(Update: The changes below have been proclaimed into force and are effective as of July 5, 2021. See update post here.)
On December 8, 2020, the Ontario legislature gave royal assent to Bill 213, Better for People, Smarter for Business Act, 2020. The Bill makes important changes to the Business Corporations Act (Ontario) (OBCA).
Repeal of Minimum Canadian Resident Directors
Currently, subsection 118(3) of the OBCA states that:
“At least 25 per cent of the directors of a corporation other than a non-resident corporation shall be resident Canadians, but where a corporation has less than four directors, at least one director shall be a resident Canadian.“
Bill 213 repeals the above subsection 118(3) in its entirety.
Because of the director residency requirement, non-resident entities who wished to set up a Canadian corporation to do business in Ontario but who did not have a Canadian-resident director often chose to incorporate under the statute of another province instead which did not have the director residency requirement (British Columbia, Nova Scotia, or Quebec). After this requirement is repealed, non-residents will be able to incorporate in Ontario without having a Canadian-resident director.
Shareholders Resolutions by Majority
Currently the OBCA allows shareholders to pass a written resolution to approve matters required to be passed by an ordinary resolution at a meeting of shareholders if that written resolution is signed by all of the shareholders entitled to vote on it.
This requirement is being amended for private corporations so that the written resolution only needs to be signed by shareholders with at least a majority of the shares entitled to vote on the resolution.
The amendment does not change the requirement for matters that require a special resolution of the shareholders, in which case a written resolution (in lieu of a meeting) must still be signed by all of the shareholders entitled to vote on that resolution.
Effective Date To Be Confirmed
The amendments to the OBCA will take effect on a day to be proclaimed by the Lieutenant Governor. It is not yet known when this effective date will be.