Two new statutes, the Escheats Act, 2015 (the “Escheats Act”) and the Forfeited Corporate Property Act, 2015 (the “FCPA”) come into force on December 10, 2016.
Escheat and forfeiture
Escheat refers to the reverting of property to the Crown or government; in this case the Ontario Government, when the property has no owner. Forfeiture of corporate property may be necessary if a corporation dissolves but holds property at the time it dissolves. This is quite possible for both voluntary and involuntary dissolutions. If there is cause, or if a corporation defaults on filing or statutory obligations, the Ministry of Government and Consumer Services may dissolve the corporation (involuntary dissolution).
When an Ontario corporation is dissolved and owns assets on the date it ceases to exist, the corporation’s assets are forfeited to the Crown. The Office of the Public Guardian and Trustee (OPGT), on behalf of the Crown, may sell or administer the property. The OPGT has certain obligations under the Escheats Act if the property in question was held by a registered charity.
The new statutes include rules that apply when corporate property is forfeited or otherwise return (escheat) to the Crown. The Escheats Act repeals and replaces the existing escheats statute. Both statutes include complementary amendments to other statutes. For example, the FCPA create new record–keeping obligations for corporations, through amendments to the Corporations Act (the “CA”), the Business Corporations Act (the “BCA”), and, although not yet in force, the Not-for-Profit Corporations Act, 2010 (the “NCA”).
New record–keeping obligations
Under s.140.1 of the BCA, corporations must now keep a register of their ownership interests in land located in Ontario. Although not explicitly stated, this likely applies to both registered and beneficial interests.
The register must be maintained at the corporation’s registered office, and must identify each property and:
- Its acquisition date; and
- Its disposal date, if applicable.
Along with the register, corporations must also retain a copy of any deeds, transfers or similar document that contain any of the following with respect to each property listed in the register:
- The municipal address, if any;
- The registry or land titles division and the property identifier number;
- The legal description; and
- The assessment roll number, if any.
Although the FCPA comes into force on December 10, 2016, all corporations existing or continued under the BCA before December 10, 2016 have a 2–year transition period to December 10, 2018 to comply with the above requirements. However, any corporation incorporated or continued under the BCA on or after December 10, 2016 must comply immediately upon incorporation or continuance.
Similar amendments apply to the CA (see sections 300, 300.1 and 304) and the NCA (see sections 92, 92.1 93 and 95).
The new requirements may be particularly onerous for corporations like home–builders or condominium developers, or any other corporation which may have hundreds or thousands of ownership interests in land.