On December 10, 2016, Bill 144, the Budget Measures Act, 2015 (Ontario) will come into force and the Forfeited Corporate Property Act, 2015 (FCPA) will be enacted. The enactment of the FCPA will have the effect of amending the Business Corporations Act (Ontario) (OBCA), the Corporations Act (Ontario), and – when it comes into force – the Not-for-Profit Corporations Act, 2010 (Ontario). The FCPA will impose new record-keeping obligations on Ontario companies. This article focuses on the implications for OBCA companies only.
Pursuant to the amendments, nearly all Ontario corporations will be obligated to maintain and update a new register of the corporation’s ownership interests in land in Ontario. The legislation appears to exclude non-Ontario corporations with ownership interests in real property situated in Ontario, as well as OBCA corporations’ ownership interests in real property situated outside of Ontario. Following implementation of the amendments, the OBCA will require corporations to “prepare and maintain at its registered office a register of its ownership interests in land in Ontario”.i While the term “ownership interest” is not defined, interpreting it to cover both legal and beneficial interests in real property in Ontario, would be the most cautious approach.
Timing of new obligations
Under the OBCA, there are two important deadlines to keep in mind:
- Corporations that are incorporated or continued under the OBCA on or after December 10, 2016, must comply with the new obligations immediately; and
- Corporations that were incorporated or continued under the OBCA before December 10, 2016 must comply with the new obligations as of December 10, 2018.ii
Under the OBCA, the register required to be maintained shall: (i) identify each applicable property; and (ii) show the date on which the corporation acquired the property and, if applicable, the date on which it disposed of it. iii
In addition, an OBCA corporation must keep with the register a copy of any deeds, transfers or similar documents that contain any of the following information with respect to 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; and
Consequences of non-compliance?
Under subsection 145(1) of the OBCA, shareholders and creditors will have the right to examine the corporation’s register of ownership interests during business hours and take extracts from those records. Every person who without reasonable cause contravenes section 145 is guilty of an offence. Where an individual is convicted, he or she is liable to a fine of not more than CA$2,000 or to imprisonment for a term of not more than one year, or both. Where a body corporate is convicted, it is liable to a fine of not more than CA$25,000.
Management of Ontario corporations should be aware of these new obligations, which could potentially be quite onerous for OBCA companies with substantial ownership interests in land in Ontario. Given the current uncertainty around how these new rules will be applied and interpreted in practice, we recommend a cautious approach that builds compliance with the new rules into a corporation’s existing record-keeping practices.