On December 10th, 2016, the Ontario Business Corporations Act (OBCA) was amended. It now requires Ontario corporations to create and maintain a register of all of their ownership interests in land in Ontario. Corporations incorporated on or after December 10th, 2016, must comply immediately. Other Ontario corporations have until December 10th, 2018 to comply.
This new register is to be kept at the corporation’s registered office and must record certain detailed information on the corporations ‘ownership interests’ in real property. It must state the acquisition and disposal dates of each property owned by the corporation. The register must also include supporting documents, such as deeds and transfers, and must be kept with the register if they contain information relating to:
- the property’s municipal address;
- the registry or land titles division and the property identifier number;
- the property’s legal description; and
- the assessment roll number.
These requirements will not be overwhelming for small business corporations that rarely buy or sell interests in land, however, those corporations which regularly buy and sell real estate will find this to be a large burden.
How is ‘ownership interest’ defined under the revised legislation?
Unfortunately, the new OBCA amendments do not define the key term of ‘ownership interest’ and as such, it is not understood if the ownership interest refers only to registered interests or whether it also applies to beneficial interests in real property. If the requirement also applies to beneficial interests, then Ontario corporations who hold beneficial interests in land in Ontario will also need to comply with these requirements, even if the registered holder is not an OBCA corporation. Without a clear definition, an OBCA corporation cannot be sure if it needs to maintain records with respect to such instruments as: options to purchase, mortgages, easements or possibly leasehold interests.
It is clear that the new requirements do not apply to ownership interests in land outside Ontario or to entities incorporated under statutes other than the OBCA, such as the Canada Business Corporations Act, even if the corporation is based out of Ontario.
Corporations who fail to comply with these new requirements can be subject to a fine of not more than $25,000. Director and Officers who permitted the offence could also subject to a fine of not more than $2,000 or to imprisonment for a term of not more than one year, or to both.
At this point, no one can say for sure the full impact of these changes, but we will stay on top of any future developments and keep you informed.