Ontario Removes Director Residency Requirements and Permits Majority Shareholder Resolutions inWriting


Amendments to the Ontario Business Corporations Act (OBCA) came into force on July 5, 2021 and these changes included: i) eliminating the requirement that mandated each OBCA corporation to have a minimum 25% of the directors to be resident Canadians; ii) allowing private corporations to pass ordinary resolutions in writing with a majority shareholder approval, without the consent of the minority shareholders and without calling a meeting.

Directors’ Residency Requirement

The repeal of the directors’ residency requirement in section 118(3) of the OBCA allows all the directors of a Canadian corporation to be non-residents of Canada and this brings Ontario’s corporate statute into alignment with other Canadian provinces and territories including British Columbia, Alberta, Quebec, Nova Scotia and New Brunswick. The change adds competitive advantage to the Province of Ontario and helps attract foreign businesses that want to participate in the Canadian economy directly or through an Ontario subsidiary. It provides for greater flexibility for business that wish to be incorporated in Ontario without needing to find resident Canadians willing to act as directors.

Ordinary Shareholder Resolutions In Writing

Another amendment to the OBCA allows private (non-offering) Ontario corporations to pass ordinary shareholder resolutions in writing, in lieu of a shareholder meeting, where they have been approved by a majority of shareholders entitled to vote on the resolution. Previously, it was required for all shareholders entitled to vote on the resolution to sign the resolution in writing. However, this unanimity is still required for all special resolutions of shareholders and all resolutions in writing for the directors.