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A letter from 16 Bay Street law firms, addressed to Government and Consumer Services Minister Ross Romano, says, 'system shutdowns, technical glitches and substantive problems' with the province’s new Online Business Registry 'are causing significant disruption, delaying transactions and adding significant costs for businesses.'Nathan Denette/The Canadian Press

A group of Canada’s largest law firms are urging the Ontario government to fix flaws in a new online business registry launched last month, saying it is so error-ridden that they have advised clients to register their businesses outside of the province.

A letter from 16 Bay Street firms, addressed to Government and Consumer Services Minister Ross Romano, says, “system shutdowns, technical glitches and substantive problems” with the province’s new Online Business Registry (OBR) “are causing significant disruption, delaying transactions and adding significant costs for businesses.”

Seven of 12 pages in the letter sent last week are dedicated to listing various issues with the OBR, which was developed by the province’s licensing land registry service Teranet. The signees represent and submit filings on behalf of “hundreds of thousands” of entities that do business in Ontario, the letter said.

Launched on Oct. 19, the OBR is an online portal where users incorporate businesses and submit various filings. It replaces a largely paper-based system that required visiting a counter at a government office to conduct business.

Many of the law firms have advised employees and clients to avoid the “creation or use of Ontario entities in corporate transactions” if possible, and recommend using federal entities or ones based in other provinces instead, according to the letter.

If companies avoid registering in Ontario, it risks undoing the province’s efforts to attract more business. In July, the government eliminated director residency requirements for businesses registered in Ontario, a move meant to encourage more companies to incorporate in the province.

The OBR issues are so disruptive, the letter said, that it is “having a chilling effect on doing business in Ontario in general.”

Sebastian Skamski, a spokesman for the ministry, told The Globe and Mail in an e-mail Thursday that “improvements have been made on a rolling basis” and that “the overwhelming majority of issues should be resolved” in the coming week.

The OBR, he said, “replaced an outdated, inefficient, three-decade old” system, and has “successfully completed” more than 120,000 transactions since its launch.

Aird & Berlis LLP; Bennett Jones LLP; Blake, Cassels & Graydon LLP; Borden Ladner Gervais LLP; Davies Ward Phillips & Vineberg LLP; Dentons Canada LLP; Fasken Martineau DuMoulin LLP; Goodmans LLP; Gowling WLG; McCarthy Tétrault LLP; McMillan LLP; Norton Rose Fulbright Canada LLP; Osler, Hoskin & Harcourt LLP; Stikeman Elliott LLP; Torys LLP; and Wildeboer Dellelce LLP signed the letter, as first reported by the Toronto Star.

Business lawyers are entering a busy year-end period, where there will be a high volume of corporate transactions to process. Natalie Munroe, a lawyer at Osler who heads a team that assists clients with corporate transactions, told The Globe that a task that used to take 20 minutes before OBR launched can take as long as four hours because of errors and glitches in the new system.

“I think the most concerning problems are when you file, you have no idea what you’re going to get back,” she said. “We’ve had an instance where we got back a filing that had nothing to do with our clients.”

Elliott Stone, president and founder of MD Physician Tax Service, a tax and accounting firm that serves doctors, told The Globe that some of his clients are having trouble incorporating their businesses on OBR, and that their articles of incorporation are not formatted correctly in the system.

“It’s one massive paragraph instead of what it’s [supposed] to be,” he said.

The law firms have pushed back against guidance from the ministry to file amendments if there are problems with an initial filing.

“It is also completely inappropriate to ask or expect our clients to bear additional costs … to fix errors that are caused by the OBR,” the letter said.

The OBR’s problems have also overwhelmed ESC Corporate Services Ltd. and Dye & Durham Ltd, the authorized service providers for OBR, who users pay for each filing to complete transactions.

“They are each responding to hundreds of calls a day relating to OBR errors,” the law firms wrote.

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