Proposed Permanent Changes to Enable Digital and Virtual Processes under the Ministry of Public and Business Service Delivery's Business Law Statutes

Regulation Number(s):
R.R.O. 1990, Reg. 178 (General) under the Co-operative Corporations Act
Instrument Type:
Bill or Act:
Less Red Tape, Stronger Economy Act, 2023
Summary of Proposal:
On April 3, 2023, the government introduced the Less Red Tape, Stronger Economy Act, 2023. Among other things, the bill includes proposed amendments to eight business law statutes to generally eliminate barriers or hurdles which preclude or make it burdensome for businesses and corporations to implement certain virtual processes. The eight affected business law statutes are:

• Business Corporations Act
• Co-operative Corporations Act
• Corporations Act
• Corporations Information Act
• Limited Partnerships Act
• Not-for-Profit Corporations Act, 2010
• Partnerships Act
• Personal Property Security Act

If passed, the proposed changes in part would replace the temporary legislative framework for virtual processes, including virtual meetings, which was enacted in response to the COVID-19 pandemic, which expires on September 30, 2023. In particular, the proposed changes would:

• Establish that certain corporations may hold virtual or hybrid meetings, and that voting (including elections) may be conducted virtually or in hybrid form unless the corporation's governing documents provide otherwise
• Better facilitate the sending of notices or other documents by electronic means
• Permit, but not require, affected corporations, businesses, and/or partnerships to store records by electronic means and facilitate the electronic examination of records remotely, as applicable.

You can find the proposed legislative changes, as well additional information about the Less Red Tape, Stronger Economy Act, 2023, by following the link below.

In addition to the proposed legislative changes, the ministry is also exploring additional, complementary, changes in a proposed regulation to amend R.R.O. 1990, Reg. 178 (General) under the Co-operative Corporations Act, which is posted here for public comment.

In general, the draft proposed regulation to amend R.R.O. 1990, Reg. 178 (General) under the Co-operative Corporations Act would revoke sections 21 and 22 of that regulation:

• Section 21 of the General Regulation currently restricts the ability of non-profit housing co-operatives to send a notice or other document to a member or a director of a co-operative by electronic means.
• Section 22 of the General Regulation currently restricts the ability of non-profit housing co-operative members and directors to send a notice or other document to the co-operative by electronic means.

Revoking these sections is intended to enable non-profit housing co-operatives to fully engage in the broader virtual process amendments being proposed under the Co-operative Corporations Act, as part of the Less Red Tape, Stronger Economy Act, 2023.

The proposed changes would align the electronic notice provisions for non-profit housing co-operatives with other co-operative corporations, and other types of corporations, in allowing them to send and receive notices and other documents by electronic means. Please note that these proposed changes would not require notices to be sent electronically but, rather, would simply allow non-profit housing co-operatives and its members and directors to send/receive electronic notices or documents, and would remain subject to their articles or by-laws.

The ministry welcomes feedback on the draft proposed amendments.
Analysis of Regulatory Impact:
Issues & Objectives:

• The effect of the pandemic has demonstrated that the ministry's business law statutes and the Condominium Act, 1998 (Condo Act) should be modernized to accommodate contemporary business practices and eliminate burden for corporations and businesses.
• Accordingly, the ministry is proposing to implement permanent legislative and regulatory changes that would enable certain corporations and businesses to hold virtual or hybrid meetings, and undertake other virtual processes associated with meetings (such as sending an electronic notice about the meeting), without needing to take certain preliminary steps, such as passing a corporate by-law, as well as proposed changes to address digital storage of and electronic access to records. These changes would also replace temporary legislative changes that currently permit certain corporations and businesses to hold virtual or hybrid meetings until September 30, 2023.
• Overall, the proposal is intended to remove statutory barriers or hurdles and provide corporations and businesses with enhanced flexibility to satisfy their corporate governance obligations in a manner that is suitable to their needs.

Benefits, Costs, and Other Impacts:

• Because of the structure of the statutes (organizational/framework statutes where the ministry generally has no oversight function over the corporations) and because of the nature of the proposed changes (the proposed changes are enabling/permissive in nature and corporations could choose the virtual processes that work for them), the ministry cannot anticipate how many corporations may choose to implement virtual processes, or in which fashion they may be implemented. However, in order to estimate the potential cost savings from the proposed amendments, the ministry relied on statistics from ServiceOntario (SO) and made some conservative assumptions to conclude that an estimated direct compliance net cost-savings of approximately $14M per year could be realized across Ontario corporations.
• This figure was calculated by comparing the costs of hosting in-person meetings versus hosting virtual meetings only for a sample of corporations under the Ontario Business Corporations Act currently active in Ontario (this sub-set of corporations was chosen because the ministry could identify and review enough data to make reasonable assumptions for this group).
• This figure will fluctuate based on the individual corporation's choices on whether they decide to continue hosting virtual only meetings, switch to hybrid or return to in-person meetings in the future.
• Notably, the proposal impacts over 1.3 million business corporations, over 576,000 partnerships, over 60,000 not-for-profit corporations, over 12,000 condo corporations, over 1,700 co-operative corporations, over 130 share capital social clubs, and over 120 insurers.
Further Information:
Proposal Number:
Posting Date:
April 3, 2023
Comments Due Date:
May 3, 2023
Contact Address:
Ministry of Public and Business Service Delivery
Policy, Planning and Oversight Division
56 Wellesley St. W.,
Toronto ON M5S 2S3