Autorisation to carry on trust company activities in Québec

Application

This procedure applies to the following legal persons that wish to obtain an authorization to carry on trust company activities in Québec:

  • Business corporations regulated by Title III TCSCA;
  • Legal persons constituted under the laws of a Canadian jurisdiction other than Québec and having the capacity to carry on trust company activities.

Obligation to be authorized

The provisions relating to an application for authorization to carry on trust company activities in Québec are found in sections 22 to 28 of the Trust Companies and Savings Companies Act This link will open in a new window, CQLR, c. S-29.02 (“TCSCA”).

Under section 17 TCSCA, the AMF’s authorization is required by any operator that carries on trust company activities if such activities are carried on in Québec constitute the operation of an enterprise, regardless of any other activities that may be carried on by the operator, unless the operator is covered by an exception.

  1. Trust company activities

    Trust company activities are defined in section 2 of the Act and consist, for a legal person, in being a trustee, an adviser to a person of full age, a tutor or curator to property, a sequestrator or the liquidator of a succession, legal person or partnership.

  2. Carrying on trust company activities in Québec

    According to section 18 TCSCA, trust company activities are carried on in Québec in the following cases:

    • If they consist in being a trustee, when the settlor or another person who transfers some of his or her property to a trust patrimony is domiciled in Québec (s. 18(1) TCSCA);
    • If they consist in being tutor to the property of a minor person or of a person of full age, or curator to the property of a person of full age or adviser to a person of full age, when that person is domiciled in Québec (s. 18(2) TCSCA);
    • If they consist in being the liquidator:
      • of a succession, when the last domicile of the deceased is in Québec (s. 18(3)(a) TCSCA); or
      • of a legal person or a partnership, when the liquidation is governed by the laws of Québec (s. 18(3)(b) TCSCA);
    • If they consist in being sequestrator, when the contract is governed by the laws of Québec or the sequestration is ordered under the Code of Civil Procedure (chapter C-25.01) (s. 18(4) TCSCA).

  3. Training company activities constitute the operation of an enterprise

    The carrying on by one or more persons of an organized economic activity, whether or not it is commercial in nature, consisting of producing, administering or alienating property, or providing a service, constitutes the operation of an enterprise (art. 1525, 3rd par., Civil Code).

  4. Regardless of the other activities carried on by the operator

    It must be determined whether or not there is the operation of an enterprise, regardless of any other activities that may be carried on by the operator. Therefore, if the trust company activities are even slightly incidental to another commercial activity, then the moment they constitute the operation of an enterprise, the AMF’s authorization is required.

  5. Exceptions

    Section 20 TCSCA provides that insurers authorized under the Insurers Act and financial services cooperatives governed by the Act respecting financial services cooperatives are not required to obtain the AMF’s authorization to carry on trust company activities to the extent provided by government regulation.

    Under section 21 TCSCA, financial institutions that carry on trust company activities in accordance with section 20 TCSCA and legal persons authorized by the AMF in accordance with section 109.6 of the Securities Act (i.e., a legal person, other than a trust company governed by the TCSCA, authorized to act as trustee of an investment fund in accordance with the Civil Code), are subject to Division II of Chapter V as if they were authorized trust companies. These provisions concern the administration of the property of others (ss. 55 to 62 TCSCA).

Application for authorization

Under the first paragraph of section 22 of the Act, a legal person that intends to carry on trust company activities is responsible for filing an application with the AMF for its authorization, when required.

The applicant must demonstrate that it is able to comply with the applicable provisions of the TCSCA (s. 22, 2nd par. TCSCA). It must also have at least $5 million in capital (s. 19, 1st par. TCSCA).

The information to be included in the application for authorization is set out in the third paragraph of section 22 TCSCA.

The documents to be enclosed with the application that will be filed with the AMF are set out in section 24 TCSCA.

Checklists

The following checklists describe the information to be included in, and documents to be enclosed with, the application for authorization.

Contents of the application for authorization

Information/Documents Source Clarification by the AMF
1. The applicant must show that it has at least $5 million in capital; s. 19, 1st par. TCSCA n/a.
2. The applicant must show that it is able to comply with the applicable provisions of the TCSCA; s. 22, 2nd par. TCSCA The AMF assesses the application and required documents to determine if the information is satisfactory.
A declaration signed by a person authorized to do so within the legal person regarding compliance with the laws, regulations and guidelines applicable to the legal person must also be provided.
3. The applicant must include the following information: s. 22, 3rd par. TCSCA n/a
3.1 Its name and the name it intends to use in Québec if different;
 s. 22, 3rd par. (1) TCSCA n/a
3.2 The address of its head office and, if the latter is not in Québec, the proposed address of its principal establishment in Québec, if any;
 s. 22, 3rd par. (1) TCSCA If there is no establishment in Québec, an attorney must be designated (see 3.7).
3.3 If applicable, the conditions and restrictions it wishes to have attached to the authorization;
 s. 22, 3rd par. (2) TCSCA n/a
3.4 A description of its financial structure;
 s. 22, 3rd par. (3) TCSCA A detailed organization chart of the applicant’s ownership structure (including percentages) showing its parent company and all members of the group.
3.5 If applicable, the name and address of each holder of a significant interest in its decisions, as well as a description of that interest;
 s. 22, 3rd par. (4) TCSCA Refer to s. 7 TCSCA, for the definition of “significant interest.”
3.6 If the applicant is not a business corporation regulated by Title III TCSCA, the name of the regulatory authority of its domicile (home regulator) (under s. 23 TCSCA, the competent authority with respect to the applicant’s trust company activities, under the laws of the jurisdiction whose legislation governs the applicant’s constituting act);
 s. 22, 3rd par. (5) TCSCA Confirmation by the authorities of the place where it was constituted that the applicant is solvent and in compliance with the laws and regulations of its jurisdiction.
3.7 If applicable, the name and address of the attorney designated under section 26 of the Act respecting the legal publicity of enterprises (Legal Publicity Act);
 s. 22, 3rd par. (6) TCSCA Section 26 of the Legal Publicity Act states: “A registrant who is neither domiciled nor has an establishment in Québec must designate an attorney residing in Québec, unless exempted from that requirement by regulation of the Minister.”
3.8 If it belongs to a financial group, the name under which the group is known, if any, and, if applicable, the names of the other financial institutions that belong to the group;
 s. 22, 3rd par. (7) TCSCA Refer to ss. 3 and 4 TCSCA, for the definition of “financial institution” and s. 13 TCSCA for the definition of “financial group.” These institutions must appear in the organization chart (see 3.4).
3.9 The other information prescribed by regulation of the AMF;
 s. 22, 3rd par. (8) TCSCA n/a
3.10 The name of the auditor charged with auditing the books and accounts.
 ss. 273 and 98 TCSCA Refer to s. 97 TCSCA for the qualifications.
Add telephone no. and e-mail address.
This information will be published in the register (s. 154 TCSCA).

Documents to be enclosed with the application for authorization

Information/Document Source Clarification by the AMF
1. A list of the applicant’s directors and officers, including their names and domiciliary addresses; s. 24(1) TCSCA Including a senior management organization chart.
2. The résumé of each director and officer; s. 24(2) TCSCA n/a
3. A copy of the applicant’s constituting act; s. 24(3) TCSCA n/a
4. A copy of the applicant’s by-laws or of any other document established for the same purposes; s. 24(3) TCSCA n/a
5. If applicable, a copy of the applicant’s audited financial statements for its most recent fiscal year ended, to the extent and in the manner that may be determined by regulation of the AMF; s. 24(4) TCSCA n/a
6. If applicable, the financial statements that the applicant is required to file with its home regulator, to the extent and in the manner that may be determined by regulation of the AMF; s. 24(4) TCSCA n/a
7. The other documents prescribed by regulation of the AMF; s. 24(5) TCSCA No regulation, but see below for the other documents required pursuant to s. 273 TCSCA.
8. The investment policy; ss. 273 and 65 TCSCA n/a
9. A copy of the declaration of registration filed with the Registraire des entreprises du Québec (Québec enterprise registrar or REQ), including the company’s French name; s. 273 TCSCA n/a
10. A copy of the fidelity insurance policy for an amount considered sufficient by the AMF according to generally accepted practices and the volume of the company’s activities; ss. 273 and 48 TCSCA The company must demonstrate that its insurance coverage is sufficient according to generally accepted practices and the volume of its activities.
11. The applicant’s three-year business plan; s. 273 TCSCA The business plan must contain at least the following information:
  • The applicant’s target markets and the business opportunities it is seeking to exploit;
  • A description of governance in connection with Chapter VI of Title II TCSCA;
  • Financial forecasts or projections, for at least three complete years of operation, specifying, if applicable, the impact that adding the new activities in Québec will have on the income statement, balance sheet and capital test, including the assumptions used;
  • The relationships and key outsourcing agreements between the applicant and third persons;
  • A detailed description of all products and services that will be marketed in Québec;
  • A description of the client service and means implemented to protect its reputation in connection with Title II, Chapter IV, “Commercial practices;”
  • A description of the activities it carries on outside Québec;
  • The policies in effect within the registrant’s organization.
12. The fees and charges prescribed by government regulation. 24(6°) LSFSE Refer to the list.

Granting of authorization

Section 25 TCSCA sets out the conditions that must be met in order for the AMF to grant its authorization to an applicant:

  • The applicant has provided the information and documents required under the Act and has paid the fees and charges payable (s. 25(1) TCSCA);;
  • In the AMF’s opinion,
    • the applicant has shown that it is able to comply with the applicable provisions of the Act (s. 25(2)(a) TCSCA);
    • there are no serious reasons to believe that a holder of a significant interest in the applicant’s decisions is likely to interfere with the applicant’s adherence to sound commercial practices or sound and prudent management practices (s. 25(2)(b) TCSCA);
    • The applicant’s name is not misleading (s. 25(2)(c) TCSCA).

Section 26 TCSCA provides that, in granting its authorization, the AMF may require any undertaking or the attachment of conditions and restrictions.

The AMF notifies the applicant in writing of its decision (s. 28, 1st par. TCSCA). When it refuses to grant its authorization or grants it but attaches condition and restrictions, the AMF must notify the prior notice prescribed by section 5 of the Act respecting administrative justice (chapter J-3) to the applicant in writing and grant the latter at least 10 days to submit observations, unless the conditions or restrictions are attached at the applicant’s request (s. 28, 2nd par. TCSCA).

Lastly, according to section 27 TCSCA, the authorization entails, for the authorized trust company, the obligation to maintain its existence until the full and final revocation of that authorization. This section of new law is intended to maintain the contracts and other acts made by authorized trust companies in accordance with their authorization, thereby preventing them from dissolving or liquidating in order to cancel such contracts and acts.

Fees and costs payable

Refer to the complete list of fees and costs payable to the AMF for more information.

Processing time

Except in specific circumstances, the AMF will grant an authorization to carry on trust company activities within 180 days from the date the application is completed.

Insight

Did you know?

The AMF no longer issues licences in paper format as was the case under the former Act respecting trust companies and savings companies (chapter S-29.01). The concept of “licence” ceased to exist with the coming into force on June 13, 2019 of the new Trust Companies and Savings Companies Act (chapter S-29.02) and was replaced with the concept of “authorization to carry on trust company activities in Québec.”

Authorized trust companies are listed in the AMF’s Register – Insurers, Deposit institutions and Trust companies. The information contained in this register is public information; it may be set up against third persons as of the date it is entered and is proof of its contents for the benefit of third persons in good faith (s. 154, 2nd par. TCSCA).

End of the insight