On December 10, amendments to Ontario’s Business Corporations Act (OBCA) and Corporations Act came into force that impose new record keeping requirements on Ontario corporations that have ownership interests in land in Ontario. The amendments were made in connection with the Forfeited Corporate Property Act, 2015 (FCPA) which came into force on the same date and which establishes new rules related to the forefeiture of property when a corporation is dissolved. Companion amendments to the Not for-Profit Corporations Act, 2010 were also enacted but have not yet been proclaimed in force.
If a corporation incorporated under either the OBCA or the Corporations Act is dissolved, any of its property that has not been disposed of on the date of dissolution is immediately forfeited to, and vests in, the Crown. To help avoid such forfeitures of real property, every Ontario corporation is now required to maintain at its registered office a register of its ownership interests in land in Ontario.
What Interests in Land are to be Recorded?
The new record keeping requirements apply only to ownership interests in land in Ontario. Land owned outside Ontario is not subject to the new requirements. The term “ownership interests in land” is not defined and therefore may be interpreted broadly to include both registered and beneficial interests in freehold land, as well as leasehold and easement interests.
Arguably, however, the primary purpose of the new legislative scheme is to ensure that any registered interests in land in Ontario that are held by a corporation will be identified and transferred to a new owner by way of a registered transfer prior to the corporation being dissolved. Unregistered beneficial interests in land will usually not be forfeited when a corporation is dissolved because, absent a conveyance to another party, such interests will generally be conveyed to the corporation’s shareholder by way of a customary general conveyance given to the shareholder prior to dissolution. Nevertheless, until the term is clarified, we recommend that corporations include both registered and beneficial interests in land in their property registers.
Information to be Included in the Register
The property register must identify each property owned by the corporation, show the date the corporation acquired the property, and, if applicable, show the date the corporation disposed of the property.
In addition, the 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 in which the property is located and the property identifier number,
- the legal description, and
- the assessment roll number, if any.
When Do You Have to Comply?
The new record keeping requirements will apply to all corporations incorporated under the OBCA and the Corporations Act on or after December 10, 2016. Corporations incorporated before December 10, 2016 must comply with the new rules by December 10, 2018.
Consequences of Non-Compliance
If a corporation, without reasonable cause, fails or neglects to comply with these new requirements, the corporation is guilty of an offence and liable to a fine of up to $25,000. In addition, each director or officer of the corporation is also guilty of an offence and liable to a fine of up to $2000 or imprisonment for up to a year or both.
The new record keeping requirements with respect to ownership interests in land in Ontario will impose an additional, and potentially significant, administrative burden on Ontario corporations. Those corporations that were incorporated before December 10, 2016 and that have extensive ownership interests in land in Ontario should begin preparing their real property register and compiling the necessary supporting documentation and records as soon as possible so as to be in compliance with the new requirements well in advance of the deadline on December 10, 2018.
To discuss these issues, please contact the author(s).
This publication is a general discussion of certain legal and related developments and should not be relied upon as legal advice. If you require legal advice, we would be pleased to discuss the issues in this publication with you, in the context of your particular circumstances.
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