One of the many changes to have come into force this month is the requirement for all condo directors to disclose certain facts about themselves or risk being automatically disqualified. This post will help you with the process and timing of this new requirement.
The amended Condo Act added 2 additional requirements for an individual to qualify as a condo director:
- They must complete the newly required training within 6 months of their appointment/election; and,
- They must comply with new disclosure obligations within the prescribed time.
What must be disclosed?
The extent of what must be disclosed is provided for by regulation. Specifically, the candidate seeking to be appointed or elected must confirm the following:
- Whether they are an owner and, if so, whether they are more than 60 days in arrears;
- Whether they occupy their unit;
- Whether they or a “related person” (see definition further below) are a party to any legal action to which the corporation is also a party. If the candidate or a related person is a party to such a legal action, the candidate must provide a brief general description of the action;
- Whether they have been convicted of an offence under the Condominium Act or under the regulations adopted thereto within the preceding 10 years. If so, they must provide a general description of the offence;
- Whether they, directly or indirectly, have a material interest in a contract or transaction to which the corporation or the declarant is a party. If so, they must provide a statement of the nature and extent of their interest in such contract or transaction.
The existence of the above facts do not disqualify a potential candidate. However, he or she must disclose them and let the owners decide whether they will still vote for him or her.
Also note that the corporation may, with a by-law, require candidate to disclose additional information.
What is a related person and who is a spouse?
For the purpose of this disclosure obligation, a “related person” includes a spouse, a child, a parent, a child or parent of the spouse or the occupier of a unit owned by the candidate or by his/her spouse.
By the way, a spouse includes both “married” spouses and two individuals who live together in a conjugal relationship outside of marriage. Not to confuse anyone, but this definition, in my view, is wide than the traditional “common law” definition, which requires 3 years of ongoing and continuous cohabitation. I would suggest that a candidate should disclose the fact that his girlfriend or boyfriend (if living together) is a party to a legal action involving the corporation.
When and how must this disclosure be done?
The timing and method of disclosure will depend on whether the person is elected or appointed and on when the person makes his or her candidacy known. See below.
In advance of the AGM
When a candidate notifies the board of his/her intention to be a candidate for election in advance of the AGM and within the time frame provided by the Advance Notice, the candidate must make the required disclosure in writing and at the time of advising of his/her interest of being a candidate. Such written statement must be signed by the candidate.
[Please note that some transitional exceptions may apply to an AGM held before December 11, 2017].
At the AGM
If the candidate does not advise of his interest to run for election in advance but is a candidate at the meeting of owners (we sometimes refer to these as a nomination from the floor), then the person must provide the required disclosure at the meeting of owners. Such disclosure does not have to be in writing. If the disclosure is made in writing, it must be signed by the candidate.
[While this is not required under the regulation, I still recommend that the disclosure be done in writing even if the notification is done at the meeting. It’s in everyone’s interest].
If appointed by the board
If the candidate is appointed by the board to fill a vacancy (as opposed to being elected by the owners at a meeting of owners), the candidate should provide the required disclosure one of the following 2 ways:
- in writing if the disclosure is made prior to the board meeting where he or she is appointed;
- either orally or in writing if the candidate makes the disclosure at the actual board meeting where the candidate is appointed.
This timings and procedure is subject to any provision in a by-law of the corporation. Again, if the disclosure is in writing, it must be signed by the candidate.
What if the information changes?
Interestingly enough, the draft version of the regulation seemed to impose on directors an obligation to disclose any changes in the information pertaining to them. For instance, if a director became a party to a legal action involving the corporation, the draft version of the regulation seemed to imposed on them the obligation to advise of this change.
The way we read the disclosure obligations now, it seems that the information only needs to be accurate at the time of the disclosure and there appears to be no additional requirement to correct it if it changes. That is unfortunate. Certainly, the saving grace is that directors have an ongoing obligation to disclose the existence of any direct or indirect interest in a contract or transaction involving the corporation. That is not new and continues to apply.
What form must be used?
Somewhat surprisingly, the ministry has not developed a form to be used for the disclosure – perhaps because in some cases the disclosure does not have to be in writing.
In the absence of a mandated form, we have developed our own form for our clients.
Important notice: Please don’t forget you have until December 31, 2017 to register your corporation with the CAO. Time is slowly running out! You can read more on this here.