Chapter 7: The Incorporation Process

Recent Proposed Amendments Bill 213

Amendments that will change the requirements for certain shareholder written resolutions and Canadian residency requirements for directors under the Ontario Business Corporations Act^[1] have received Royal Assent but are not yet proclaimed in force.^[2]

The amendments will remove the current requirement that 25% of the directors of a corporation (other than a non-resident corporation) be resident Canadians.

Review Questions

1. According to the Ontario Business Corporations Act, who potentially could be a director of a corporation?
2. Abdul, a 17-year-old business student at college.
3. Bonnie, a 38-year-old entrepreneur who has just declared bankruptcy.
4. Tanveer, a 44-year-old executive who is experiencing severe, ongoing, and completely debilitating complications from a brain-wasting disease.
5. Eilish, a 52-year-old career criminal who was recently released from prison after a 12-month sentence further to her fraud conviction.

d., though probably not a good idea!

2. .Meredith and Ling want to incorporate their web design business. Although both are Canadian citizens, Meredith is a full-time student at the University of New South Wales in Australia and Ling is in the second year of a four-year posting at the Canadian embassy in Dublin. Explain whether they would meet the director residency requirements of an Ontario corporation.

1. In what section of the form would you provide the full address of the registered office of the corporation?
2. How would you indicate that your corporation required a fixed board of directors in the articles?
3. What is the cost for filing the form online? In paper format?300
4. Confirm everything else that would need to be filed with the articles when incorporating a federal corporation in paper format.
   1. Jackson and Mohamed were ready to incorporate their restaurant business. Both were going to act as first directors but only Jackson signed the articles as incorporator of the business. Explain what else is now required to be completed and where it should then be filed.
   2. Outline four differences in the incorporation process between filing articles online and filing articles by mail for Ontario corporations.
   3. If you were a corporate law clerk, what are five pieces of information you would want to obtain from clients at the initial meeting to discuss incorporation?

Chapter 8: Directors' and Shareholders' Resolutions

Recent Proposed Amendments Bill 213

Amendments that will change the requirements for certain shareholder written resolutions and Canadian residency requirements for directors under the Ontario Business Corporations Act^[3] have received Royal Assent but are not yet proclaimed in force.^[4]

Shareholder Ordinary Written Resolutions-Non-Offering Corporations

Once in force, the amendments will allow ordinary shareholder resolutions of a non-offering corporation to be passed through a written resolution that is signed by the holders of at least a majority of the shares entitled to vote on the resolution. Currently, all written shareholder resolutions must be signed by all shareholders entitled to vote on the resolution. To ensure that those who do not sign the written resolution are aware of the decisions being made, the amendments will require notice to be provided to all those who did not sign the written resolution within 10 business days of the resolution being signed.

Impact on Chapter 8

At any point in the text where it refers to a non-offering Ontario corporation's unanimous ordinary written shareholder'sresolution, once the amendments are in force, that reference should be changed. The ordinary resolution may be signed by the holders of a simple majority of the shares entitled to vote on the resolution, subject to the corporation's articles and any unanimous shareholder'sagreement (see pages 184, 185, 205, and 207).

Errata

Please note an error in footnote 6 on page 189, referencing Figure 9.3 on page 219. That figure demonstrates the provision in By-law No. 1 which does not provide the chair of a meeting with a second or casting vote in the event of a tie decision.

Review Questions

1. Which of the following shareholders' resolutions may be completed by written resolution?
2. The Best Business Ever Corporation ("BBE") was incorporated on May 1, 2020. Its articles state that the number of directors will be a range between one and five. The number of directors was set by special shareholders' resolution at four. The by-laws state that a majority of the directors constitutes quorum for a meeting of directors. Answer the following:
3. What is the last day on which the first annual meeting of shareholders may be called?
4. If a director wants to call a meeting of directors to authorize the president of the corporation to enter into a contract on behalf of BBE for the purchase of a new building, what must the director do?
5. Draft the notice of meeting for b. The meeting is to be held at 2:30 p.m. on February 10, 2021, at the registered office of BBE, which is 53 St. James Crescent, Arnprior, Ontario. The new building that is the subject of the contract is located at 1415 Laurier Street, Rockland, Ontario, and will be purchased from Classy Commercial Builders Inc.

^[1] RSO 1990, c B.16.

^[2]Better for People, Smarter for Business Act, 2020, SO 2020, c 34, was introduced as Bill 213 in the Ontario Legislature on October 6, 2020, and received Royal Assent on December 8, 2020. The amendments to the Ontario Business Corporations Act found in Schedule 1 will come into force on proclamation by the Lieutenant Governor.

^[3] RSO 1990, c B.16.

^[4]Better for People, Smarter for Business Act, 2020, SO 2020, c 34, was introduced as Bill 213 in the Ontario Legislature on October 6, 2020, and received Royal Assent on December 8, 2020. The amendments to the Ontario Business Corporations Act found in Schedule 1 will come into force on proclamation by the Lieutenant Governor.