Highly anticipated amendments to the Business Corporations Act (Ontario) (OBCA) will take effect on July 5, 2021. As covered in our previous article on the OBCA amendments, two major changes are coming to Ontario's corporate law landscape:
- Removal of the Canadian residency requirement for directors; and
- Simplifying the shareholder resolution approval process for private corporations.
Corporations can prioritize expertise and representation over Canadian residency when determining their board composition. Further, corporate law practitioners in Ontario and their foreign-based clients will no longer have to incorporate in other jurisdictions (e.g. Alberta or British Columbia) solely because they cannot locate a resident Canadian director.
The second key change lowers the approval threshold for private corporation shareholder resolutions in writing to a simple majority. Prior to these amendments, written shareholder resolutions in lieu of a meeting required unanimous approval. The lowered threshold will help speed up the shareholder approval process where the corporation may otherwise have to coordinate with a multitude of shareholders in various jurisdictions or is faced with unresponsive shareholders.
Going forward, despite the elimination of the director residency requirement, Ontario corporations must still include director residency information in their filings to facilitate the launch of a new online Ontario Business Registry later this year.
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.
