CANADA Law and Practice Contributed by: Scott Hyman, Anthony Spadaro and David Wilson, Davies Ward Phillips & Vineberg LLP
Quebec Publication is the civil law equivalent of perfec- tion. In Quebec, personal (movable) property security (other than a pledge) is published by the filing of a notice of the deed of hypothec with the Quebec personal property registry (Register of Personal and Movable Real Rights). A secured party will complete and file the notice, which will include the names and addresses of the debtor and the secured party, the date of the deed of hypothec, the hypothec amount and a complete detailed collateral description. Each filing has a default term of ten years, which can be extend- ed. A pledge is published by control, whether by way of physical delivery of pledged collateral to the creditor or by way of contractual control. Although perfection by control over deposit accounts is not possible under the PPSA, Que- bec law allows for publication by control over monetary claims, including claims relating to deposit accounts. Immovable property security is published by registration of a notice of the notarial deed of hypothec at the land register maintained in the registry office of the relevant registration division in Quebec, together with a copy of the deed of hypothec itself or an extract thereof. The main land registers also maintain special sub-regis- ters for the purposes of publishing hypothecs charging mining rights, cable communication networks, timber cutting rights, railway net- works, oil or gas pipelines and power lines. In all cases, notices of the security granted pur- suant to a deed of hypothec can only be reg- istered after the deed of hypothec has been executed and is in effect. As a result of recent amendments to Quebec’s language laws, these notices (including the col- lateral description) and any agreements or other
documents attached thereto must be drafted exclusively in French, which can be a source of additional cost and delay. One challenge that parties and their legal coun- sel often face in Canada is determining which jurisdictions are relevant for security and perfec- tion over personal property. Under the conflict of law rules of each Canadian province, security over tangible personal property needs to be valid and perfected in each jurisdiction in which the debtor has tangible personal property. Security over a debtor’s intangible property (including receivables, intellectual property and contractual rights) needs to be valid and perfected in the jurisdiction where the debtor is “located” . The latter can be difficult to determine because cer- tain provinces – such as Ontario, British Colum- bia, Saskatchewan, Quebec and Alberta – look to the debtor’s jurisdiction of formation or the location of its registered office, whereas the rest of the provinces and territories look to the loca- tion of the debtor’s “chief executive office” or “chief place of business” . For example, a credi- tor taking security over the intangible assets of a corporation incorporated in Nova Scotia whose chief executive office is located in Ontario should register in both Nova Scotia (to comply with the Ontario PPSA) and in Ontario (to comply with the Nova Scotia PPSA). 5.4 Restrictions on Upstream Security Canada does not have general restrictions on the provision of upstream security. However, please see 5.6 Other Restrictions regarding undervalue transfers and fraudulent convey- ances and preferences. 5.5 Financial Assistance Some provincial corporate statutes, including those in Alberta and British Columbia, contain restrictions on a corporation’s ability to provide
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