Ontario’s top lawyers warn their clients against using a new online business registry that was rolled out by the Doug Ford government this week as it struggles to deal with a backlog of unprocessed applications.
Shoppers Union Bonded Trust, which operates the provincial business registry, has been so flooded with letters from troubled companies seeking help that senior staff have been unable to answer questions about the new system, a spokesperson for the trust told the Globe and Mail.
“The issues are so big that we can’t even respond to the inquiries that are coming in,” said Melissa Ryan, the chief executive officer of Shoppers Union Bonded Trust, a unit of Telus Corp. “I’m sure there will be a large number of businesses that, if they followed the advice that I’ve been told, will be on a very slow track to closure.”
In an industry geared toward speed and streamlining, the government’s confusing rollout of new legislation is taking some firms by surprise, with major law firms telling clients to avoid Ontario for now.
Starting next month, businesses that are not incorporated or have not yet started up must submit an online application to become a corporation, or register as a subsidiary of a corporation in order to qualify for a license to do business, though they can ask that the process be delayed. The new rules only apply to companies incorporated on or after 1 October, 2017, but the trustee services branch of Ontario’s Societe Generale de Securite d’Administration (SGS) was told by Shoppers Union Bonded Trust it needs to update an existing back-up system by mid-August in order to accept newly proposed registrations – at the same time, the government is also pushing Ontarians to register online to renew and extend their business licences.
As a result, “we are advising clients to refrain from registering for the registry until this system is working properly and to obtain advice from their respective attorneys on their legal options regarding this matter,” said David Israelowitz, senior associate at Arnall Golden Gregory LLP, a Toronto-based legal firm that is advising clients on how to comply with the new legislation.
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Other firms aren’t as concerned. Vancouver-based McKenzie Bonas LLP is offering clients training so they can quickly submit applications, although it also cautions its clients that the new business registry could be a long, complex process – potentially up to two years. “There is no guarantee of success for many,” the firm said in a note to clients.
Some lawyers remain hopeful that the registry will improve as the government focuses on fixng it. The registry will also expand beyond the companies that haven’t already started up to encompass all private corporations, municipalities and not-for-profit corporations that have fewer than five employees and less than $1m in annual turnover.
One sign that this could be a slow fix: a public comment period on the registry hasn’t yet opened and Ryan said she would only be able to respond to individual inquiries.
The registry, the government said, aims to reduce the length of time to process applications – down from an average of 700 days to only 12 days – while making it easier for businesses to become registered and “easier for business owners to receive timely advice from third parties in providing general information, evaluating the potential risks and benefits and making appropriate decisions.”