The Ontario Business Corporations Act (“OBCA”) currently imposes a residency requirement for directors. Subsection 118(3) of the OBCA stipulates that at least 25% of the directors of an Ontario corporation must be “resident Canadians” unless there are fewer than four directors, in which case, at least one director must be a resident Canadian. This minimum resident Canadian director requirement has been an obvious impediment to foreign investment in Ontario.
As of July 5th, 2021, with the coming into force of Bill 213: Better for People, Smarter for Business Act, 2020 (“Bill 213”), the minimum director’s residency requirement will be removed and no longer be required for Ontario incorporated businesses. This change will apply automatically to all Ontario business corporations, regardless of when they were incorporated.
The elimination of the director residency requirement in Ontario is a much-awaited development for many corporations and foreign investors who want to incorporate in the province, but do not always have qualified directors who are resident Canadians.
Since the Province of Alberta has already eliminated the director’s residence requirement in March 2021, those requirements will only remain under the federal Canada Business Corporations Act and the corporate statutes of Manitoba, Newfoundland and Labrador, and Saskatchewan.
Currently, the following provinces and territories do not require Canadian directors:
- British Columbia
- New Brunswick
- Northwest Territories
- Nova Scotia
- Prince Edward Island
- Yukon Territory
If you would like more information on this topic, please contact a member of the Astrum Consulting team at info(@)astrumconsulting.ca.
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