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In July 2013, we reported that the Ministry of Economic Development, Employment and Infrastructure was proposing to recover costs incurred by the Crown from former directors and officers of forfeited property of dissolved corporations. Now it is enshrined in law, under Ontario’s recently passed Bill 144, Budget Measures Act, 2015 (Schedule 7).

On December 10, 2015, the Forfeited Corporate Property Act, 2015 received Royal Assent, with the majority of the Act coming into force on December 10, 2016. The Act will also amend 18 other Acts.

Sections 30 and 31 of the new Act set out the authorization for the Minister to determine the amounts due to the Crown, and how the Crown may recover them.

To recover costs against former directors & officers, the Minister must apply to the Superior Court for an order determining who the directors & officers were (in the two years prior to dissolution) and ordering those individuals to pay some or all of the costs sought by the Crown. Related regulations may be passed relating to exceptions and governing the determination of amounts under section 30.

The sections, while not specifically aimed at clean-up costs for contaminated lands, would certainly encompass these. This is yet another way that directors & officers will find themselves potentially liable for such costs, regardless of fault, and no matter when the contamination may have occurred.

While we understand the desire to limit tax payer liability, as we’ve commented before, the trend to go after innocent directors is continuing to expand. We question the wisdom of this approach, as it no doubt will put a chill on those who would otherwise be willing to serve as directors, potentially affecting the management and business efficiency of Canadian corporations.

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