Deadline – December 10, 2018

In 2015, the Ontario Legislature enacted the Forfeited Corporate Property Act, 2015, which deals with what happens to property, including land and interests in land, which corporations own at the moment that they cease to exist.

Ordinarily, if a corporation owns land (or any property) when it is dissolved, the land “escheats” (is forfeited) to the Crown.  Sometimes – often – the corporation is dissolved because of its failure to make its annual filings, and the dissolution occurs unbeknownst to the owners / directors of the corporation.

As part of imposing some rationalization on keeping track of the land in Ontario that Ontario corporations own, the Forfeited Corporate Property Act, 2015 amended the Business Corporations Act (Ontario) and the Corporations Act (Ontario) to require corporations governed by those statutes to complete and maintain a register of all of their “ownership interests” in land located in Ontario.  (When it comes into effect, the Not‑for‑Profit Corporations Act will also impose this rule on the corporations that it governs; co‑operative corporations, on the other hand, have been spared the obligation to have such a register.) We previously wrote about this in March of 2017.

If your organization has been in existence since before December 10, 2016 and is either a business corporation incorporated under the Business Corporations Act (Ontario) or a non‑profit corporation incorporated under the Corporations Act (Ontario), then it has until this coming December 10^th to put such a register in place.

What Does “Ownership Interest” in Land Mean?

Unfortunately, the legislation that enacted this requirement did not define the meaning of “ownership interest.”

At a minimum, it includes registered ownership of a parcel of land in Ontario. It may also include a leasehold interest in land (in other words, your organization is a tenant under a lease), and could also include ownership of an easement that your organization received. It’s just not clear at this point what the scope is of an “ownership interest,” and the courts in Ontario have not yet interpreted the phrase for the purpose of the legislation.

What should you do?  Probably the prudent thing is to include in your organization’s register a list of leasehold interests and easements (if your organization received an easement separately), as well as of the properties of which your organization is the registered owner or owns beneficially.

Contents of the Register

The register must contain the following information:

1. It must identify each property; and
2. It must show the date that your organization acquired its ownership interest in the property and, if applicable, the date that your organization disposed of its ownership interest in the property.

Supporting Documents

You’ll have to keep with the register a copy of any deeds, transfers or similar documents that contain any of the following information with respect to each property that is listed in the register:

1. The municipal address for the property, if any;
2. The registry or land titles division in which the property is located;
3. The property identifier number for the property;
4. The legal description for the property;
5. The assessment roll number for the property, if any.

Location of the Register

Where is the register to be kept?  At your organization’s head office.

Is There a Penalty for Failing to Keep the Register?

Yes, there is.

For a Corporations Act corporation, failure to maintain the register is an offence under the Act, and on conviction the corporation and any director or officer of the corporation who fails or neglects to comply with the requirement is liable to a fine of up to $200.00 (under the Not‑for‑Profit Corporations Act, once it comes into effect, the fines will be much higher – up to $5,000.00 – as well as the possibility of a prison sentence of up to six months, or both).

For a Business Corporations Act corporation, the penalty is greater: for the corporation, a fine of up to $25,000.00, and for any other person who is found liable for failing or neglecting to maintain the register a fine of up to $2,000.00 or imprisonment of up to one year, or both.

Filed in: Commercial Law, Not for Profit Law

Tags: “Ownership Interest” in Land, Business Corporations Act, Corporations Act, Forfeited Corporate Property Act