- New Law Brings Compliance Risks for Small Ontario Companies
- May 2, 2017 | Author: Marlin J. Horst
- Law Firm: Shibley Righton LLP - Toronto Office
Small and medium-sized corporations are most at risk of violating a little-known Ontario law that changes the way businesses track their real estate interests, says Toronto corporate and commercial lawyer Marlin Horst.
The Forfeited Corporate Property Act, 2015 came into force in late 2016, imposing new record-keeping requirements on all companies registered under the Ontario Business Corporation Act (OBCA).
The amendments force businesses registered in Ontario to draw up and maintain a list of all their ownership interests in lands in the province, including the date of acquisition, and later, if applicable, the date of disposal. While the new law is intended to smooth the process when dissolved corporations forfeit their property to the Crown, Horst says it has significant implications for all businesses registered under the OBCA.
“It’s a pretty major change because many corporations operate without keeping a register of their real property, and I don’t think it has been advertised as well as it should be,” says Horst, a partner in the Toronto office of Shibley Righton LLP.
“It’s another example of new requirements coming in through the back door that have absolutely nothing to do with the title of the act,” he tells AdvocateDaily.com.
“It’s not going to be the big multinationals who will fall foul of this, but smaller companies who have never had to register their land interests before. If you’re a manufacturing business that owns a piece of land or a few properties around the province, this could come as a surprise. They are the ones most at risk.”
Even if businesses currently keep some sort of list, Horst says they are unlikely to meet the standards set by the new law, which demands that records include the municipal address of all properties, as well as their legal descriptions, assessment role numbers and land registry identifiers.
In addition, the amendments contain a requirement that the property list must be kept at the corporation’s registered address, which Horst says is often not the same as its head office. For example, may of his clients use his office as their registered address.
“Lawyers will have to ask clients if they own any real property, and if they do, we’ll need more information so we can update their records,” he says.
While corporations registered under the OBCA before December 2016 will have a two-year transition period to get their files in order, newer registrants will have to comply immediately, and failure to do so could see them and their directors exposed to fines or other penalties under the law.
Horst says businesses should incorporate property list changes into their minute book updates and annual filing processes to minimize the chance of missing a property transaction.