A new regime effecting the forfeiture of corporate property was recently enacted in Ontario. The new legislation, which came into force on December 10, 2016, includes the Forfeited Corporate Property Act, 2015 (FCPA) and related amendments to the Ontario Business Corporations Act (OBCA).
Under Ontario law, when a corporation is dissolved, all of its personal and real property is forfeited to and vests in the Crown. Prior to the enactment of the new regime, the owners of an OBCA corporation could apply to revive the corporation and recover its corporate property for up to 20 years after the date of its dissolution. Under the new regime, while it is still possible to revive a corporation for up to 20 years post-dissolution, the recovery of its personal and real property is now only possible (with limited exceptions) for three years after dissolution.
In addition to this significant change in the timeline for recovery after forfeiture, the FCPA introduces a comprehensive regime in relation to the powers of the Crown in respect of forfeited property. These include the power to appoint a receiver, cancel encumbrances, use forfeited property for Crown purposes, sell or otherwise dispose of the property, and seek an order for costs incurred by the Crown in relation to the forfeited property against former directors and officers.
From a transactional point of view, perhaps the most relevant change is the amendments to the recordkeeping requirements of the OBCA. As a result of the amendments, any corporation incorporated or continued under the OBCA after the FCPA came into force must maintain a register of ownership interests in land in Ontario. Corporations incorporated prior to that date have been given a two year grace period but must also have a register of ownership of land in Ontario in place by December 10, 2018. This new requirement should be kept in mind when performing diligence or providing opinions in relation to a representation that an OBCA corporation is in compliance with all applicable laws.
Stay informed on M&A developments and subscribe to our blog today.