The long-awaited amendments to the Business Corporations Act (Ontario) (OBCA) will take effect this summer, July 5th.
Presently under the OBCA, a minimum 25 percent of the directors of a corporation must be resident Canadians. This requirement has often posed a challenge for foreign businesses to incorporate in Ontario, despite having operations, management, employees and facilities located in Ontario. On July 5th, Bill 213 (Better for People, Smarter for Business Act, 2020) will eliminate the director residency requirement for both private and public corporations, a noteworthy change that will make Ontario a more appealing jurisdiction for foreign businesses to incorporate. This welcomed change in Ontario follows the footsteps of British Columbia, Quebec, Nova Scotia, New Brunswick, Prince Edward Island, Yukon, Northwest Territories, and Nunavut. Important to note, corporations incorporated under the federal Canada Business Corporations Act will still be required to meet the 25 percent Canadian resident director requirement.
Moving forward, despite repealing the Canadian residency requirement in Ontario for incorporation, Ontario corporations will still be required to take account of records regarding Canadian resident directors in their articles of incorporation and in compulsory corporate information filings. This continued requirement is intended to simplify data collection in regard with the upcoming launch of a new online Ontario Business Registry, scheduled for later this year.
This is exciting news for our international business clients in regard to facilitating their foundational corporate structures in Ontario.
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