A Quick Statutory Check-Up
The Burden Reduction Act, 2017 (the “Act”) received Royal Assent, and therefore came into effect, on March 22, 2017. With its enactment, the Act makes several changes to a couple of key business-related statutes in Ontario. The most significant legislative changes include the following:
- Quorum at Shareholders’ and Directors’ Meetings
The Act changed the requirements of the Business Corporations Act (Ontario) (the “OBCA”) with respect to quorum for shareholders’ and directors’ meetings. Shareholders’ meetings will now satisfy their statutory quorum requirements if the holders of a majority of the shares entitled to vote at the meeting are present, irrespective of the number of persons actually present, at the meeting. Quorum for a directors’ meeting will be achieved if a majority of the directors, or the minimum number required by the Articles of Incorporation, are in attendance. As always, these minimums remain subject to higher thresholds as may exist in a corporation’s by-laws or applicable shareholders’ agreement(s).
- Place of Director Meetings
The Act also amends the OBCA to allow a corporation to hold a directors’ meeting anywhere, unless the Articles of Incorporation or the corporation’s by-laws provide otherwise and removes the requirement that a majority of such meetings be held in Canada. This allows the corporation far more flexibility, which in turn should make it easier for corporations to host directors’ meetings.
- Repeal of the Bulk Sales Act
After years of formal and informal lobbying, Ontario has finally repealed its Bulk Sales Act and therefore ceased to be the only Canadian Province that still had a bulk sales statute. The Bulk Sales Act was confusing, difficult to comply with and unnecessarily onerous, both procedurally and substantively. Its repeal will lower asset sale transaction costs and should also result in greater clarity around risk-allocation among lawyers and parties to such transactions.