Lawyers recommending clients keep their corporate records current is (I imagine) dentists’ equivalent of recommending flossing. It’s good for you, prevents problems and it’s relatively easy but it seems hard to make a habit of.
Well, there’s another reason or, at least, another record keeping requirement. In December, the Ontario government made changes to the Ontario Business Corporations Act that require Ontario corporations now maintain a register of all real property owned by them.
Part of the reasoning behind the amendment is so that the government is better able to identify assets of dissolved corporations.
While the form of the register appears to be fairly flexible –there’s no prescribed form and, as with most corporate record keeping requirements, the register can be maintained in electronic format - the content is considerable.
For all real property owned by a corporation, the corporation will need to maintain a register at its head office to include the following: date of acquisition, registration numbers, municipal address, assessment roll numbers, legal description, and sales or other transfers particulars. Plus, these registers will need to include supporting documents such as copies of the transfers/deeds.
The register likely applies to certain unregistered interests in land as well (e.g., mortgages held and beneficial interests where the corporation is not the registered owner).
For corporations that deal in land, such as builders and developers or even some farm corporations, this new requirement could be fairly onerous and necessitate new internal procedures to regularly update.
The new requirement is effective immediately for corporations created on or after December 10, 2016. For corporations created before then, there is a two year period to get updated: i.e., by December 18, 2018.
As with most corporate record keeping requirements (to name a few, maintaining copies of: corporate articles; bylaws; list of officers, directors, shareholders; issued securities; resolutions; and annual minutes of directors and shareholder meetings), the benefit to keeping current will be clearest in the event of audit and in the event of sale or contemplated sale and corporate financing. With sales and financing, in particular, corporate officers and directors typically have to make representations and warranties about the completeness of records and compliance with applicable laws.
So, if you own an Ontario corporation or are officer or director of an Ontario corporation that owns real property, now might be a good time to check in with your corporate lawyer to make sure your corporation meets this new requirement as well as existing record keeping obligations.
It probably wouldn’t hurt to floss, either.
Adam Kowalsky is an associate at the law firm of Cobb & Jones LLP. For more articles, visit the library page at www.cobbjones.ca