The Quebec Court of Appeal upheld a lower court ruling that could have a chilling effect on the flow and quality of confidential information financial institutions disclose to regulatory authorities, and even potentially undermine the “safety and soundness” of Canada’s financial system, according to business lawyers.
In a majority decision in line with two Ontario Superior Court decisions, the Quebec Court of Appeal held that documents and exchanges between federally regulated firms such as banks and insurance companies with the Office of the Superintendent of Financial Institutions (OSFI) are protected by statutory confidentiality provisions imposed by Regulations under the Insurance Companies Act, with some exceptions. While the regulations were enacted to limit the communication of supervisory information, the appeal court found that sections 2 and 3 of the Regulations did not create an absolute prohibition on disclosure and could be subject to production in civil proceedings.
Quebec’s legislative framework for companies incorporated in the province, for years practically shunned by the business and legal community, has been revamped, modernized and simplified, drawing praise alike from corporate and commercial lawyers and shareholder activists.
Replacing both Part I and Part IA of the outdated and much-maligned Companies Act (Act), which was last updated nearly three decades ago, the Quebec Business Corporations Act (BCA) has the ambitious aim of making Quebec a national leader in the business legal landscape thanks to the introduction of measures that clarifies directors’ duties, simplifies the process of incorporating in the province, and grants new rights to minority shareholders.
“It brings Quebec into the 21st century,” remarked Benjamin Silver, counsel to McCarthy Tétrault LLP’s business law group in Montreal.
Shareholders should have the right to ask to examine the financial statements of the corporation’s subsidiaries, rules Quebec appeal court.