Until recently, an executive could generally assume that an offense committed by his or her company essentially exposed the corporation to criminal penalties. That is no longer the case. Since 2024, the Building Act (“Act”) has allowed, under certain circumstances, an officer to be held personally liable for an offense committed by the company, one of its employees, agents, or representatives.
Recently, we have published several articles on the new system of administrative monetary penalties (“AMPs”) introduced by the Act[1]. These new measures provide, in particular, that an officer may, under certain circumstances, become personally liable when a company fails to pay an AMP. However, the legislature has gone even further in the criminal sphere.
Thus, unless an officer can demonstrate that he or she exercised due diligence, an officer may now be held personally liable for an offense, even if he or she did not directly participate in it and was unaware of it. This legislative change significantly increases the risks faced by officers of construction companies. Under what circumstances can they be held personally liable?
The General Principle in Criminal Matters
In criminal matters, when an offense is committed in the course of a company’s business, the company is generally held liable. This rule stems from the principle that a corporation has a legal personality distinct from that of its directors, officers, and shareholders.
Thus, a company that violates a statutory obligation may be subject to criminal prosecution and sentenced to the penalties provided for by law. The resulting liability generally falls on the corporate entity rather than on the individuals involved in its management or who hold an interest in it.
This distinction is one of the cornerstones of corporate law. Directors, officers, and shareholders are generally not personally liable for offenses committed by the corporation. However, the legislature has chosen to deviate from this principle in certain circumstances provided for by the Act.
The Exception to the General Principle
To establish the criminal liability of an officer, the legislature drew inspiration from mechanisms already found in certain criminal laws [2]. More specifically, section 201.0.2 of the Act establishes a presumption of criminal liability with respect to officers. Thus, when a corporation, or one of its employees, agents, or representatives, commits an offense under the Act, its officer is presumed to have committed that offense himself or herself.
This presumption is not, however, absolute. The officer may rebut it by demonstrating that he or she exercised due diligence by taking all reasonable precautions to prevent the commission of the offense. The existence of oversight mechanisms, internal controls, training programs, documented follow-ups, or corrective measures may, in particular, be taken into account in assessing this defense.
The prosecutor must nevertheless establish beyond a reasonable doubt the existence of the offense as well as the status of the person in question as an officer. Once these elements have been established, it is up to the officer to prove that he or she took the reasonable measures necessary to prevent the alleged breach.
Through this provision, the legislature seeks not only to sanction at-fault companies but also to hold accountable those who exercise decision-making or supervisory authority over their activities. Executives must now be able to demonstrate, in concrete terms, the measures put in place to ensure compliance with the Act.
This approach is consistent with the fundamental objectives of the Act, including the competence and integrity of contractors, the quality of construction work, and the protection of the public. In return, it requires executives to exercise greater vigilance with regard to compliance.
Significant Consequences for Executives
This new regime has significant consequences for executives. The prosecutor does not have to prove beyond a reasonable doubt that the officer personally participated in the violation, authorized or directed it, or even had knowledge of it. Rather, the prosecutor must prove that a violation was committed by the company, one of its employees, agents, or representatives, as well as the status of the person in question as an officer.
Consider the example of a corporation that performs work requiring a subcategory of license that it does not hold. If an inspector from the Régie du bâtiment du Québec (Quebec Building Board) observes the violation, the corporation could face criminal prosecution. The officer in question could also be prosecuted, even if he or she was not present on the job site, did not participate in any decisions regarding the work in question, or was unaware that the work was being performed. It would then be up to the officer to demonstrate, through concrete evidence, that he or she took all reasonable precautions to prevent the commission of the offense and thus rebut the presumption established by the Act.
Furthermore, the term “officer” is interpreted very broadly under the Act. The following, among others, may be considered officers:
- a member of a corporation;
- a director of a legal entity;
- an officer as defined by the Business Corporations Act;
- a full-time manager;
- a shareholder holding 10% or more of the voting rights attached to the shares of a legal entity.
This definition warrants special attention. Indeed, a shareholder holding 10% or more of the voting rights attached to the shares of a legal entity may be considered an officer within the meaning of the Act, even if he or she does not participate in the day-to-day management of the business. This reality may come as a surprise to some shareholders who, although they do not participate in the day-to-day management of the company and do not consider themselves officers, could nevertheless fall under this legal classification.
Caution is advised
Officers are therefore advised to exercise heightened vigilance in ensuring compliance with the statutory and regulatory requirements applicable to the company. In this regard, implementing effective oversight mechanisms, license verification processes, documented compliance policies, and appropriate training can help demonstrate that due diligence was exercised in the event of an alleged violation.
Companies must also ensure that everyone’s roles and responsibilities are clearly defined and that appropriate control mechanisms are in place to prevent situations of non-compliance. It is not sufficient for a executive to claim ignorance of a situation or to cite the trust they placed in an employee. In the event of a violation, they must be able to prove the concrete measures they implemented to ensure compliance with the obligations set forth in the Act.
Given the broad scope of the term “officer,” those covered must remain actively involved in managing their company’s operations. When a problematic situation is identified or a disagreement arises regarding certain practices, it is prudent to document the interventions, recommendations, and objections raised.
Compliance with the Act is therefore no longer merely an organizational issue. It may result in personal criminal liability for certain officers. In this context, due diligence should not be viewed as a mere abstract legal concept. Rather, it constitutes the primary line of defense for executives exposed to the risk of personal liability in the event of a violation of the Act.
If you have any questions or would like guidance regarding the criminal regime provided for by the Building Act, we invite you to contact the members of our construction law team.
[1] New RBQ Sanctions Regime: Are You Ready?, Cain Lamarre; RBQ SAP: Due Diligence—Your Best Line of Defense, Cain Lamarre.
[2] Act respecting certain measures to enforce environmental and dam safety laws, RLRQ c. M-11.6, s. 51.; Tourist Accommodation Act, Chapter H-1.01, s. 35; Act to Combat Smoking, Chapter L-6.2, Art. 57.1.1. ; See also in the construction sector: Master Electricians Act, Chapter M-3, Art. 21.2; Master Pipefitters Act, Chapter M-4, Art. 20.2;
