Mandatory Disclosure Requirement Of Nominee Agreements

As part of its initiative to protect the integrity and fairness of its tax system, the provincial 2019-2020 budget put an emphasis on the disclosure requirement of nominee agreements.

Under Québec civil law, the contractual relationship whereby one party (the Nominee) agrees to hold title to certain property on behalf of the beneficial owner (the Principal) is commonly referred to as a nominee agreement. Under this arrangement, generally without informing the third party, the Nominee acts as agent to the Principal to execute transactions on his or her behalf, effectively allowing the Principal to remain anonymous.

A nominee agreement is commonly used in real estate transactions where multiple parties are involved and anonymity of the true owner is important, for example in the case of asset protection, financing transactions and for investment confidentiality.