In 2015, the Ontario legislature passed legislation called the Forfeited Corporate Property Act, 2015 (the FCPA). The FCPA came into effect on December 10, 2016.

One of the things that the FCPA does is to amend the Corporations Act (Ontario), the Business Corporations Act (Ontario), and the Not‑for‑Profit Corporations Act, 2010 (Ontario) to require corporations that are subject to these statutes to keep a register at their registered office of their ownership interests in land located in Ontario.

Given that the amendments were enacted in the FCPA, it seems that the provincial government intends for this to be a convenient mechanism to enable it to locate land that reverts to the Crown if a corporation is dissolved while still owning land.

What’s the new requirement?

The register must:

• identify each property; and
• for each property, show the date that the corporation acquired the property and the date the corporation disposed of the property.

In addition, for each property listed in the register the corporation must keep a copy of the deeds, transfers and similar documents that contain any of the following information:

• the municipal address, if any, of the property;
• the registry or land titles division in which the property is located, as well as the property identifier number assigned to the property by the land registry system;
• the legal description of the property; and
• the assessment roll number, if any of the property.

In most cases, the transfer or deed by which a corporation acquires the ownership interest in the property will contain all, or most, of the information mentioned in the preceding paragraph.

Clearly, part of the requirement is to update the register as interests in land are acquired and disposed of by the corporation.

What’s an “ownership interest in land”?

What does the FCPA mean when it refers to an “ownership interests in land”?  The phrase is not defined in the FCPA, so it may take a while – and some court decisions – to understand fully what is included in the phrase.

It certainly means, however, outright ownership of a parcel of land. It also includes the circumstance of owing a parcel of land with another person or persons – for example, where a corporation owns a 50% interest in a parcel of land and another person owns the other 50%.

Easements would be included. By way of illustration, let’s say corporation A owns a parcel of land, which it acquired by a deed in 2014. A year later, in 2015, corporation A’s neighbour, corporation B, gives corporation A an easement for emergency vehicle access over a portion of corporation B’s land. The easement from corporation B to corporation A will be granted by a deed/transfer which will be registered in the land registry office where the two properties are located. Now, corporation A has a new “ownership interest in land” – the easement from corporation B ‑‑ and will have to record the easement in its register of ownership interests in land and keep the deed/transfer by which it acquired the easement from corporation B.

It’s likely, as well, that “ownership interest in land” encompasses not only “legal” (registered) ownership, but also any beneficial interest in land that a corporation owns. Sometimes it happens that the ownership of land is accomplished through a trustee arrangement. A trustee is the registered owner of the land, but owns the land “in trust” for, and for the benefit of, another person. If that other person, who is the beneficial owner of the land, is a corporation subject to the Corporations Act, the Business Corporations Act or the Not‑for‑Profit Corporations Act, 2010, then the corporation will have to record its “beneficial” ownership of that parcel of land in the register it is required to keep.

Unanswered is the question whether “ownership interest in land” includes a leasehold interest. In other words, if your organization leases an office, is the lease an “ownership interest in land” for the purpose of the FCPA requiring you to record information about the lease?

When does a corporation have to start maintaining the register?

In the case of corporations subject to the Corporations Act and the Business Corporations Act, if they were in existence before December 10, 2016, then they have two years – until December 10, 2018 – to comply with these record‑keeping requirements.

In the case of corporations subject to the Corporations Act and the Business Corporations Act, if they came into existence on or after December 10, 2016, then they have to be in compliance now.

Since the Not‑for‑Profit Corporations Act, 2010 still is not in force, the record keeping requirements under this statute will apply to its corporations only when the statute comes into force or when a corporation is incorporated or continued under the statute, whichever happens later.

Where do the register and other documents have to be kept?

A corporation has to keep the register containing information about its ownership interests in land, as well as the related documents mentioned above, at its registered office.

What is the consequence for not complying?

If a corporation fails to comply with these record‑keeping requirements, the officers and directors of the corporation face the possibility of fines or other penalties. The nature of the fines and penalties will depend on the corporate legislation to which a corporation is subject.

Conclusion

In summary, corporations that have an ownership interest in land will, first of all, have to identify what those interests are. Once that step is taken, they’ll have to set up a system for recording the information – and assembling copies of the relevant documents -‑, as well as updating the information as the circumstances of their ownership interests in land change over time. If your corporation was around before December 10, 2016, you have until December 10, 2018 to pull everything together and set up a register; if your corporation was incorporated on or after December 10, 2016, then you need to get started, if you haven’t already.

Filed in: Commercial Law