Industry NewsfeedCourtesy of Osler. View original article here.
On December 10, 2016, amendments to the Ontario Business Corporations Act (the OBCA) will come into effect that will require all corporations incorporated under the OBCA to comply with new onerous record-keeping requirements with respect to interests in land in Ontario.
The Forfeited Corporate Property Act, 2015 (the FCPA) comes into force on December 10, 2016. The FCPA attempts to remedy certain issues with the forfeiture of corporate property upon dissolution to the Crown, as well as the revival of dissolved corporations. As part of doing so, the FCPA implements amendments to the OBCA that, among other things, introduce new record-keeping requirements for Ontario corporations, which also come into effect on December 10, 2016. The FCPA enacts similar amendments to the Ontario Corporations Act and the Not-for-Profit Corporations Act, 2010 (the latter of which will come into force when the Not-for-Profit Corporations Act, 2010 comes into force). This update focuses on changes to the OBCA.
Under the new provisions, an OBCA corporation will be required to prepare and maintain a register of its ownership interests in land in Ontario. This requirement does not extend to ownership interests in real property situated outside Ontario. The legislation does not define the term “ownership interests” and is silent with respect to whether that term refers only to legal/registered interests or whether it is meant to apply to both legal/registered interests and beneficial interests in real property. If the requirement is meant to apply to both, then Ontario corporations who hold a beneficial interest in land in Ontario will also need to comply with these requirements, even if the registered holder is not an OBCA corporation. Without a definition of the term “ownership interests,” it is not clear whether an OBCA corporation needs to maintain records with respect to options to purchase, mortgages held in respect of land in Ontario, easement and right-of-way interests or possibly leasehold interests, depending on the nature of the lease and whether there is a leasehold parcel for the property.
The new register of ownership interests in land in Ontario needs to:
- identify each property; and
- show the date the corporation acquired the property, and if applicable, the date the corporation disposed of it
In addition, the corporation must cause to be kept with the register a copy of any deeds, transfers or similar documents that contain any of the following with respect to each property listed in the register:
- the municipal address, if any
- the registry or land titles division and the property identifier number
- the legal description
- the assessment role number, if any
Currently, the register may be kept at the corporation’s registered office or at another place in Ontario designated by the directors. However, the amendments to the OBCA include a provision, not yet proclaimed in force, that would require the register to be kept at the corporation’s registered office. If the corporation intends to maintain the register of ownership interests in land at its registered office and its registered office is at a place other than the corporation’s place of business (for instance, at a law firm or other third party), then the corporation will need to provide to that third party all necessary information to maintain the register, together with copies of the required supporting documentation.
A corporation incorporated or continued under the OBCA on or after December 10, 2016 must immediately comply with these new provisions. Corporations incorporated or continued under the OBCA prior to this date will be given a two-year transition period and must comply with the provisions as of December 10, 2018. For Ontario corporations with interests in many properties, we recommend starting the process of collecting the required information and records now to ensure they are in compliance by the December 10, 2018 deadline.
Non-compliance with these provisions may result in the corporation and its directors or officers being subject to fines or other penalties under the OBCA.
The amendments have not been well publicized by the Ontario government to date and further information regarding the applicability of the requirements may be provided as corporations begin to implement them.
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