Act respecting French, the official and common language of Québec (Bill 96)

On May 24 of this year, the Government of Québec officially adopted the Act respecting French, the official and common language of Québec, better known as Bill 96 (the "Bill"), which proposes a major reform of the Charter of the French Language (the "Charter") and amendments to other Acts. In this bulletin, we offer a brief analysis of the provisions relating to the language of certain contracts and its impact on private placements.

One of the important changes proposed by the Bill relates to the language of certain contracts, including contracts of adhesion.

Who is affected by the Bill?

In the case of private placements, any issuer that wants to issue securities to subscribers in Québec will have to comply with the new requirements.

Contracts of adhesion

Article 1379 of the Civil Code of Québec provides: "A contract of adhesion is a contract in which the essential stipulations were imposed or drawn up by one of the parties, on his behalf or upon his instructions, and were not negotiable. Any contract that is not a contract of adhesion is a contract by mutual agreement."

For example, in the case of a private placement, an offering memorandum, a subscription agreement, and any document relating to a security issued that contains non-negotiable terms, including a warrant certificate or a debenture, would be considered to be contracts of adhesion.

The changes made by the Bill

The Charter already requires that these contracts and the documents related to them be drawn up in French. However, the parties were able to derogate from that rule by stating their express wish that the documents be written in another language. The practice was therefore to incorporate a clause stipulating that it was the express wish of the parties to have the document written in another language.

Section 55 of the Charter has been amended by the Bill to remove that option for contracts of adhesion:

"55. Contracts pre-determined by one party, contract containing printed standard clauses, and the related documents, must be drawn up in French. The parties to such a contract may be bound only by its version in a language other than French if, after the French version has been provided to the adhering party, such is their express wish. The documents related to the contract may then be drawn up exclusively in that other language. They may be drawn up in another language as well at the express wish of the parties.

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The consequences in the case of a private placement

Stipulation of the choice of language in a contract of adhesion is therefore officially insufficient. However, new section 55 leaves that option open for any contract that is not a contract of adhesion. The removal of "contracts containing printed standard clauses" suggests that the contracting parties will enjoy greater freedom.

For contracts of adhesion to be written in a language other than French, the Bill provides that a French version must first be drawn up, free of charge, and brought to the attention of the adhering party. Only after that first step could the contract be entered into in a language other than French and the documents related to it be provided.

This new addition will prevent an issuer from sending a subscriber in Québec an offering memorandum or subscription agreement in English, and any document related to it, before the subscriber has examined the French version and has consented to receiving the documents in English.

The issuer must therefore plan for four steps: (1) send the French version; (2) allow the subscriber to examine it; (3) obtain the subscriber's consent to using English as the language for the transaction and sending the English version of the related documents; and (4) deliver the related documents in English and proceed with the subscription.

However, there seems to be nothing to prevent the English version of an offering memorandum or subscription agreement being sent concurrently with the French version.

Exceptions

New section 55 states that the obligation to provide a French version before entering into a contract in another language does not apply to the contracts listed below or the documents related to them:

(1) a contract of employment;

(2) a contract referred to in the second paragraph of section21 or in section21.5, without regard to the cases and conditions provided for by a regulation made under subparagraph1 of the second paragraph of that section; or

(3) a contract used in relations outside Québec.

Entry into force

The Bill includes several different dates for coming into force, depending on the section. Sections 21.5 and 55 will come into force one year after the Bill is assented to. The Bill will receive assent and thus become law in the next few days.

Fasken tools

Fasken provides a Resource Center that presents the key elements of the reform, including:

  • The Guide entitled French is at the Heart of Your Business (attached);
  • A self-assessment tool;
  • An annotated Act;
  • A podcast (in English and French);
  • A bulletin.

New content will be added periodically.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.