The grace period is over. All Ontario corporations that hold a legal or beneficial interest in real property in Ontario are now subject to more onerous record keeping requirements.
These requirements are a result of amendments made to the Ontario Business Corporations Act and the Corporations Act on December 10, 2016 and require all Ontario corporations to create a register of its ownership interests in real property. "Ownership interest" was not defined and therefore, both legal and beneficial interests in land will be caught. The registers must identify each of the following items:
- The property;
- The date the corporation acquired the property; and,
- The date the corporation disposed of the property (if applicable).
Ontario corporations are also required to keep with the register (which must be housed at the corporation's registered office address) a copy of any deeds, transfers or similar documents that contain the municipal address, the registry or land titles division and property identifier number, legal description and any assessment roll number with respect to each property listed in the register.
Law firms and other third parties who provide their address to Ontario corporations to use as their registered office will need to be aware of these provisions and ensure they are provided with the necessary registers and supporting documents. Ontario corporations who hold a beneficial interest in real property (i.e. pursuant to a co-tenancy or co-ownership agreement or who appoint a nominee corporation to hold legal registered title to real property), will need to take notice of these new requirements and obtain a copy of the required supporting documents from the property manager or trustee corporation (even if the registered holder is not incorporated under the OBCA).
Further, the real property register (just like other registers) must be available for examination to all directors, registered and beneficial shareholders and creditors of the corporation during normal business hours. Such persons are also entitled to take extracts of such records free of charge.
While corporations incorporated after December 10, 2016 were required to comply with these requirements immediately, existing Ontario corporations had a grace period of 2 years to comply. The expiration of that grace period occurred on December 10, 2018.
Corporations that fail to comply with the legislative requirements may be subject to a fine of not more than $25,000. If a corporation is found guilty, every director or officer who authorized, permitted or acquiesced in the offence is also liable to a fine of not more than $2,000 and/or imprisonment for a term of not more than 1 year. Accordingly, it is prudent that corporations holding any ownership interest in real property understand these rules and take the necessary steps to comply.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.