F-3.2.1 - Act to establish the Fonds de solidarité des travailleurs du Québec (F.T.Q.)

Updated to 22 October 1999

This document has official status.

chapter F-3.2.1

Act to establish the Fonds de solidarité des travailleurs du Québec (F.T.Q.)

The Minister of Finance is responsible for the administration of this Act. Order in Council 55-2016 dated 3 February 2016, (2016) 148 G.O. 2 (French), 1272.

WHEREAS the Fédération des travailleurs du Québec has proposed the establishment of an investment fund for the objectives, mainly, of promoting job maintenance and job creation, stimulating the economy and training workers in economic matters;

Whereas, to achieve those objectives, an appeal will be made to the solidarity of the working men and women of Québec;

Whereas it is expedient to accede to the request of the Fédération des travailleurs du Québec;

Whereas the establishment of such a fund requires the enactment of special legislation regarding both its organization and the protection of the investors concerned;

THE PARLIAMENT OF QUÉBEC ENACTS AS FOLLOWS:

DIVISION I ARTICLES

§ 1 . — Constitution and head office

1999, c. 40, s. 139.

1. A joint-stock company is hereby constituted under the name of “Fonds de solidarité des travailleurs du Québec (F.T.Q.)”, hereinafter called “the Fund”.

1983, c. 58, s. 1; 1999, c. 40, s. 139.

2. Notwithstanding section 125 of the Companies Act (chapter C-38), the provisions of that Act which are applicable to companies constituted by the filing of articles apply to the Fund, with the necessary modifications, where they are not inconsistent with this Act, except the second paragraph of section 46, subsection 1 of section 53, section 54, sections 123.9 to 123.11, 123.21 to 123.27, 123.55, 123.72, 123.82, 123.91 to 123.93, 123.95, 123.96, 123.98 to 123.100, the second paragraph of section 123.114 and sections 123.115 to 123.139.

The Fund is deemed to have been constituted by the filing of articles on 23 June 1983.

The articles may be amended, but no filing of articles may result in the amendment of any provision of this Act.

1983, c. 58, s. 2; 1993, c. 48, s. 421; 1999, c. 40, s. 139.

3. The head office of the Fund is established in the territory of the Communauté urbaine de Montréal.

1983, c. 58, s. 3.

§ 2 . — Management

4. The affairs of the Fund are managed by a board of directors consisting of

(1)  ten persons appointed by the Conseil général of the Fédération des travailleurs du Québec;

(2)  two persons elected by the general meeting of holders of class “A” shares;

(3)  four persons appointed by the members contemplated in subparagraphs 1 and 2, namely one from among the persons considered by those members to represent industrial undertakings, one to represent financial institutions and two to represent the socio-economic sector;

(4)  the person appointed president and chief executive officer of the Fund by the members contemplated in subparagraphs 1, 2 and 3.

The person contemplated in subparagraph 4 of the first paragraph is a member of the board of directors during his term as president and chief executive officer.

1983, c. 58, s. 4; 1993, c. 47, s. 1.

5. If a vacancy occurs among the members of the board of directors contemplated in subparagraph 1 of the first paragraph of section 4, the Conseil général of the Fédération des travailleurs du Québec may appoint a person for the unexpired portion of the term.

1983, c. 58, s. 5.

6. The first persons appointed under subparagraph 1 of the first paragraph of section 4 may appoint two persons for not over one year to act as directors until the election of the persons contemplated in subparagraph 2 of that paragraph.

Upon the appointment of the directors contemplated in subparagraphs 1 and 2 of the first paragraph of section 4, two duplicates of the list of their names, addresses and occupations must be filed with the Inspector General of Financial Institutions by the secretary general of the Fédération des travailleurs du Québec. These directors enter office from the date of the filing.

1983, c. 58, s. 6.

§ 3 . — Share capital

7. Subject to section 15.1, the Fund is authorized to issue class “A” shares without par value, giving the rights provided for in section 123.40 of the Compagnies Act (chapter C-38), the right to elect two directors and the right of redemption provided for in sections 10 and 11.

The Fund is also authorized, subject to section 15.1, to issue class “A” fractional shares without par value, giving proportionately the same rights as class “A” shares, except the voting rights attached to such shares.

The Fund may, by articles of amendment,

(1)  create one or more series of class “A” shares that include, in addition to the rights set out in the first paragraph, either the right to be exchanged for shares of another series or any other characteristic not inconsistent with this Act;

(2)  convert in whole or in part the class “A” shares held by the shareholders or certain shareholders into one or more series of shares created under subparagraph 1, on terms and conditions which may, where expedient and with the authorization of the Minister of Finance, depart from subsections 6 and 7 of section 48 or from section 49 of the Companies Act (chapter C-38).

The directors may also, by articles of amendment according to sections 123.101 and 123.103 of the Companies Act, create any other class of shares which does not give the right to vote at meetings of the shareholders. The articles of amendment determine the other rights, privileges, conditions and restrictions attached to the shares of each class.

1983, c. 58, s. 7; 1989, c. 78, s. 1; 1997, c. 62, s. 1.

8. Subject to section 123.56 of the Companies Act (chapter C-38), only a natural person may acquire or hold class “A” shares or fractional shares. No holder of class “A” shares or fractional shares may alienate them and no such shares or fractional shares may be purchased by agreement by the Fund, except with the authorization of the board of directors or a committee composed of persons designated by it for that purpose.

The Fund may purchase class “A” shares or fractional shares by agreement only where and so far as provided by a policy adopted by the board of directors and approved by the Minister of Finance and only at a price not in excess of the price of redemption fixed in accordance with the second or third paragraph of section 11.

1983, c. 58, s. 8; 1986, c. 69, s. 1; 1989, c. 78, s. 2; 1993, c. 47, s. 2.

9. Notwithstanding section 8, class “A” shares or fractional shares may be transferred to or acquired by a trustee within the scope of a registered retirement savings plan under which the shareholder or his spouse is a beneficiary. The beneficiary of the plan is deemed, however, to keep the voting rights attached to the shares thus transferred. For the purposes of the second paragraph of section 8 and section 10, the spouse is deemed to be the person who acquired the transferred share or fractional share from the Fund.

However, the trustee is subject to section 8 in respect of any transfer to a person other than the shareholder from whom he acquired a class “A” share or fractional share.

1983, c. 58, s. 9; 1989, c. 78, s. 3.

10. A class “A” share or fractional share is redeemable by the Fund only in the following cases:

(1)  at the request of the person who acquired the share or fractional share from the Fund at least 730 days prior to redemption if, after reaching 55 years of age, he has availed himself of his right to early retirement or retirement or if he has reached 65 years of age;

(2)  at the request of the shareholder, who did not acquire the share or fractional share from the Fund, if the person who had acquired it from the Fund has reached 65 years of age or, if deceased, would have reached that age had he lived provided that, in either case, the share or fractional share was issued by the Fund at least 730 days prior to the date of redemption;

(3)  at the request of the person on whom the share or fractional share has devolved by succession;

(4)  at the request of the person who acquired the share or fractional share from the Fund, if he applies to it therefor in writing within 60 days of subscribing the share or fractional share or, in the case provided for in section 26, within 60 days of the first deduction from his salary or wages;

(5)  at the request of the person who acquired the share or fractional share from the Fund, if he is declared, in the manner prescribed by by-law of the board of directors, to be suffering from a severe and prolonged physical or mental disability which prevents him from working.

1983, c. 58, s. 10; 1989, c. 5, s. 6; 1989, c. 78, s. 4; 1997, c. 14, s. 6.

10.1. For the purposes of paragraph 5 of section 10, a disability is severe only if by reason thereof the person is incapable regularly of pursuing any substantially gainful occupation.

However, in the case of a person 60 years of age or over, a disability is severe if by reason thereof the person is incapable regularly of carrying on the substantially gainful occupation he holds at the time he ceases to work owing to his disability.

A disability is prolonged only if it is likely to result in death or to be of indefinite duration.

1989, c. 5, s. 7; 1997, c. 14, s. 7.

11. Subject to the second paragraph of section 123.54 of the Companies Act (chapter C-38), the Fund is bound to redeem any class “A” share or fractional share at the request of a person contemplated in paragraph 1, 2, 3 or 5 of section 10.

The price of redemption of the shares and fractional shares shall be fixed twice a year at dates six months apart, by the board of directors, on the basis of the value of the Fund as established by experts under the responsibility of a firm of chartered accountants according to generally accepted accounting principles.

The board of directors may also fix the price of redemption contemplated in the second paragraph at any other time in the year, on the basis of an internal valuation that, in each case, is presented in an accounting expert’s report confirming continued adherence to the generally accepted accounting principles and methods used to value the Fund and referred to in the second paragraph.

The Fund may, however, accept the offer of a shareholder to receive the last price of redemption so fixed rather than the subsequent one. The redemption contemplated in the first paragraph shall be made within a reasonable time after the date on which the request therefor is made.

However, in the case provided for in paragraph 4 of section 10, the Fund is bound to redeem the share or fractional share at the price at which it was acquired from the Fund and to pay the price thereof not later than 30 days after the date of receipt of the request.

1983, c. 58, s. 11; 1989, c. 5, s. 8; 1989, c. 78, s. 5; 1993, c. 47, s. 3; 1997, c. 14, s. 8.

12. Each shareholder is entitled to receive written confirmation of the number of shares or fractional shares he holds and of the amount paid thereon.

The confirmation is provided to the shareholder free of charge once yearly under the form and modalities prescribed by by-law of the Fund.

Where a mode of confirmation other than a share certificate is prescribed, the document sent to the shareholder serves as a certificate issued under section 53 of the Companies Act (chapter C-38).

Moreover, the Fund, at the request of a shareholder of fractional shares, must exchange the fractional share certificates or the documents serving as such for certificates or documents serving as such representing corresponding whole shares.

1983, c. 58, s. 12; 1989, c. 78, s. 6.

DIVISION II INVESTMENTS

13. The main functions of the Fund are

(1)  to invest in qualified undertakings and provide them with services in order to create, maintain and protect jobs;

(2)  to promote the training of workers in economic matters and enable them to increase their influence on Québec’s economic development;

(3)  to stimulate the Québec economy by making strategic investments that will be of benefit to Québec workers and undertakings;

(4)  to promote the development of qualified undertakings by inviting workers to participate in that development by subscribing shares of the Fund.

1983, c. 58, s. 13; 1997, c. 62, s. 2.

14. For the purposes of this Act, an undertaking is a partnership or legal person pursuing economic objects; investment includes any financial assistance granted to an undertaking in the form of a loan, security, guarantee, purchase of capital stock of any other form.

1983, c. 58, s. 14; 1983, c. 54, s. 114; 1999, c. 40, s. 139.

14.1. For the purposes of this Act, “qualified undertaking” means

(1)  a Québec undertaking, namely an undertaking in active operation the majority of whose employees are resident in Québec and whose assets are less than $50,000,000 or whose net assets are not over $20,000,000; or

(2)  an undertaking whose activity outside Québec has an impact on the raising or maintenance of the level of employment or the economic activity in Québec or is likely to have such an impact, in the cases and to the extent determined in a policy adopted by the board of directors and approved by the Minister of Finance.

For the purposes of this section, the assets or net assets of a Québec undertaking are the assets or net assets shown in the financial statements for its financial year ended before the date on which the investment is made, minus the write up surplus of its property and intangible assets. In the case of an undertaking which has not completed its first financial year, a chartered accountant is required to confirm in writing to the Fund that the assets or net assets, as the case may be, of the undertaking are, immediately before the investment, under the limits prescribed in this section.

1983, c. 54, s. 114; 1989, c. 78, s. 7; 1997, c. 62, s. 3.

15. The Fund may make investments in any undertaking with or without security or guarantee.

However, in the course of each fiscal year, the portion of the Fund’s investments in qualified undertakings entailing no guarantee or hypothec must represent, on the average, at least 60 % of the average net assets of the Fund for the preceding year. For the purposes of this section and of section 15.1, the average net assets for the preceding fiscal year and the average investments for the current year shall be determined by adding the net assets or, as the case may be, such investments at the beginning of the years concerned, to the net assets or, as the case may be, to such investments at the end of the years concerned, and by dividing by 2 each of the sums so obtained. In addition, the net assets do not include the movable and immovable property used by the Fund to carry on its operations.

For the purposes of this norm, qualified investments include

(1)  investments made otherwise than as first purchaser for the acquisition of securities issued by qualified undertakings;

(2)  investments added to investments previously made and which qualify under the second paragraph, in relation to an undertaking whose assets are less than $100,000,000 or whose net assets are not over $40,000,000;

(3)  investments in income-producing immovable property that is new property or property under substantial renovation, up to a sum not exceeding 5 % of the net assets of the Fund at the end of the preceding fiscal year.

The total of the investments that qualify under subparagraphs 1 and 2 of the third paragraph is limited to 20 % of the net assets of the Fund at the end of the preceding fiscal year. For the purposes of subparagraph 1 of the third paragraph, a dealer acting as an intermediary or firm underwriter is not considered to be a first purchaser.

Subparagraph 3 of the third paragraph does not apply to investments in immovable property situated outside Québec, except where they have an impact on the raising or maintenance of the level of employment or the economic activity in Québec or are likely to have such an impact, in the cases and to the extent determined in a policy adopted by the board of directors and approved by the Minister of Finance. In addition, the said subparagraph does not apply to investments in immovable property located in Québec and intended primarily for housing or shopping centres, other than within the scope of a project related to the recreation-tourism sector.

Investments with regard to which the Fund has entered into an agreement and for which it has committed but not disbursed sums of money at the end of a fiscal year shall be taken into account in the calculation of the investments that qualify under the norms set out in this section, up to a total amount not exceeding 12 % of the net assets of the Fund at the end of the preceding fiscal year.

The requirement prescribed in the second paragraph applies from the fiscal year having begun on 1 November 1986.

1983, c. 58, s. 15; 1989, c. 78, s. 8; 1992, c. 57, s. 585; 1997, c. 62, s. 4.

15.1. If the Fund fails to comply, in the course of a fiscal year, with the requirement prescribed in the second paragraph of section 15, it shall not issue class “A” shares or fractional shares in the course of the following fiscal year for a total consideration exceeding the amount determined as follows:

75 % of the total consideration paid for class “A” shares and fractional shares issued in the preceding fiscal year, excluding the total consideration paid for class “A” shares or fractional shares acquired and paid by payroll deduction in accordance with the provisions of Division IV or acquired under a subscription agreement entered into with an employer in favour of his employees, if the portion of the average investments concerned that are qualified investments is equal to 50 to 59 % of the average net assets of the Fund for the preceding year; 50 % of such consideration, if the portion of such average investments is equal to 40 to 49 % of the average net assets; 25 % of such consideration, if the portion of such average investments is equal to 30 to 39 % of the average net assets. If the portion of such average investments is equal to a percentage that is less than 30 % of the average net assets, the Fund shall not issue any class “A” share or fractional share during that fiscal year.

Class “A” shares and fractional shares acquired and paid by payroll deduction in accordance with the provisions of Division IV or acquired under a subscription agreement entered into with an employer in favour of his employees are excluded from the application of this section.

1989, c. 78, s. 9.

16. The Fund shall make no investment in an undertaking that would then make the total amount of its investment in the undertaking greater than 5 % of the assets of the fund as established on the basis of the latest expert evaluation contemplated in the second paragraph of section 11.

The percentage may be increased to 10 % to enable the Fund to acquire securities from an undertaking doing business in Québec that is not a Québec undertaking within the meaning of section 14.1. In such a case, the Fund cannot, directly or indirectly, acquire or hold shares that include more than 30 % of the voting rights attached to the shares of the undertaking and that can be exercised in any circumstances.

Where the Fund avails itself of the second paragraph as regards an undertaking in which it already holds, directly or indirectly, shares that include more than 30 % of the voting rights attached to the shares of the undertaking and that can be exercised in any circumstances, it shall have a period of five years from the date of the investment concerned to bring its interest in the capital stock of that undertaking into conformity with the said paragraph.

These restrictions do not apply, however, where the Fund invests in the following securities:

(1)  securities guaranteed by the government of Québec or of Canada or of any Canadian province or territory;

(2)  securities the payment of which is guaranteed in capital and interest by the transfer of a grant from the Gouvernement du Québec, payable out of the appropriations to be voted each year for such purposes by the Parliament;

(3)  bills of exchange accepted or certified by a bank or a financial institution registered with the Régie de l’assurance-dépôts du Québec.

An undertaking that holds securities enabling it, under all circumstances, to elect a majority of the directors of another undertaking is deemed to form, together with the latter, one and the same undertaking for the purposes of this section.

1983, c. 58, s. 16; 1989, c. 78, s. 10.

17. Where the Fund makes an investment in the form of a security or guarantee, it must establish and maintain, for the duration of the security or guarantee, a reserve equivalent to not less than 50% of the amount of the security or guarantee.

The Fund may invest the money deposited in the reserve under this section in the manner provided in the rules relating to investments presumed sound prescribed by the Civil Code .

1983, c. 58, s. 17; 1999, c. 40, s. 139.

DIVISION II.1 LOANS

1989, c. 78, s. 11.

17.1. The Fund shall not contract any loan that would make the current total capital of its total debt greater than 100% of the total consideration paid for its class “A” shares and fractional shares.

For the purposes of this section, the expression “total debt” means the amount obtained by applying the following equation:

x = the debt of the Fund + y1 [debt of any particular subsidiary of the Fund + y2 (debt of any particular subsidiary of the particular subsidiary of the Fund)]

where

x = the total debt of the Fund; and

y1 = the percentage of voting shares held, directly or indirectly, by the Fund out of the capital stock of the particular subsidiary of the Fund; and

y2 = the percentage of voting shares held, directly or indirectly, by the particular subsidiary of the Fund out of the capital stock of the particular subsidiary of the particular subsidiary of the Fund.

Furthermore, the debt of a subsidiary does not include the principal of a loan granted to the subsidiary by the parent legal person, either directly or by subscription of any debt security.

This equation applies, with the necessary modifications, to any subsidiary of a subsidiary, in descending line.

1989, c. 78, s. 11; 1999, c. 40, s. 139.

DIVISION III CONFLICT OF INTEREST

18. Any director having an interest in an economic activity causing his personal interest to conflict with that of the Fund shall, under pain of forfeiture of office, disclose his interest and abstain from voting on any decision involving the activity in which he has an interest.

The director is deemed to have an interest in any economic activity in which his spouse or child has an interest.

1983, c. 58, s. 18.

19. In no case may the Fund make an investment in favour of one of its senior executives or of his spouse or child, nor of any of its major shareholders.

Senior executive has the same meaning as in the Securities Act (chapter V-1.1).

1983, c. 58, s. 19.

20. In no case may the Fund invest in an undertaking in which a director contemplated in subparagraph 1, 2 or 4 of the first paragraph of section 4 or a senior executive other than a director has a major interest nor in an undertaking controlled by him.

1983, c. 58, s. 20.

21. A person is considered to be a major shareholder in the Fund if he directly or indirectly holds more than 10% of the issued and paid-up capital stock.

A person is considered to have a major interest in an undertaking if he holds more than 10% of the stocks or shares of the undertaking.

A person is deemed to control an undertaking if he holds securities enabling him under all circumstances to elect a majority of its directors.

1983, c. 58, s. 21.

22. Any contract in contravention of section 19 or 20 may be cancelled within one year of the date of the contract.

The senior executives of the Fund who carried out the financial transaction or consented thereto are jointly and severally liable for the losses to the Fund resulting from the transaction.

1983, c. 58, s. 22.

23. No contract made in contravention of section 19 or 20 may be cancelled and the second paragraph of section 22 does not apply if the contravention results from the opening of a succession or a gift and if the beneficiary renounces the property concerned or disposes of it with dispatch.

1983, c. 58, s. 23.

DIVISION IV PURCHASE OF CLASS “A” SHARES OR FRACTIONAL SHARES BY PAYROLL DEDUCTIONS

1989, c. 78, s. 12.

24. A person may request his employer to deduct the amount he determines from his salary or wages, for the period he specifies, to pay for the class “A” shares or fractional shares he has decided to purchase from the Fund.

The employer shall, within a reasonable time, make the deduction from the salary or wages of the person requesting it if 50 of his employees, or 20% of them if that is fewer, avail themselves of this section.

1983, c. 58, s. 24; 1989, c. 78, s. 13.

25. An employee whose salary is subject to a deduction under this division may, at any time, notify the employer of his decision to cease purchasing shares of the Fund by a deduction from his salary or wages.

The employer shall comply with the employee’s decision with reasonable dispatch.

1983, c. 58, s. 25.

26. An employee availing himself of section 25 may demand redemption of the shares he has subscribed provided he applies to the Fund in writing within 60 days of the payday when the first deduction was made from his salary or wages under this division.

1983, c. 58, s. 26.

27. An employer shall remit to the Fund or the trustee designated by the latter the amounts deducted under this division not later than the fifteenth day of the month following that in which he made the deduction. The remittance must be accompanied with a statement specifying the amount deducted from the salary or wages of each employee and the latter’s name, address, date of birth and social insurance number.

Copy of the statement is also forwarded, where applicable, to the certified association.

The amounts deducted under this division remain due to the employee as salary until they are remitted by the employer to the Fund or to the trustee designated by it.

1983, c. 58, s. 27; 1989, c. 78, s. 14; 1993, c. 47, s. 4.

28. An employee on behalf of whom sums have been remitted under section 27 is deemed to have subscribed for as many of the Fund’s class “A” shares and fractional shares as the amounts deducted from his salary permit him to purchase.

1983, c. 58, s. 28; 1989, c. 78, s. 15.

29. An employer required to make a deduction under this division shall at the request of the Fund transmit a notice once yearly to each employee concerned who receives remuneration advising him where he may examine the half-yearly financial statements of the Fund.

The form, tenor and mode of transmission of the notice are prescribed by the Commission des valeurs mobilières du Québec.

1983, c. 58, s. 29.

DIVISION V MISCELLANEOUS AND FINAL PROVISIONS

30. In addition to the other statutory duties it may have regarding the Fund, the Commission des valeurs mobilières du Québec is responsible for inspecting once yearly the internal affairs and the activities of the Fund to see that this Act is complied with.

For the inspection, the Commission has the powers vested in it by Chapters I and II of Title IX of the Securities Act (chapter V-1.1).

The Commission shall make a report of each inspection to the Minister of Finance and shall include therein any other information or document the Minister determines.

1983, c. 58, s. 30; 1989, c. 78, s. 16.

31. Sections 123.77 to 123.79 of the Companies Act (chapter C-38) apply only in the case of the directors contemplated in subparagraph 2 of the first paragraph of section 4.

1983, c. 58, s. 31; 1986, c. 69, s. 2.

32. A shareholder may, on payment of the costs prescribed by by-law of the board of directors, obtain copy of the articles and by-laws of the Fund.

1983, c. 58, s. 32.

33. (This section ceased to have effect on 23 June 1988).

1983, c. 58, s. 33; U. K., 1982, c. 11, Sch. B, Part I, s. 33.

34. (Omitted).

1983, c. 58, s. 34.

REPEAL SCHEDULE

In accordance with section 17 of the Act respecting the consolidation of the statutes and regulations (chapter R-3), chapter 58 of the statutes of 1983, in force on 1 July 1983, is repealed, except section 34, effective from the coming into force of chapter F-3.2.1 of the Revised Statutes.