On July 5, 2021, the amendments to the Business Corporations Act (Ontario) (OBCA) in Bill 213, the Better for People, Smarter for Business Act, 2020, will be proclaimed into force.
As described in our previous article, Bill 213 makes two notable changes to the OBCA:
- removing the minimum Canadian director residency requirement; and
- lowering the approval threshold for a written ordinary resolution of the shareholders to the holders of at least a majority of the shares entitled to vote on that resolution.
These amendments are a welcome development for the governance of Ontario corporations, particularly for non-resident investors that have historically been required to consider other provincial jurisdictions without director residency requirements when incorporating in Canada because the non-resident investor did not have a suitable resident Canadian to act as a director.
We recommend that Ontario corporations review their articles, by-laws, shareholder agreements and other constating documents to consider whether reconstituting the board of directors would be desirable in the absence of the Canadian director residency requirement and how the governance process can be more efficient for passing written ordinary resolutions of the shareholders.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.