The Forfeited Corporate Property Act, 2015 (the “FCPA”) came into effect on December 10, 2016 following the passing of the Budget Measures Act, 2015 by the Ontario government one year earlier. The substance of the FCPA affects what happens to corporate property when an Ontario corporation is dissolved under Ontario’s Business Corporations Act (the “OBCA”), Corporations Act, and Not-for-Profit Corporations Act. Pursuant to section 244(1) of the OBCA, any property held by a corporation that has not been disposed of on the date of the corporation’s dissolution is immediately forfeited to the Crown.
For the purposes of this blog, “dissolution” is defined as an involuntary dissolution occurring under section 241(4) of the OBCA. Pursuant to sections 241(1) to (3) of the OBCA, a corporation may be involuntarily dissolved where it fails to comply with numerous statutes primarily involving its tax obligations, or where it fails to comply with its reporting requirements under Ontario’s Corporations Information Act.
Sections 241(9) and 241(12) of the OBCA collectively provide that a corporation dissolved under section 241(4) of the OBCA may be revived at any point within 20 years of its dissolution. Prior to the FCPA coming into force, a corporation could recover any forfeited property if it was revived at any time within this 20-year period. However, the enactment of the FCPA has substantially hastened the timeline within which a corporation must be revived if it is to recover forfeited property. Sections 241 (10) and (11) are the relevant provisions of the OBCA.
Pursuant to section 241(10), if a corporation was dissolved before the FCPA came into force, recovery of forfeited corporate property will be permitted where revival occurs within three (3) years of the date the FCPA came into force, being December 10, 2016. In other words, corporations dissolved at any date prior to December 10, 2016 must be revived before December 10, 2019 if they wish to recover any corporate property that escheated to the Crown.
Pursuant to section 241(11), if a corporation was dissolved on or after the day that the FCPA came into force, revival must occur within three (3) years of the date the corporation was dissolved. In other words, where revival occurs more than three (3) years after the date the FCPA came into force or three (3) years after the corporation was dissolved, as the case may be, the revived corporation will be prohibited from recovering any forfeited corporate property.
To read part 1 of this blog, click here.
The author would like to thank Garrett Horrocks for his contribution to this blog.