In Québec, section 128 of the Act respecting the Barreau du Québec makes legal advice and the drafting of agreements, by-laws and resolutions relating to the constitution, organization, reorganization, winding-up or amalgamation of a corporation the exclusive prerogative of the practising advocate, when those acts are performed for others. An accountant or a tax adviser may therefore design a structure and compute its effects, but the corporate documentation that gives it effect belongs to a lawyer or, depending on the act, to a notary.
This article is written for chartered professional accountants, tax advisers, immigration consultants, business transfer brokers and the advisers who work alongside entrepreneurs. It answers one precise question: at what point does a file require a lawyer, and how can you hand off that part without losing the relationship you have built with your client.
The point where a file leaves your scope of practice
It rarely happens at the start. It happens in the middle. You have built the structure, costed the rollover, explained the mechanics to the client, and now the documents that will make it real have to be produced: articles, resolutions, a shareholder agreement, a share exchange, filings with the register. That is where the file changes in kind.
Three reflexes present themselves, and two of them are wrong. Drafting it yourself exposes you to the illegal practice of law and, more concretely, to a document that will not hold the day it is needed. Sending the client off to find a lawyer alone means accepting that a colleague may pick up the whole file, often along with the relationship. The third path is to bring a lawyer into your file, at your call and at your pace.
What is reserved to lawyers in Québec?
The answer is written down, and it is short. Section 128 lists the acts that are “the exclusive prerogative of the practising advocate or solicitor” when they are performed for others:
- to give legal advice and consultations on legal matters;
- to prepare and draw up a notice, motion, proceeding or other similar document intended for use in a case before the courts;
- to prepare and draw up an agreement, petition, by-law, resolution or other similar document relating to the constitution, organization, reorganization or winding-up of a legal person, or the amalgamation of several legal persons or the surrender of a charter.
The third paragraph is the one that touches your practice every day. It says nothing about litigation: it speaks of constitution, organization, reorganization, winding-up and amalgamation. That is the very body of a tax planning or business transfer file.
What you can still do yourself
Section 129 of the same Act limits section 128, and it is worth knowing so as not to feel more constrained than you are. It provides in particular that nothing in section 128 restricts the rights specifically given to any person by any other Act, nor the right of the secretary of a legal person to draw up the minutes of meetings of directors or shareholders and the other documents he is authorized to draw up by federal or provincial law.
The dividing line therefore runs between designing and documenting. Designing a structure, computing its tax effects, recommending one regime over another, explaining the arrangement to the client, keeping the minutes as secretary of the corporation, filing declarations with the register: all of that stays on your side. Drafting the articles, the shareholder agreement, the resolutions of a reorganization, or advising the client on the legal reach of what he is signing: that moves to the lawyer's side.
This division takes nothing away from anyone. It describes a well-run file, in which each professional signs what he masters and the client is not left to arbitrate between two partial opinions.
Can an accountant incorporate a company for a client?
No, and it is the question that comes up most often. Constituting a corporation for another person means preparing and drawing up the articles, the initial resolutions and the organizational documents. Section 128 (1) (c) of the Act respecting the Barreau du Québec places precisely those documents among the reserved acts, since they relate to the “constitution” and the “organization” of a legal person. Filling in the registrar's online form for your own business is one thing; doing it for a client, with the corporate documentation that has to go with it, is another.
Let us say it plainly: many professionals who are not lawyers do incorporate companies for their clients. In the great majority of cases this is not bad faith. It is an incomplete reading of the law, often inherited from an office practice that was never questioned, and sometimes encouraged by the fact that the registration form is public and easy to reach. We are not writing this to judge anyone or to denounce a practice. We are writing it to inform, and above all to let you protect yourself.
Because the risk is almost never the one people picture. It is not a surprise inspection. It is a dissatisfied client. A falling-out between shareholders two years later, a transaction that fails, a disputed invoice: the client then looks for leverage, takes advice, and learns that the documents behind his corporation were prepared by someone who was not entitled to prepare them. What was merely a service rendered becomes a means of pressure, and sometimes a complaint to the professional order, a challenge to your fees or a claim.
Two concrete consequences follow. Section 188 of the Professional Code makes a natural person who contravenes the Code or the Act constituting an order liable to a fine of $2,500 to $62,500, and $5,000 to $125,000 in other cases, those amounts being doubled on a repeat offence. And professional liability insurance covers acts performed in the practice of the insured profession: an act that falls outside it may well not be covered, which leaves the professional alone facing the claim.
The solution is simple and it does not cost you your client. You keep running the file, choosing the regime and explaining the structure. The corporate documentation is produced by the lawyer, at your request, and you deliver it within your own mandate. The service is rendered, the client is served, and no one is exposed.
Five situations where the file calls for a lawyer
The estate freeze
You have settled the timing, the value to be frozen, the share classes to be created and the tax election that applies. What remains is the share capital amendment, the board resolutions, the subscription for the new shares, often the family trust, and the agreement that holds it all together. That is corporate drafting within the meaning of section 128.
The shareholder agreement
It is the document that comes up most often, and the one that gets put off longest. A template found online costs little and is paid for dearly the day of a falling-out, because it ignores the mechanics of the Québec Business Corporations Act and the difference between an ordinary agreement and a unanimous one, which do not produce the same effects on the powers of the directors.
Buying or selling a business
The choice between a share sale and an asset sale is often decided on tax grounds, but it is documented legally: letter of intent, due diligence, representations and warranties, price adjustments, non-competition, assignment of contracts and permits. A badly calibrated warranty clause can wipe out the tax advantage you had secured.
Reorganization and amalgamation
Interposing a management corporation, joining two entities of the same group, buying out a shareholder: each of these calls for a sequence of corporate acts, dated, ordered and consistent. It is the order of the steps that makes the whole valid, and that is where files built in haste come apart.
Business immigration
A foreign investor or entrepreneur often has to create or acquire a business, and the structure chosen must satisfy both the immigration authorities and corporate law. The two sides answer to each other: a poorly built structure can compromise an immigration file, and an undertaking given without weighing its corporate reach can bind the client for years.
Referring without losing your client: three ways of working
This is the real objection, and it is a fair one. Here are the three modes we work in.
| Mode | Who speaks to the client | When to choose it |
|---|---|---|
| You stay on the file | You | You order the service, we produce the documents, you deliver them to your client within your own mandate. |
| We work as three | You and us | The file requires the client to hear from the lawyer directly, but you remain the conductor. |
| You refer | Us | The legal side goes beyond the current mandate. We take over and return the file to you once the question is settled. |
In all three, the principle is the same: we do not go looking in your client's affairs for what is not in our mandate. An accountant who entrusts us with drafting an agreement does not learn six months later that we have offered to keep his books.
And if the file turns out to be more complex?
Labo Legal is a platform: flat-price services, ordered online, produced within 24 to 48 business hours. That is efficient for routine acts, and that is precisely its usefulness to you, because you know in advance what the legal part will cost and when it will be ready.
A file does not always stay in that format. An agreement grows complicated, a dispute appears, a transaction expands, a reorganization reaches several entities and several jurisdictions. In that case, the platform is operated by the firm MEKA AVOCAT, which takes over on a conventional mandate. You will not be left stranded halfway.
That is the reason the whole thing is built this way: a simple door for what is simple, and a firm behind it for what is not.
How fees work in a collaboration
Our prices are published, service by service, with the government fees set out in detail. You can therefore cost the legal part of a file before you even raise it with your client, which changes the conversation: you quote an amount rather than an unknown.
If you order the service, you are invoiced and you re-bill according to your own arrangement with your client. If you refer, your client is invoiced directly. Sharing fees between a lawyer and a person who is not a lawyer is not permitted, and we do not offer it: the collaboration rests on the quality of the work delivered and on reciprocity, not on a commission.
Professional secrecy, confidentiality and conflicts of interest
A lawyer's professional secrecy, protected by the Professional Code and by the Charter of human rights and freedoms, covers what the client confides to us. When you send us information on your client's behalf, it is with the client's agreement, and that information is handled under the same rules as if the client had given it to us directly.
A conflict of interest check is run before any mandate is opened. If a conflict exists, we decline the file and tell you immediately, which leaves you time to direct your client elsewhere without losing days.
Starting a collaboration
There is no partnership agreement to sign and no minimum volume to meet. The simplest way to begin is to send us a real file, with its deadline, and to judge from the result.
A consultation makes it possible to confirm, in one session, whether a structure is workable and how the tasks should be divided. For a first documentary file, the shareholder agreement, the articles of amendment and Québec incorporation are the most common entry points. You can also write directly to contact@labolegal.ca, mentioning your profession and the nature of the file: the answer comes from a lawyer, not from a form.
Frequently asked questions
No. Constituting a corporation for another person means preparing and drawing up the articles, the initial resolutions and the organizational documents, and section 128 (1) (c) of the Act respecting the Barreau du Québec reserves those documents to the practising advocate because they relate to the constitution and the organization of a legal person. The accountant may choose the regime, explain the structure to the client and run the file; the corporate documentation is produced by the lawyer.
Not for others. Section 128 (1) (c) of the Act respecting the Barreau du Québec makes the preparation and drawing up of an agreement, by-law or resolution relating to the constitution, organization, reorganization or winding-up of a legal person the exclusive prerogative of the practising advocate. The accountant may design the structure, compute its tax effects and discuss it with the client; drafting the document itself belongs to the lawyer.
He can design it, set the freeze value, choose the share classes and apply the tax rules. The share capital amendment, the board resolutions and the agreement that frames the operation are corporate drafting within the meaning of section 128 of the Act respecting the Barreau du Québec and belong to the lawyer.
Section 129 of the Act respecting the Barreau du Québec provides that section 128 does not restrict the rights given to a person by another Act, nor the right of the secretary of a legal person to draw up the minutes of meetings of directors or shareholders and the other documents he is authorized to draw up by federal or provincial law.
No. Three modes are possible: you order the service and remain the sole point of contact, we work as three with you as the conductor, or you refer and we return the file to you once the legal question is settled. We do not offer the client services outside the mandate entrusted to us.
Labo Legal is operated by the firm MEKA AVOCAT. When a file outgrows the flat-price service format, the firm takes over on a conventional mandate. You will not be left stranded halfway.
The commonest risk is not an inspection, it is a dissatisfied client who later discovers that the documents were prepared by a person who was not entitled to prepare them, and uses that as leverage. Added to it are the fine under section 188 of the Professional Code, $2,500 to $62,500 for a natural person and $5,000 to $125,000 in other cases, doubled on a repeat offence, and the fact that professional liability insurance may not cover an act performed outside the insured scope of practice.
No. Sharing fees between a lawyer and a person who is not a member of the Barreau is not permitted. If you order the service, you are invoiced and you re-bill under your arrangement with your client. If you refer, your client is invoiced directly.