What do you need to know if your dissolved Corporation stills holds title to real property? (The New Forfeited Corporate Properties Act)Indu
On December 10, 2016, The Forfeited Corporate Property Act, 2015 (“FCPA”) came into force. FCA introduced new changes to existing laws applicable to the process for dealing with the remaining property of corporations that have been dissolved.
The FCPA also amends the Ontario Business Corporations Act (“OBCA”), the Ontario legislation governing the incorporation, operation and dissolution of Ontario corporations. Similar amendments have been introduced through FCPA to the Not-For-Profit Corporations Act. It seems the determination of the amendments is to make it easier for the Provincial Government to locate real property owned by Ontario corporations where the property has reverted to the Crown.
Before the Amendments, Ontario corporations have benefited from a 20-year limitation period to reinstate their corporate status after dissolution. The 20-year limitation has always been matching with the equal time limited to recover real and personal property forfeited to the Crown. While this 20-year dealing applying for revival under section 241 of the OBCA (from the date of dissolution) remain intact, the latter limitation period has been shorted to THREE (3) years after dissolution.
This means that three-years after a corporation is dissolved, any real and personal property of the dissolved corporation will escheat or be forfeited to the Crown. Recovery of that property requires not only the revival of the corporation under section 241 of the OBCA but also, after December 10, 2019, an application under the FCPA or the Escheats Act.
Under the Amendments made to section 241 of the OBCA, however, an Ontario Corporation that:
- For Corporations dissolved after December 10, 2016, the THREE-YEAR LIMITATION begins immediately;
- For corporations dissolved prior to December 10, 2016 but not yet reached their 20-year limit on December 10, 2016, a new three-year timer has begun.
New Requirements on Dissolution:
The Articles of Dissolution of an OBCA corporation now requires a declaration that, if it was at any time a registered owner of land in Ontario, it is no longer so (section 238(1) (d.1) and (2) (g.1), OBCA).
The Director appointed under the OBCA may refuse to issue a Certificate of Dissolution if the Director is aware that the Corporation is the registered owner of land in Ontario. Also, the Director has the power to revoke a dissolution order if the Director receives a notice from the Minister of Economic Development, Employment and Infrastructure (MEDEI), who is the Minister responsible for the administration of FCPA, that, in the Minister’s opinion, the revocation would be in the public interest.
Applicable to Not-for Profit Corporations
The Ontario Corporations Act applies to Non-Share Capital Corporations, until the Not-for-Profit Corporations Act, 2010, S.O. 2010, c. 15 (ONCA) is proclaimed in force.
An Ontario Not-for Profit Corporation dissolves by surrendering its Charter (Letters Patent), which must be accepted by the Office of the Public Guardian and Trustee for Ontario and the Companies and Personal Property Security Branch of the Minister of Government Services. With the Amendments, the Provincial Government may refuse to accept the Surrender of the Charter if it learns that the Corporation is the registered owner of land in Ontario, the existence of which must be disclosed in the application for Surrender of the Charter.
Ontario Corporations that have been dissolved within the 20-year limitation period, and those wishes to dissolve, should therefore be advised with regard to the changes in their situations.
The new record keeping requirements under the Ontario Business Corporations Act – you can read more about these requirements/amendments here
This article provides information of a general nature only. It does not provide any legal advice nor can it or should it be relied upon. If you have any specific legal questions please contact our office and speak to one of the members of our Business Law Practice Group.