The Forfeited Corporate Property Act (FCPA) comes into force in Ontario on December 10, 2016, and will implement additional record-keeping obligations for corporations incorporated or continued in Ontario.
Where a corporation is dissolved in Ontario, and that corporation is a holder of real estate, such property is automatically forfeited to the Ontario Crown upon dissolution. Prior to the FCPA, forfeited real property could be recovered within 20 years after dissolution by reviving the corporation. Following the introduction of the FCPA, while the dissolved corporation may still be revived within 20 years from the date of dissolution, it will no longer be possible to recover that property if the revival takes place three years or more after the date of dissolution. The FCPA will also amend several provisions of Ontario’s Business Corporations Act (OBCA). While this bulletin focuses on the specific OBCA amendments, the discussion is equally applicable to corporations incorporated under Ontario’s Corporations Act and Ontario’s Not-for-Profit Corporations Act, which will be subject to similar regulations.
The OBCA will require that a corporation maintain, at its registered office, a register of its ownership interests in land in Ontario. The register must identify each property and show the date the corporation acquired, or disposed of (if applicable), the property. Further, corporations will also be required to maintain supporting documents along with the register, including copies of any deeds, transfers or similar documents that contain any of the following information about 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 roll number, if any
While the OBCA amendments will come into force on December 10, 2016, currently existing corporations have until December 10, 2018 to comply. Corporations incorporated on or after December 10, 2016 will be required to maintain the land register as of their date of incorporation.
However, due to its novelty and the limited public discussion it has received to date, the full implications of the real property register are yet unknown. For example, corporations are allowed a “reasonable time” to update their register of “ownership interests in land” so as to be available to any person lawfully entitled to examine them. The terms “reasonable time” and “ownership interests in land” are, however, not defined in the OBCA. It is therefore unclear how up-to-date the register must be and whether corporations will be required, in addition to listing property that they own outright, to include beneficial interests, leasehold interests, easements or mortgage interests they hold in land.
Corporations and their counsel should discuss the manner in which the new record-keeping obligations should be fulfilled. Though it is hard to imagine that there will be any significant governmental enforcement of the new rules, corporations will have to ensure they comply to meet obligations to lenders and others.