Nicolas Guevara-Mann | Queen’s Business Law Clinic | July 2021

Editor: Mikela Page

Bill 213 became law in December 2020. Although this bill affects numerous pieces of legislation, there are significant amendments to Ontario’s Business Corporations Act (OBCA) that Ontario businesses should be aware of. These changes came into force on July 5, 2021.

Director Residency Requirement

Previously, under section 118(3) of the OBCA, at least 25% of the board of directors in an Ontario corporation had to be resident Canadians. For some smaller businesses with non-Canadian founders, this was a difficult requirement to meet, as they had to find a resident Canadian to act as a director. This required a social network and high levels of trust, which were not always present.

Bill 213 has now repealed this provision, meaning there is no longer a residency requirement for directors in Ontario corporations. This brings Ontario in line with several other Canadian provinces and territories which have already removed this requirement, and as a result, it could make Ontario a more appealing jurisdiction for non-Canadian businesses.

Simplified Shareholder Resolutions

The Bill also simplifies how some shareholder ordinary resolutions (such as removal of directors) are passed. Previously, private corporations passing an ordinary resolution in writing had to get it signed by all the voting shareholders. With the amendments, ordinary resolutions now only need to be signed by the holders of a majority of the voting shares (subject to the articles or a unanimous shareholder agreement). After the vote is completed, the corporation must notify the minority shareholders of the resolution, but no prior notice is required. This change will simplify the voting process especially where there are many minority shareholders.


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