Proposed Amendments to the Business Corporations Act (Ontario)


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Proposed Amendments to the Business Corporations Act (Ontario)

In 2001, the federal government enacted a wholesale reform of the Canada Business Corporations Act (CBCA). As a result, the CBCA leapt ahead of the OBCA in a number of key areas. These include:


		residency requirements for directors;

		financial assistance;

		indemnification and insurance for directors and officers;

		shareholder proposals; and

		unanimous shareholder agreements.

Ontario has fallen behind nearly every other Canadian jurisdiction in many of these areas. For example, Ontario is one of the last remaining jurisdictions in Canada that still generally requires that a majority of board members and board committee members be resident Canadians. This requirement is a significant deterrent for public companies (especially inter-listed companies) and subsidiaries of foreign corporations using Ontario as the incorporation jurisdiction of choice. It is also an incentive for those companies to export themselves out of Ontario. Other provinces and territories including, most recently, British Columbia, have removed this requirement.

Reform of the OBCA would give Ontario the opportunity to regain its status as the leading corporate law jurisdiction in Canada, adopting the current best practices from the CBCA, British Columbia, Nova Scotia, New Brunswick, Delaware, New York and other important corporate law jurisdictions.