Involuntary corporate dissolution
An information sheet for companies about involuntary dissolution in regards to section 240 and 241 of the Business Corporations Act.
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A corporation may be involuntarily dissolved (cancelled) by order of the Director appointed under the Business Corporations Act (BCA) for reasons set out in sections 240 and 241 of the Business Coporations Act.
Please be advised that the Central Production and Verification Services 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 Law Society Referral Service of the Law Society of Upper Canada. You will be referred to a lawyer for up to one half-hour free legal consultation. You must be 18 years of age to access this service.
Visit the Law Society Referral Service website for information. If you would like to be referred to a lawyer, you may submit a request by completing this online application.
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 section 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 Legislative Assembly of Ontario
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: Alcohol and Gaming Regulation and Public Protection Act, 1996, Corporations Tax Act, Employer Health Tax Act, Fuel Tax Act, Gasoline Tax Act, Land Transfer Tax Act, Retail Sales Tax Act, Taxation Act, 2007 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)
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, and subject to subsection 241(10) or (11) of the BCA as the case may be, shall be deemed for all purposes to have never been dissolved (section 241(9)).
Where the corporation was cancelled before December 10, 2016 and revived on or after December 10, 2019, and where the corporation is cancelled on or after December 10, 2016 and revived more than three years after cancellation, any forfeited corporate property shall not be returned to the corporation except in the manner provided in the Forfeited Corporate Property Act, 2015 or in the Escheats Act, 2015; see subsections 241(10) and 241(11) of the BCA.
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 (section 244(1)), legally it “forfeits to and vests in 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 to 244 of the BCA, subject to sections 242(1.1) and 242(1.2).
The minister responsible for the Forfeited Corporate Property Act, 2015 is responsible for forfeited corporate property within the meaning of the Forfeited Corporate Property Act, 2015. For further information you can contact Manager, Portfolio Performance, Realty Division, Ministry of Infrastructure at 416-325-1443.
The Public Guardian and Trustee has authority under the Escheats Act, 2015 to deal with corporate property to which the act applies at any time after dissolution. For more information, you can contact the OPGT charitable property program.
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 (section 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 serve the Public Guardian and Trustee and the minister responsible for the Forfeited Corporate Property Act, 2015, as applicable under subsections 242 (3) and (4) of the Business Corporations Act.
Please refer to sections 242 through 244 of the Business Corporations Act for further details on actions, liability, service on the Public Guardian and Trustee and Minister of Infrastructure and property after dissolution.