How To Dissolve A Corporation In Ontario
If you want to know how to dissolve a corporation in Ontario, you must first seek consent from the Ministry of Finance. Once consent is received, the corporation has 60 days within which to file articles of dissolution. If a corporation has been dissolved, but property remains in the dissolved corporation after a three-year period, the Forfeited Corporate Property Act, 2015 (FCPA) must now be considered which contemplates the distribution of property after a corporation has been dissolved.
As of December 2016, the FCPA authorizes the Government of Ontario to sell the property, as well as remove or amend any encumbrances or security interests registered against it. The act applies to personal and real property. It also extends to personal property that may not be owned by the corporation, if this property was left inside the corporation’s forfeited real property.
Owners of a dissolved corporation have up to 20 years to apply to revive the corporation and recover assets. The FCPA does not alter the 20-year period within which former shareholders can make an application for revival. However, shareholders may not have any assets to recover if they apply for a revival after a three-year period.
There have been recent amendments to Ontario’s Business Corporation Act, the Corporations Act, and the Ontario Not-for-Profit Corporations Act that will help make the Ontario Government’s job easier when finding and retrieving property pursuant to its rights under the FCPA. Corporations are now required to keep an updated register of the corporation’s ownership in land. The register must show the corporation’s ownership interest, the date acquired and the date sold (if any). The corporation must also keep proof of the real property interest. This may include copies of transfers, deeds, or other document containing the municipal address, the registry or land titles division, the property identifier number, the legal description and the assessment roll number, if any.
The register must be kept with the corporation’s books and records at the corporation’s registered office, or other location as agreed upon by the board of directors. This amendment substantially increases corporate record keeping responsibilities. It may take a great deal of time for some corporations to gather the necessary documents and information. If a corporation’s records are kept at a law firm or other similar off-site location, the corporation must ensure the law firm or other service provider has all updated real property information and documents.
In a press release from Ontario Ministry Finance, it noted several policy reasons for the introduction of the new legislation. The FCPA will allow forfeited property to return to productive use as quickly and efficiently as possible. As well, they hope it will reduce the number of corporate properties that are forfeited to the Crown, and increases accountability for costs associated with forfeited corporate property.
Although the legislative amendments came into effect on December 10th, 2016, there is a grace period of two years before the requirement comes into effect. This will allow some time for corporations to gather the necessary information and documents in preparation for the changes. It is advisable to start gathering this information now. If you need help implementing these new changes or dissolving your corporation, contact Conduct Law.
Conduct Law is an Ottawa based business law firm with locations in Ottawa, Barrhaven and Kanata. Our professionals are experienced business lawyers who can help with commercial real estate, liens, incorporations, trademarking or implementing corporate structures that manage tax obligations, whether as a corporation, partnership, family trust, testamentary trust, or any other type of legal entity.
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