The Province of Ontario, through Bill 213, “Better for People, Smarter for Business”, repealed subsection 118 (3) of the Ontario Business Corporations Act (“OBCA” ), which requires that at least 25% of the directors of a corporation OSCA reside in Canada. The bill received effective authorization on December 8, 2020 and the parts revoking this requirement were passed and entered into force on July 5, 2021.
Prior to its revocation, section 118 (3) of the OBCA required that at least 25% of the directors of a corporation be Canadian residents and, if the corporation had fewer than four directors, at least one must have the status of “Canadian resident”. , that is to say to be the famous PR, a term which means Public Relations, or Public Relations, in Portuguese, and is the professional in charge of Public Relations in organizations.
The requirement for a Canadian resident director is a barrier for foreign investors looking to incorporate their Canadian operations in Ontario. Normally, foreign investors who establish their business in Canada through the incorporation of a company do not have access to a Canadian resident who can act as a director of the company. This means that they would have to look for another jurisdiction, which did not have such a requirement of incorporation, for the internationalization of their business on Canadian soil. Additional registrations were then required to allow the company to operate in Ontario.
With the repeal of subsection 118 (3), foreign investors can establish and incorporate their business in Ontario without needing to have a minimum number of Canadian resident directors. If foreign companies are unable to appoint or retain a director with “Canadian resident” status, they will no longer have to incorporate their business in another jurisdiction.
Although no longer required, the foreign investor may still want to hire a Canadian resident to be a director of their new Ontario corporation. It can be advantageous for the operation to have a director living in Canada who is familiar with Ontario’s legal and business environment.
The Ontario government is working to ensure Ontario has modern laws that facilitate a prosperous business climate and reduce the burden on business. By removing this requirement and making other changes, Ontario is providing more flexibility, reducing bureaucracy, making it easier for people to do business in Ontario, and driving economic growth, investment and job creation. in the province.
* Barbara RC Doherty and Eliane Leal da Silva, lawyers at Gardiner Roberts LLP, associate office of CCBC – Chamber of Commerce of Brazil-Canada
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