On December 10, 2016, the Forfeited Corporate Property Act (the “FCPA”) introduced new changes to existing laws regarding the forfeiture of corporate property to the Crown in the event of dissolution. The effect of the new legislation appears to be to allow the Crown to pursue a quicker and more seamless assumption of the assets remaining with a corporation after its dissolution.
Prior to the introduction of the FCPA, corporations in Ontario have benefited from a twenty-year limitation period in which they could reinstate their corporate status after dissolution. The historical twenty-year revival period has always been paired with an equal time period to recover real and personal property forfeited. Under the new legislation, while the revival period subsists, the latter limitation period has been shortened to only three years after dissolution.
This means that three years after a corporation is dissolved, any real and personal property of the dissolved corporation will escheat or be forfeited to the Crown.
For corporations dissolved after December 10, 2016, the three-year clock begins immediately. For those that dissolved prior to the above-mentioned date but had not yet reached their twenty-year limit on December 10, 2016, a new three-year timer has begun.
Ontario corporations that have been dissolved within two decades of the enactment date, and those that face dissolution moving forward, should, therefore, be advised with regard to the changes in their circumstances.
The new legislation also imposes new record keeping requirements under Ontario’s Business Corporations Act and Corporations Act. You can read more about the details of the New requirements for corporations.
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The article was written by corporate lawyers division at Hummingbird lawyers LLP