On December 10, 2016, new requirements for Corporations governed by Ontario’s Business Corporations Act (“OBCA”) and Corporations Act (“OCA”) came into force. The following will also apply to the Ontario Not-For-Profit Act when it is enacted.
Under the amendments, corporations must prepare and maintain a register of their ownership interests in land at their registered office or alternative place in Ontario as ascribed by the directors. Although the scope of the definition of “land” remains broad under the OBCA, the general outlook is that it includes both beneficial and registered interests.
What Needs to be Included?
To conform to the new laws, lawyers for Ontario corporations should therefore ensure that a compliant register is maintained. According to the new Section 140.1(2) of the OBCA, the register must (a) identify each property; and (b) show the date the corporation acquired the property and, if applicable, the date the corporation disposed of it. In addition, the register must now be kept in conjunction with the following information:
- The municipal address, if any;
- The registry or land titles division and the property identifier number;
- The legal description; and
- The assessment roll number, if any.
What are the Associated Risks?
While all corporations in existence prior to December 10, 2016 have two years to meet this new standard, all newly incorporated entities must adhere to them from their inception. Inaction will come at a price. Failure to comply will result in a fine up to $25,000 for the corporation as well as personal fines of up to $2,000 for every director or officer who authorized, permitted, or acquiesced the offence. These individuals may also face up to 1 year of imprisonment.
Further, not only will corporations be fined for their daily non-compliance (after receiving notice), but perhaps more influencing, they will be unable to represent and provide warranties that they have complied with all applicable laws in Ontario.
These new laws reflect an aura of importance being placed on the meticulous record keeping of Ontario corporations. It is imperative that affected corporate clients be warned of the implications immediately and that their record books be amended to reflect the changes.
The new record keeping obligations were made as a result of a regime change initiated by the Ontario Government affecting the forfeiture of property to the Crown for dissolved corporations. To read more about the details of these changes, click here.
By: Michael Taing & Daniel Wulffhart