Government of Ontario: Ministry of Government and Consumer Services

ServiceOntario

Companies and Personal Property Security Branch

(mailing address)
393 University Avenue, Suite 200
Toronto ON M5G 2M2
(physical address)
375 University Avenue, 2^nd floor

INVOLUNTARY DISSOLUTION (BUSINESS CORPORATIONS)

A corporation may be involuntarily dissolved (cancelled) by order of the Director of the Companies and Personal Property Security Branch (CPPSB) under the Business Corporations Act (BCA) for reasons set out in sections 240 and 241 of the BCA.

GENERAL INFORMATION

Please be advised that the COMPANIES AND PERSONAL PROPERTY SECURITY BRANCH CANNOT GIVE LEGAL ADVICE. This information is intended as a general guide only. For further assistance or legal advice, please consult your lawyer.

If you need a lawyer, you may wish to contact the Lawyer Referral Service of the Law Society of Upper Canada. You will be referred to a lawyer for up to a half-hour free legal consultation, either in person or over the phone. Please note that this is a toll service and phoning the Lawyer Referral Service line will automatically generate a $6.00 charge on your phone bill, in the month following your call. You must be 18 years of age to access this service. The number is 1-900-565-4577 (1-900-565-4LRS).

Cancellation for Cause under Section 240 of the Business Corporations Act

Section 240 of the BCA provides that where sufficient cause is shown, the Director may, after giving the corporation an opportunity to be heard, by order cancel a certificate issued or endorsed under the BCA, and,

in the case of the cancellation of a certificate of incorporation, the corporation is dissolved on the date fixed in the order; and
in the case of the cancellation of any other certificate, the matter that became effective upon the issuance of the certificate ceases to be in effect from the date fixed in the order.

With respect to cancellation of a certificate “sufficient cause” includes:

The corporation has not maintained the required number of directors; or
The corporation has not maintained the required number (at least 25 per cent) of resident Canadian directors; or
The corporation has been convicted of an offence under the Criminal Code of Canada or any federal statute or an offence as defined in the Provincial Offences Act, and cancellation of the certificate is in the public interest; or
The corporation has engaged in conduct described in s. 248 (2) (“motifs suffisants”).

Revival by Private Act Only

Corporations cancelled for cause pursuant to section 240 of the BCA, CANNOT apply for revival. The only way to revive the corporation is by way of a special act of the Legislature (Private Act). For information on obtaining a special act contact:

Clerk of the Standing Committee on Regulations and Private Bills
Committees Branch
Telephone: 416/325-3515
Website at: www.ontla.on.ca

Involuntary Dissolution under Section 241 of the Business Corporation Act

Section 241 of the BCA provides that the Director may by order cancel a certificate of incorporation and the corporation is dissolved on the date fixed in the order, for default in compliance with notice that:

the corporation is in default in complying with any of the following Ministry of Finance statutes: Corporations Tax Act, Employer Health Tax Act, Fuel Tax Act, Gasoline Tax Act, Land Transfer Tax Act, Retail Sales Tax Act or the Tobacco Tax Act; or
the corporation has not complied with sections 77 and 78 of the Securities Act; or
The corporation has failed to comply with a filing requirement under the Corporations Information Act or has failed to pay a fee required under the BCA. (Prior to March 1, 1999 corporations cancelled for failure to file a fee were cancelled for cause under section 240.)

Revival

Corporations cancelled pursuant to section 241(4) of the Business Corporations Act for any of the reasons listed above may be revived, on the application of any interested person (for example, an officer, director, shareholder, creditor, or estate trustee of a shareholder) if not more than twenty years from the date of dissolution. For information on filing Articles of Revival see the information sheet “Revival (Business Corporations)”.

Upon revival, the corporation, subject to the rights, if any, acquired by any person during the period of dissolution, shall be deemed for all purposes to have never been dissolved (s.241 (5)).

Notification

Compliance letters and notices are sent to the corporation’s registered office address shown on the public record to give the corporation an opportunity to remedy its default(s) and avoid cancellation for cause under section 240. In the case of section 241, a notice of default may be published in The Ontario Gazette, followed by cancellation if the corporation fails to come into compliance. It is therefore important to ensure that the corporation remains in compliance with all applicable legislation, and that information on the public record concerning the corporation and its registered office address is up to date. The Corporations Information Act requires that corporations file a Form 1, Initial Notice/Notice of Change, within 15 days after a change takes place in information previously filed. (For details see the information sheets "Initial Return/Notice of Change, Making Changes to Corporate Information" and "Checklist for Completing Form 1, Initial Return/Notice of Change").

Continuing Business Activity After Dissolution

Upon dissolution, the corporation ceases to exist. If the activities of the business continue, the business is then operating without corporate status. Consult with your lawyer regarding the personal liability of the owners and operators of a business that is operating without the limited liability shelter of a corporation.

Property After Dissolution

Upon dissolution, any property of a corporation that has not been disposed of at the date of dissolution immediately becomes the property of the Crown (s. 244(1)), legally it “forfeits to the Crown”. However, such property is available to satisfy any judgment, order or other decision made in connection with a proceeding brought against the corporation, as set out in sections 242-244.

In Ontario the Office of the Public Guardian and Trustee represents the Crown. For information concerning property of a corporation that has been involuntarily dissolved please contact the Office of the Public Guardian and Trustee at:

Office of the Public Guardian and Trustee
595 Bay Street, Suite 800
Toronto, ON M5G 2M6
Tel: (416) 326-1963 or in Ontario toll free at 1-800-366-0335

Actions After Dissolution

Despite dissolution of a corporation under the Business Corporations Act, a civil, criminal or administrative action or proceeding commenced by or against the corporation before its dissolution may be continued as if the corporation had not been dissolved (s. 242(1)).

A civil, criminal or administrative action or proceeding may be brought against a corporation after its dissolution as if the corporation had not been dissolved.

Notice Of Action

A person who commences an action, suit or other proceeding against a corporation after its dissolution must provide notice to the Office of the Public Guardian and Trustee that such proceeding has commenced (s. 242(3)).

Please refer to sections 242 through 244 of the Business Corporations Act for further details on actions, liability and property after dissolution.

OTHER RELATED INFORMATION SHEETS

Revival (Business Corporations)
Initial Return/Notice of Change Making Changes to Corporate Information
Filing of Annual Returns

November xx, 2007

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