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Tuesday, November 17, 2020

On October 6, 2020, the Government of Ontario introduced Bill 213, Better for People, Smarter for Business Act, 2020 (“Bill 213”) which proposes to amend the Ontario Business Corporations Act (“OBCA”), among other statutes. If passed, the proposed amendments under Bill 213 could make Ontario a more attractive province in which to incorporate and operate Canadian and foreign-owned businesses.

OBCA Amendments

The proposed OBCA amendments would eliminate the director residency requirement for all OBCA corporations, as well as lower the approval threshold for written ordinary resolutions of shareholders of privately held OBCA corporations.

Director Residency Requirement

Currently, for both public and private OBCA corporations, at least 25% of directors are required to be resident Canadians. In the case of an OBCA corporation with less than four directors, at least one director must be resident Canadian. Bill 213 seeks to remove this requirement, which would allow corporations to place the most qualified people on their board of directors and would eliminate a requirement which may have discouraged foreign businesses from incorporating in Ontario. This proposed amendment would also bring Ontario in alignment with many other Canadian provinces and territories including Quebec, New Brunswick, Prince Edward Island, Nova Scotia, British Columbia, Nunavut, the Northwest Territories and the Yukon. Alberta has also recently repealed its resident director requirement, although it is currently awaiting proclamation. However, federally incorporated corporations must still meet the residency requirement under the Canada Business Corporations Act.

Written Ordinary Shareholder Resolutions

OBCA corporations may obtain shareholder approval by written resolution in lieu of having a meeting of shareholders. Currently, written shareholder resolutions must be signed by all of the shareholders entitled to vote on the resolution at a meeting of the shareholders. Bill 213 seeks to lower the unanimous shareholder approval threshold to shareholders holding at least a majority of shares entitled to vote on the resolution. The proposed lower threshold would only apply to privately held OBCA corporations and corporate actions requiring an ordinary resolution. Additionally, the proposed amendment would be subject to any higher threshold requirement that might be stipulated in a corporation’s articles, by-laws or a unanimous shareholder agreement (“USA”).

While the proposed amendment does not provide for any advance notice of a written resolution to shareholders, the corporation would be required to issue notice of the resolution being passed to voting shareholders who do not sign the written ordinary resolution within 10 business days of the resolution being passed. This notice must include the text of the resolution that was passed along with a description of and reasons for the business dealt with by the written resolution. This proposed amendment could enable privately held corporations to make decisions that require shareholder approval by ordinary resolution faster and more cost efficiently, as well as facilitate quicker responses to opportunities and urgent issues. Resolutions relating to more fundamental corporate actions, such as amalgamations or amendments to a corporation’s articles, would still require unanimous approval by all shareholders entitled to vote on the matter if passed by written resolution (or, if passed at a meeting of shareholders, approval by two-thirds of the votes cast at such meeting).

The proposed amendment would align the province of Ontario with certain jurisdictions that are considered attractive for corporations, including the province of British Columbia and the state of Delaware.

Bill 213 is currently in the second reading stage of the legislative process. If the proposed amendments under Bill 213 are passed, OBCA corporations should review their articles, by-laws and any USAs to determine whether any changes are necessary in order to conform with the new requirements and avoid any unintended outcomes.

Should you have any questions or require assistance with complying with the proposed amendments, please contact Ragu Anantharajah by email at, Niall Sweeney by email at, or Julian Lupo by email at

This update is intended as a summary only and should not be regarded or relied upon as advice to any specific client or regarding any specific situation.

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