By Michel Rochefort, Partner and Lawyer, BCF Business Law
The French language requirements are not always clear when
it comes to doing private placements in the Province of Québec.
Numerous market participants simply do not have a clear
understanding of the exact meaning of Section 40.1 of the
Securities Act (Québec):
40.1. Every prospectus of any type, document
authorized by the Authority for use in lieu of a prospectus,
offering memorandum prescribed by regulation, risk
acknowledgment form prescribed by regulation, take-over
bid circular, take-over bid, directors’ circular and individual
officer’s or director’s circular regarding a take-over bid or
issuer bid as well as any document required by regulation
to be incorporated by reference shall be drawn up in French
only or in French and English.
It is very important to realize that the offering memorandums
covered by that Section are exclusively the ones “prescribed
by regulation”, the most popular of those being the offering
memorandum referred to in Section 2. 9 of National Instrument
45-106 (the OM Exemption).
Consequently, the offering memorandums prepared by
issuers relying per example on the minimum amount (or $150,000)
prospectus exemption or the Accredited Investor prospectus
exemption do not have to be translated into French.
In addition to the Securities Act (Québec), the Charter of
the French language is also applicable in the context of private
placements, more particularly Section 55:
55. Contracts pre-determined by one party, contracts
containing printed standard clauses, and the related
documents, must be drawn up in French. They may be
drawn up in another language as well at the express wish
of the parties.
The subscription agreements prepared in the context of private
placements are in fact considered “contracts pre-determined by
one party”. However, a typical way to avoid the need to translate
those subscription agreements is simply to add a language clause
at the end of the document similar to the following:
It is the express wish of the Subscriber that the Subscription
Agreement and any related documentation be drawn up in
English only. Il est de la volonté expresse du souscripteur que
la convention de souscription ainsi que tout document connexe
soient rédigés en langue anglaise uniquement.
In conclusion, you have to remember that the presence of
Québec purchasers in a private placement does not trigger any
translation requirements for issuers, provided that they are not
using the OM exemption (Section 2. 9 of National Instrument
45-106) and provided that the subscription agreement contains
the usual language clause referred to above.
For more information contact:
Doing Business in Quebec:
Navigating the French Language Requirements