Background
Real estate owned by an Ontario corporation is immediately forfeited and vests in the Crown when the corporation is dissolved through an involuntary dissolution. If the dissolution is voluntary, the articles of dissolution must state that the corporation has distributed its remaining property to its shareholders. Subject to rights of revival in certain circumstances, Infrastructure Ontario will sell forfeited real estate pursuant to the Forfeited Corporate Property Act, 2015 (FCPA).
The policy objectives of the FCPA include providing greater transparency and certainty in managing and disposing of forfeited corporate properties. To achieve this objective, amendments to the Ontario Business Corporations Act (OBCA) and the Ontario Corporations Act (OCA) were enacted. These amendments require a corporation to prepare and maintain at its registered office a register of its ownership interests in land in Ontario.
Compliance Requirements
Ontario corporations incorporated after December 10, 2016 must comply with the requirement to maintain the real estate register as of the date of incorporation. Ontario corporations incorporated on or before December 10, 2016 have until December 10, 2018 to comply.
Failing to comply with the requirement to maintain the register without reasonable cause is an offence under both the OBCA and the OCA, and may result in fines against the corporation of up to $25,000 and against directors and officers of up to $2,000.
For corporations actively buying and selling real estate, the corporate register must be continually updated. For most corporations, compliance will consist of a periodic review and updating of real estate ownership interests. Corporate solicitors for Ontario corporations typically maintain and update corporate books and records, including the articles and by-laws, any unanimous shareholder agreement, resolutions of directors and shareholders, as well as registers of the shareholders, directors, and officers. Creating and updating the real estate register has now been added to these requirements.
The register must identify each property and show the date the corporation acquired the property, and the date the corporation disposes of the property. The corporation must also maintain supporting documents, including copies of deeds, transfers or similar documents, listing:
1. The municipal address, if any;
2. The registry or land titles division and the property identifier number;
3. The legal description; and
4. The assessment roll number, if any.
We can assist our clients to comply with the OBCA and OCA requirements. Upon receipt of instructions, we will obtain a current property parcel register which has the legal description, registry or land titles division and the property identifier number (PIN), and insert a copy of the PIN into the corporate minute book. If our clients maintain their own minute books, we can send a copy of the PIN to them to enable them to remain compliant with these requirements.
For further information, please contact John Singer by phone at (416) 364-4400 or by email at jsinger@businesslawyers.com.
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