On December 10, 2016, the Forfeited Corporate Property Act (the “FCPA”) came into force. The purpose of the FCPA is to deal with forfeiture of property to the Crown which belongs to a corporation at the time of the corporation’s dissolution. In connection with the adoption of the FCPA, various amendments were also made to the Ontario Business Corporations Act (the “OBCA”), including new record keeping requirements related to interests in land.
Corporations that are incorporated under the OBCA are now required to prepare and maintain a register of ownership interests in land in Ontario. This register must identify each property and the date when the property was acquired and disposed of by the corporation. The phrase “ownership interest” is not defined in the statute, leaving some uncertainty with respect to the exact intent of the legislation. However, based on the language of the amendments it appears that the phrase “ownership interest” will likely include both registered and beneficial interests in land but will be unlikely to include charges or mortgages.
Unlike other documents required to be maintained under the OBCA, this register can only be kept at the corporation’s registered office and not at another place designated by the corporation’s directors. Along with the register, the corporation will be required to keep a copy of any deeds, transfers or similar documents that contain:
- the municipal address;
- the registry or land titles division and the property identifier number;
- the legal description; or
- the assessment roll number.
If a corporation is incorporated or continued under the OBCA on or after December 10, 2016 then these requirements become effective on the date the corporation is incorporated or continued. However, if the corporation was incorporated or continued prior to December 10, 2016 then the corporation is granted a two-year window to comply and must meet the requirements by December 10, 2018.
If a corporation fails to comply with these new requirements, it may lead to fines or penalties under the OBCA, including potential personal liability and other penalties for directors and officers. A failure to comply with these requirements may also limit the corporation’s ability to make representations or warranties related to compliance with all applicable law when entering into agreements. Additionally, a corporation may also be in breach of contractual covenants it previously agreed to which require the corporation to comply with all applicable law.
The Ontario Corporations Act has also been amended to have similar record keeping requirements. Although not yet in force, the Not-for-Profit Corporations Act will also have similar record keeping requirements once it comes into force.
Depending on the nature of the business of the corporation, preparing and maintaining such a register may be quite labour-intensive and time consuming. It would be prudent for all OBCA corporations, especially those that regularly acquire and dispose of interests in land, to begin compiling the necessary information to create this register as soon as possible.