Ontario Adopts New Forfeited Corporate Property Act
The Ontario government has adopted a new Forfeited Corporate Property Act, 2015 (“FCPA”) and made related changes to the Ontario Business Corporations Act. The FCPA is scheduled to come into force on December 10, 2016.
New 3 Year Deadline for Forfeited Corporate Property
As the title of the statute implies, the FCPA specifies what happens to any remaining corporate property once a corporation is dissolved. So, if a corporation is dissolved and some or all of its property was not transferred, sold or distributed, then starting 3 years after the dissolution, the Government of Ontario can use the forfeited property for Crown purposes, sell it and remove or amend any encumbrances or security interests registered against the forfeited corporate property. The FCPA applies to both real property and personal property that was owned by a dissolved corporation. In particular, that FCPA also applies to any personal property left in, on or under forfeited real property, regardless of whether this personal property was owned by the corporation or someone else.
The 3-year deadline for the government to take or sell forfeited corporate property represents a major change. Under the current rules in the Ontario Business Corporations Act (“OBCA”) and the Corporations Act (“OCA”), the owners of a dissolved corporation have up to 20 years to apply to revive the corporation and recover its assets. After the FCPA comes into force, the corporate owners will still have 20 years to apply to revive the corporation. However, as a general rule which is subject to some exceptions, they will not be able to recover its assets if the revival occurs more than 3 years after the dissolution.
Corporations Will Be Required to Keep Register of Real Property
As part of these changes, the government has also approved amendments to the OBCA and the OCA. These two corporate statutes have been amended to require a corporation to keep an updated register of the corporation’s ownership interests in real property. This register must be kept with the corporation’s books at its registered office or at another location approved by the corporation’s directors. The register must show each ownership interest that the corporation has in land, the date it was acquired and the date it was sold (if applicable). The corporation must also keep with its real property register the deeds, transfers and other documents that contain the municipal address of the property, the registry or land titles division, the property identifier number (PIN), the legal description and the assessment roll number. Presumably, the purpose of keeping all of these records with the corporation’s books is to simplify the government’s task in using or selling any forfeited corporate property. For corporations that own real estate, this will become an additional burden. They will either need to maintain these records if they keep their own minute books, or provide all of the necessary information and documents to the law firm or other service provider who keeps their minute books.
The requirement to keep a register of real property owned by the corporation and the related documents will not come into effect until December 10, 2018. So corporations will have a 2-year period to get ready to implement this change.