Upcoming Changes to the OBCA Poised to Have a Positive, Lasting Impact on Business Efficacy in Ontario
The Ontario Business Corporations Act (OBCA) was amended following the enactment of Bill 213 – the Better for People, Smarter for Business Act, 2020. These amendments have since enhanced business efficiency across Ontario by reducing regulatory burdens for both investors and corporations.
If you are a business owner or investor planning an incorporation, restructuring, or governance review, understanding how these changes affect your corporate obligations is essential. Contact Kalfa Law Firm to discuss how these reforms may benefit your business structure.
Bill 213 introduced two key amendments to the OBCA: the removal of the director residency requirement and the introduction of majority-written shareholder resolutions for private corporations.
Bill 213 received Royal Assent on December 8, 2020, and these amendments came into force on July 5, 2021. Ontario corporations are now able to take advantage of both changes described below.
Removal of Director Residency Requirement
Section 118(3) of the current OBCA requires that at least 25% of a corporation’s directors be resident Canadians. For boards with fewer than four directors, at least one director must be a Canadian resident. Although originally intended to promote Canadian participation, this requirement created difficulties for global investors and corporations seeking diverse, skills-based boards.
In contrast, several provinces, including British Columbia, Nova Scotia, and Quebec, do not impose a residency rule. This discrepancy caused many non-resident investors to incorporate outside Ontario, limiting the province’s competitiveness.
Eliminating the residency requirement is expected to create the following long-term advantages. Non-resident investors will be able to incorporate in Ontario without retaining a nominal local director. Boards can be structured purely based on expertise rather than residency. Ontario will become a more attractive incorporating jurisdiction, even though the Canada Business Corporations Act (CBCA) still maintains a 25% residency requirement federally.
This amendment represents a significant step toward creating a more inclusive and competitive corporate environment in Ontario.
Majority Written Resolutions for Private Corporations
Under the current section 104 of the OBCA, written shareholder resolutions must be signed unanimously by all voting shareholders. For many private corporations, this requirement often results in administrative inefficiencies and delays, especially when one or more shareholders is unavailable or unwilling to participate.
Bill 213 amends section 104 to allow ordinary resolutions to be passed by a written resolution signed by shareholders representing at least a majority of the voting shares. Under this new rule, notice of the contemplated resolution is not required before signing. Shareholders who did not vote must receive notice of the passed written resolution within 10 business days. The rule applies only to matters that may be passed by ordinary resolution under the corporation’s constituting documents. Special resolutions will still require unanimous written approval or a vote at a duly convened meeting.
These amendments streamline internal decision-making processes and reduce unnecessary procedural overhead for private corporations.
Conclusion
As Ontario continues to modernize its corporate legislation, understanding how these OBCA amendments affect your business is essential. Whether you are incorporating, reorganising, drafting shareholder agreements, or preparing for a corporate transaction, expert legal guidance ensures compliance and efficiency.
Speak with a Corporate-Commercial Lawyer at Kalfa Law Firm today for tailored advice on incorporation, governance, shareholder matters, and ongoing OBCA compliance.
For further reading, explore Corporate Governance Services, Shareholders’ Agreements in Ontario, and Incorporation Services for Ontario Businesses.
You may also review statutory updates via the Government of Ontario’s official OBCA resources.
Shira Kalfa, BA, JD, Partner and Founder
Shira Kalfa is the founding partner of Kalfa Law Firm. Shira’s practice is focused in corporate-commercial and tax law including corporate reorganizations, corporate restructuring, mergers and acquisitions, commercial financing, secured lending and transactional law. Shira graduated from York University achieving the highest academic accolade of Summa Cum Laude in 2012. She graduated from Western Law in 2015, with a specialization in business law. Shira is licensed to practice by the Law Society of Ontario. She is also a member of the Ontario Bar Association, the Canadian Tax Foundation, Women’s Law Association of Ontario, and the Toronto Jewish Law Society.
© Kalfa Law 2021. Updated July 2026.
The above provides information of a general nature only. This does not constitute legal advice. All transactions or circumstances vary, and specified legal advice is required to meet your particular needs. If you have a legal question you should consult with a lawyer.
