In a recent ruling in Power Corporation du Canada c. Mouvement d’éducation et de défense des actionnaires, 2009 QCCA 1627, the Quebec Court of Appeal clarified the scope of the rule set out in section 157 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (“CBCA”), that requires a corporation to keep a copy of the financial statements of each of its subsidiaries and sub-subsidiaries at its registered office. The Court held that the requirement applies even where the accounts of a subsidiary or sub-subsidiary are not consolidated in the financial statements of the corporation, and moreover, even where the results of a subsidiary do not have a significant impact on the value of the parent company’s shares.

In the Court’s view, this interpretation serves the dual purpose behind the enactment of section 157 CBCA. First, the provision codifies the rule contained in the Handbook of the Canadian Institute of Chartered Accountants, which, since 1992, has required that subsidiaries’ financial statements be consolidated in the financial statements of their parent companies. Secondly, it allows shareholders to have free access to financial information complementing the audited consolidated financial statements which the corporation is obliged to provide to them on an annual basis.

It should be noted that the requirement contained in section 157 CBCA does not exist for companies incorporated under Part IA of the Quebec Companies Act, R.S.Q. c. C-38, the British Columbia Business Corporations Act, S.B.C. 2002, c. C-57, or the Companies Act of Prince Edward Island, R.S.P.E.I. 1988, c. C-14. The other Canadian provinces and territories have a provision similar to section 157 CBCA in their legislation.