Forfeited Corporate Property: The New Ontario Act and How It Affects Your Corporation
By: Ira Stuchberry
Click here to see this article featured in the Minden Brief 2017 Winter Newsletter.
On December 10, 2016, The Forfeited Corporate Property Act, 2015 (“FCPA”), came into force. This legislation addresses what happens to forfeited corporate property once a corporation is dissolved. The introduction of the FCPA amended several other Ontario legislations that may impact a corporation’s day-to-day reporting requirements and could have long-term consequences for corporations that are dissolved and not revived within a strict timeline.
Ongoing Reporting Requirement
The introduction of the FCPA had the effect of amending the Ontario Business Corporations Act, the Corporations Act, and the Ontario Not-for-Profit Corporations Act (together, the “Corporate Acts”) by introducing a requirement to maintain an updated register of the corporation’s ownership interest in land at its registered office.
This register must identify each such ownership interest and show the date of acquisition and disposal, if applicable. In addition, the corporation has to keep the following with the property register:
- A copy of any deeds
- Transfers or similar documents that contain the municipal address
- The registry or land titles division
- The property identifier number • The legal description
- The assessment roll number, if any
Additionally, while there is no definition of “ownership interest in land” available, there is some suggestion that it can be interpreted broadly to encompass both beneficial and legal ownership interest.
While these legislative amendments came into force on December 10, 2016, there is a grace period of two years before the requirement to prepare and maintain this register is enforced. It applies to corporations that were incorporated prior to December 10, 2016. All corporations incorporated after this date do not have this grace period. It is advisable, however, especially for corporations that have ownership interests in many properties, that these registers be prepared and maintained sooner than the two-year deadline, as it may take significant time to gather all of the required information.
Dissolution and How It May Affect Your Corporation
The new FCPA brings about a new way for the Crown to deal with forfeited corporate properties and sets out new timelines within which owners can revive corporations and recover their assets.
The Corporate Acts provide that in the event that a corporation is dissolved and the corporation is the owner of real property, such property is forfeited to the Crown. Until the introduction of the FCPA, the corporate owners had 20 years from the date of dissolution to revive the corporation and recover their assets.
With the introduction of the FCPA, the timelines have changed. While the dissolved corporation can still be revived within 20 years from dissolution, it will not recover its assets if the revival takes place more than three years after the date of dissolution, subject to some exceptions.
In addition to the forfeiture of real property, the FCPA also provides that any personal property left in, on, or under forfeited real property is also forfeited to the Crown, regardless of who owns the personal property.
After the three year deadline, the Crown can use the forfeited property for Crown purposes, dispose of it, and delete or amend any encumbrances registered against the property from title, in the case of real property, and under the Personal Property Security Act, in the case of personal property.
The enactment of the FCPA and the coming into force of the amendments to the Corporate Acts will place the onus on directors and officers of corporations to maintain updated property registers and will also make it more difficult to recover assets forfeited to the Crown in the event of dissolution. It is important and advisable that corporate owners come to terms with their new reporting requirements and take heed of the strict deadlines under the FCPA in the event the corporation is dissolved.
For further information please contact Ira Stuchberry at 416-369-4331 or at istuchberry@ mindengross.com.