consolidation in sections 261 to 264 of the BCA.

This act stipulates that directors may, either on their own initiative or at the request of the enterprise registrar, consolidate articles by consolidating and rewording older articles accumulated to date in the form of a single harmonized document.

However, it must simply be a consolidation of the articles and nothing more. Only the correction of obvious errors of reference, entry, transcription or of a similar nature will be allowed, because articles of consolidation are not an opportunity to make the slightest substantive change, no matter how minor, to the corporate structure.

1.2) Federal legislation

At the federal level, restated articles of incorporation are governed by section 180 of the CBCA—a much more succinct provision but substantially having the same effect as its provincial counterpart.

As for companies governed by the BCA, here again the restated articles of incorporation must propose a rewording that does not substantively change the content of existing articles.

The federal legislation differs slightly from the Quebec legislation on two points: (i) the CBCA stipulates that the Director’s authority to instruct directors to restate the articles of incorporation is limited and can only be exercised when it is “reasonable” for him to do so; and (ii) contrary to the BCA, the CBCA does not provide for the possibility of recording the time at which the articles are filed, only the date.

2) History and origins

The notion of articles of consolidation was only introduced in Quebec corporate law with the 2011 reform, when the BCA took effect. The provisions of the BCA were directly inspired by the federally legislated restated articles of incorporation[1].

Ultimately, though, the restated articles of incorporation stipulated in the federal legislation were inspired by the Model Business Corporation Act of 1950[2], a model act created by the US Bar Association in the 1950s—the fruit of a vast effort to coordinate and modernize corporate law in the United States.

The concept was raised again and recommended in the Dickerson Report[3] in 1971 and officially integrated in federal corporate law in 1975 when the former version of the Canada Business Corporations Act took effect. Since the act was passed, the current section 180 of the CBCA has undergone some renumbering and rewording, but has otherwise remained substantively unchanged until now.

3) Comparisons

Since the BCA has taken effect, the notion of articles of consolidation (or restated articles) has been part of corporate legislation in all Canadian provinces and territories except Nova Scotia and Prince Edward Island, in many cases with wording almost completely identical to that used in the federal legislation.

4) Technical aspects

Both in Quebec and at the federal level, articles of consolidation and restated articles constitute a simple administrative procedure not requiring shareholder approval: a simple resolution by the company’s directors suffices.

For Quebec companies governed by the BCA, articles of consolidation must be filled out following the prescribed form (i.e. form RE-509[4], to which the articles thus consolidated are appended), signed by a director or officer of the company and sent to the enterprise registrar along with the prescribed $159 fee. Filing of these articles causes a “certificate of consolidation” to be issued, taking effect on the date indicated. From that moment on, the new restated articles replace all previous articles.

At the federal level, filing restated articles of incorporation involves an almost identical procedure. They must be filled out following the prescribed form (i.e. form IC 3167[5], also with the text of the restated articles appended), also signed by a director or officer and sent to the Director along with the prescribed $50 fee[6].

Just like the BCA’s articles of consolidation, filing restated articles of incorporation automatically causes a “restated certificate of incorporation” to be issued, and the restated articles of incorporation henceforth replace all previous articles with a single, harmonized document.

CRAC wants to thank Me Patric Besner for his invaluable cooperation. Me Besner, a seasoned speaker, specializes in business law and intellectual property at Besner, Avocats d’affaires.

Please contact our corporate services team for more information regarding articles of consolidation or restated articles of incorporation.

[1] Raymond BACHAND, Reference document – Explications et commentaires aux parlementaires sur le Projet de Loi sur les sociétés par actions, Finances Québec, Quebec, 2010, p. 575 ss. (Arts. 261 ss.)

[2] American Bar Foundation, Model Business Corporations Act Annotated, West Publishing, Chicago, 1960, p. 261 ss. (s. 59)

[3] DICKERSON, R.W.V., J.L. HOWARD, and L. GETZ, Proposals for a New Business Corporations Law for Canada, Information Canada, Volume I – Comments, 1971, p. 135;  Volume II – Draft Canada Business Corporations Act, 1971, p. 125

[4] Available on CRAC’s website at  [French only]
http://www.incoweb.com/documents/pdf/crac/21_form_statuts_refonte.pdf

[5]Available on CRAC’s website at  
http://www.crac.com/form/fed/form07.pdf

[6] At the federal level, filing restated articles of incorporation is free if they are filed with articles of amendment. In contrast, the Quebec system does not provide such an option.

Retail Giants Go Up Against the OQLF: Summary of the Situation

In fall 2011, the Office québécois de la langue française (hereinafter “the OQLF”) launched an information campaign to promote compliance with the Charter of the French Language (R.S.Q., c C-11), focusing in particular on signs displaying company names that use trade-marks.

Remember the exception stipulated in subsection 25(4) of the Regulation respecting the language of commerce and business (R.R.Q., 1981, c C-11, r 9), which reads as follows:

On public signs and posters and in commercial advertising, the following may appear exclusively in a language other than French: […]

 

(4) a recognized trade mark within the meaning of the Trade Marks Act (R.S.C. 1985, c. T-13), unless a French version has been registered.

In short, according to the latest position adopted by the OQLF, it would seem that when applying the rules governing signs and commercial advertising, the rules governing business and assumed names must also be taken into account. More specifically, this means that the names of a large number of companies operating in retail sales no longer fit into the new interpretation of the notion of use as a “trade mark” applied by the OQLF. The same is true of company names that are also registered trade-marks in a language other than French and used in public signs appearing in businesses with a storefront. The OQLF proposes using these trade marks along with a descriptive (generic) expression or slogan describing the company’s products or activities, even going so far as to suggest having trade-marks translated into French[1]. In the end, though, the OQLF is handling the matter on a case-by-case basis.

After a failed attempt at reaching an agreement, six multinationals (namely Best Buy, Costco, Gap, Guess, Old Navy and Walmart) recently joined forces to challenge the OQLF’s position, asking the Superior Court of Québec to examine its validity. They are criticizing the fact that the OQLF changed its interpretation of an act that has not yet been amended, resulting in an arbitrary application of the provisions governing public signs, posters and commercial advertising. In addition to a marketing argument, they also raised the issue of the investment that such a change in the use of their trade-marks could represent.

The presentation of the motion that was originally scheduled to be heard on October 22 was postponed to November 22, the date wherein the parties agreed on the conduct of the proceedings. The case should be argued in 2013.

This situation clearly reflects the differences of opinion stirred up a few months ago by the OQLF’s new approach.

More concretely, we have noticed some inconsistency on occasion in the application of the rules by the Québec Enterprise Registrar (hereinafter “the REQ”). Indeed, a foreign company that uses its trade-mark based in a language other than French in its corporate name is exempt from declaring a name in French if this trade-mark is declared in the declaration of registration as another name used. Despite this rule, which has been in effect for a number of years, it is frequent to see two different rulings for two comparable declarations. Note, however, that this exemption does not apply to a company incorporated under the QBCA.

A court decision will certainly be most welcome to stabilize the application of the rules on displaying trade marks and thus ensure more consistency in decisions regarding their declaration to the REQ.

We were monitoring the arrival of the new draft bill amending Bill 101 announced by the Marois government that could have laid the foundation for a reform to the present judicial framework. However, Bill no 14, as submitted on December 5, does not contain new specific provisions that could possibly shed light on the subject.

To learn more about the rules applied by the REQ, we invite you to contact Mr. Denis Livernoche, Manager, Name Searches at 514-861-2799 / 1 800-361-5744, extension 335.

[1] See the following website in this regard: [French only].
 
http://www.respectdelaloi.gouv.qc.ca/.

REQ update: technical difficulties, return of Articles and search engine

System Update: technical difficulties and delays

Last November 17 and 18, the Québec Enterprise Registrar (herein after referred to as “REQ”) performed an update to its computing platform. The principal objective of the maneuver was to add “official articles" to certain services and to improve the performance of the search engine used to search for enterprises.

We have encountered multiple technical difficulties on the REQ platform following the update. In addition, we have noticed extended delays for certain files. However, the situation now seems to be reestablished.

The return of “Articles”

Since February 14, 2011, the REQ stopped providing an official version of the Articles. The confirmation of filing became the Articles. However, as of November 19, 2012, the confirmation of a document filed online will once again be simply a confirmation of filing and official Articles will be issued by the REQ for 5 documents*. It is to be expected that from November 19, 2012 to February 8, 2013, the Articles will not be joined with the issued .pdf version of the certificate. The Articles will be mailed together with the paper version of the certificate. After February 8, 2013, the REQ expects to include the .pdf version of the Articles with the issuance of the .pdf certificate as well as a paper version by mail.

*The change will only affect the following 5 services for the moment:

1.    Articles of Incorporation

2.    Articles of Continuance

3.    Articles of Amendment

4.    Articles of Amalgamation

5.    Articles of Consolidation

 

A better performing search engine

Since the coming into effect of the Business Corporations Act (L.R.Q., c., S-31.1), many note the loss in performance of the tool that’s purpose is to search for a business on the REQ site. On November 19, 2012, the REQ will make modifications to the search engine in order to improve its performance. A considerable reduction in non pertinent search results is expected and the order in which the results appear will be improved. An adjustment on the scope of certain words was also effected in order to avoid missing search results.

Tips and hints: we have concluded a problem when searching for names with acronyms using periods. In this case, the acronyms without periods do not appear in the list of results, but the system should be able to pull both the acronyms with and without periods. It is therefore preferable to search without the periods when looking for names that include acronyms. For example, if you search the acronym “V.I.P.”, the system will only find “V.I.P.” but not “VIP”. So, to eliminate missing results, search “VIP” and both results with and without periods will appear.

For all questions or information, please contact Me Pierre Bilodeau at 514-861-2799 / 1 800-361-5744, extension 343.

Incorporation of professionals: just in!

Respiratory therapists will soon have the right to practice the profession as a corporation. A draft regulation to this effect was published on April 4, 2012.  More recently, on December 12, the ”Règlement sur l’exercice de la profession d’inhalothérapeute en société” was published in the Gazette Officielle du Québec.  The Regulation should come into force on December 27, 2012.

Some particulars are worth noting, including but not limited to, the prohibition of the use of a numeric name as well as the conditions attached to the holding of capital stock or shares (s.6 of the Regulation).

For example, section 4 (1) of the Regulation provides that the respiratory therapist who exercises the profession within a corporation must ensure that at least 50% of the voting rights attached to the shares or capital stock are held by respiratory therapists and / or by legal persons, trusts or any other enterprise wherein the voting rights attached to shares, capital stock, securities or other participation rights are held entirely by respiratory therapists.

In addition, section 4 (2) of Regulation tells us that manufacturers, wholesalers, dealers or representatives of respiratory-related products and persons holding the majority of shares of such manufacturers, wholesalers, dealers or representatives cannot hold shares nor capital stock of the corporation.

In addition, the board of directors, partners or directors appointed by the partners must be positions held in a majority by respiratory therapists. Additionally, the President of the Board of Directors of the corporation or the individual exercising similar functions within a limited partnership must be a respiratory therapist who is a shareholder with voting rights or a partner (s. 4 (3) and 4 (4) of the Regulation).

Do not hesitate to contact us for more information.

Incorporation of professionals: updates pending

Over the coming year, we will keep a close eye on professions that may get the right to practise as a corporation.

As published in a draft regulation, geologists (November 21, 2012), chiropractors (September 19, 2012) and respiratory therapists (April 4, 2012) are the most likely to get this right in the near future.

Of course, CRAC Standard Schedules for these professional corporations will be available free of charge on Incoweb.

More details to come in the next issue.

Holiday Closings

Below please find the holiday closings for the offices of the Québec Enterprise Registrar (“REQ”), Corporations Canada and CRAC:

Date

REQ

Corporations Canada

 

CRAC

Monday, December 24

Closed

Open until 1:00 pm

Open

Tuesday, December 25

Closed

Closed

Closed

Wednesday, December 26

Closed

Closed

Closed

Thursday, December 27

Open

Open

Open

Friday, December 28

Open

Open

Open

Monday, December 31

Closed

Open until 1:00 pm

Open

Tuesday, January 1, 2013

Closed

Closed

Closed

Wednesday, January 2, 2013

Closed

Open

Open

To obtain a certificate bearing a date between December 24, 2012, and December 26, 2012, we must receive your documents by Monday, December 24, before 10:30 a.m.

The same also applies to users of our online system, Incoweb®.

If you need a certificate to bear the date of December 31, 2012, and January 1, 2013, we must receive your documents by Monday, December 31, before 10:30 a.m.

Incoweb® users must do the same for documents transmitted to us online.

Please do not forget to specify the required date in your cover letter or on the articles, as the case may be. We will tend to your special requests regarding your documents and remain at your disposal for any questions that you may have.

IMPORTANT: Please note that the above is not applicable for Certificates of Attestation. Please contact Johanna Cynthia Bellamy (ext. 324) at 514-861-2799 or 1 800-361-5744 if you need to obtain a specific date on your Certificates of Attestation.

From of all of us at CRAC, best wishes and Happy Holidays!

What’s new with us…

Annual BBQ

September 15 was our traditional BBQ, to which all CRAC employees and their families were invited.

This year, the activity took place at Parc des Îles in Boucherville. The entire team got to take part in outdoor activities with family and friends and enjoy a tasty feast.

A well-loved activity that bears repeating!

 

Halloween

This year again members of our team were invited to be creative and dress up for Halloween.

Everyone was invited to a pizza lunch, where people could vote on the best costumes. Curious about the results?

1st place: Captain Hook (Anne Roy)

2nd place: Vampire Queen (Emily Serlis)

3rd place: Miss Poker (Cindy Pouliot-Tessier)

 

Love is in the air!

Two of our employees have made the big leap and married the love of their life.

First, Stéphane Day, Shipping and Legal Accessories Clerk, married his sweet Isabelle on October 6.

Then, on October 27, Franca Noto of the Searches and Registrations department said “I do!” to her darling David.

To the brides and grooms!

CRAC

1080 Beaver Hall Hill,
Suite 1717
Montreal (Québec) Canada
H2Z 1S8
Tel: (514) 861-2722
Toll free: 1-800-361-5744
Fax: (514) 861-2751
E-mail: crac@crac.com

Notice: The information contained in INFO-CRAC® is of a general informative nature and in no way constitutes nor should it be construed as a legal opinion. INFO-CRAC® is published for the benefit of our clients. Please submit any comments in writing to crac@crac.com