Insights & Articles
Changes to Ontario’s Corporate Acts: Record-Keeping and Forfeiture of Corporate Property
The Budget Measures Act, 2015, will enact two new statutes which come into force on December 10, 2016, the Forfeited Corporate Property Act, 2015 (the “FCPA”) and the Escheats Act, 2015 (collectively, the “Acts”). The Acts set out a legislative regime to deal with forfeited corporate assets upon a corporation’s dissolution. The FCPA amends the Business Corporations Act (Ontario), the Corporations Act (Ontario), and the Not-for-Profit Corporations Act (Ontario) to impose new record-keeping requirements with respect to ownership interests in land and tighter timelines for dissolved Ontario corporations to recover forfeited corporate property.
Forfeited Corporate Property
Under current Ontario law, if a corporation is involuntarily dissolved its assets are forfeited to the Crown. Corporations may be involuntary dissolved for a number of reasons, such as failure to pay taxes or certain prescribed fees. Previously, corporations had twenty years under the applicable Ontario corporate act to be revived and recover its assets. Once the Acts come into force, however, corporations will still have twenty years to be revived, but may only recover their assets if the revival occurs within the first three years of dissolution, with some exceptions. This is a significant change that is effective immediately upon the coming into force of the FCPA.
New Record-Keeping Requirements
The enactment of the FCPA will impose new record keeping requirements on Ontario corporations with respect to land interests. The register of interests in land must contain information that shows each of the corporation’s ownership interests in land in Ontario, as well as the date of acquisition and disposal (if applicable) of such land. The register must contain certain prescribed information such as the municipal address (if any), property identification number (PIN), the registry or land titles division in which the property is registered, the legal description and the assessment roll number (if any). The register will need to be kept at the corporation’s registered office or such other place as designated by the directors.
It appears that these record-keeping requirements will not apply to Ontario corporations that have ownership interests in land outside of Ontario, or to non-Ontario corporations that have ownership interests in land in Ontario. However, the term “ownership interest in land” is not defined and could potentially include property that a corporation has a charge or a mortgage over as well as land beneficially owned by a corporation.
For Ontario corporations that were incorporated, continued or amalgamated prior to December 10, 2016 these requirements will not come into force until December 10, 2018. For Ontario corporations that come into existence after December 10, 2016 these requirements will be effective immediately.
These changes will have a significant practical impact on the way Ontario corporations maintain their day-to-day records as well as potentially harsh consequences for dissolved corporations that do not abide by the new timelines for revival. With the effective date of the Acts fast approaching, those in control of corporations will need to begin planning for compliance.