NOW IN EFFECT – All Ontario corporations must maintain a property register.
This requirement applies to “ownership interests in land” held on or acquired after December 10, 2018.
What does “ownership interest in land” refer to? Well, this term remains undefined. A prudent approach should consider both legal and beneficial interests (i.e. not only registered interests in real property, but other forms of ownership as well, including leasehold interests).
The registers must identify the property, the date the corporation acquired the property and the date the corporation disposed of the property (if applicable). In addition, all documentation, registrations or paperwork in support of such ownership interest (i.e. deeds) as well as instruments reflecting beneficial ownership interests (i.e. trust agreements) should be available, along with the register.
The register must be inspectable, free of charge, during business hours of the corporation by registered and beneficial shareholders of the corporation, creditors of the corporation and by agents and legal representatives of these shareholders and creditors.
Failure to comply with this requirement may result in a fine of up to $25,000 to corporations, and a fine of up to $2,000 and/or imprisonment for a term of not more than one year for directors.
Why has the Ontario legislature imposed these changes you ask? One concern was that corporations were being created to hold land but, if and once it became evident that the land acquired was environmentally contaminated (and costs exceeded the value of the property), the shareholders of the corporation would allow it to become dissolved, transferring liability to the province of Ontario and taxpayers.
Fair or not, these obligations apply to all Ontario corporations, whether or not the corporation holds land which may be contaminated. Make sure your corporation is complying.
If you have any questions, call or email someone from our team.