Ontario Personal Property Security Act

Ontario Personal Property Security Registration & Search

The Ontario Personal Property Security Registration (PPSR) System is a notice filing system that records and provides information concerning consumer and business loans where goods and other personal property are used as collateral to secure loans.  The PPSR System is a provincial system and each province and territory would have its own PPSR System.

For example, a person (“Borrower”) buys a large screen TV and borrows money from a loan company (the “Lender”) to pay for the TV.  The Borrower and the Lender enter into an agreement giving the Lender the rights to the TV until such time as the Borrower has paid the money back to the Lender.  The Lender would register a Personal Property Security Registration against the Borrower to secure its loan to the Borrower.

Who Should Register in the Ontario Personal Property Security Registration System

Persons involved in one of two types of transactions would make a registration in the Ontario Personal Property Security Registration System:  (1)  Creditors who secure payment of a debt by taking a security interest in the personal property of the debtor should register a financing statement under the Personal Property Security Act (Ontario) (frequently referred to as the “PPSA”); or (2) persons who repair or store an article and who, prior to receiving full payment give up possession of that article, should register a claim for lien under the Repair and Storage Liens Act (frequently referred to as the “RSLA”).

Registering in the PPSR System helps to establish priorities between individuals with competing interests in the same personal property, and in the case of a claim for lien will ensure that the non-possessory lien is enforceable against third parties.  Information is kept current through the registration of a financing change statement.  For instance if any information changes about the property, the lender or the borrower, a financing change statement can be filed to update the information.

What is the Registration Process

Lenders and borrowers must enter into what are called “security agreements”.  The Lender registers a notice of the agreement in the PPSR System.  This is done by completing and submitting a document electronically called a financing statement.  This must be done by an online service such as a search house.   This registration is done by the Lender because it is the Lender who wants to protect its interest in the security.

The information is then recorded on the PPSR System and remains there until such time as the PPSA registration has been discharged by the Lender.

It is not just loan companies that can register a PPSA.  If you have loaned money to a person you can have this individual sign a promissory note or a security agreement and you can then register a PPSA financing statement against that individual.  You do not have to have a solicitor prepare this document for you but it is always the best route.

What Information is Included in the PPSA Financing Statement

In the case of a consumer car loan this would include the borrower’s name, address and date of birth, the lender’s name and business address, the registration period, classification of the collateral as consumer goods, initial amount of the loan, maturity date and description of the car including motor vehicle identification number (VIN).

Even though only a summary of the information can be registered, it is important to have complete information.  For instance, having the first name, middle name and last name of the debtor is better than just the first and second name.  Consider the name “John Smith” which is very common.  If you were to do a search of this name through the PPSR System you would get results for more than one person.  However, if you register the name “John Abbot Smith” the search results would be more narrow.  Including the date of birth is another way of ensuring specific information about the debtor.  Further describing the security is important.  For instance, describing the security as a TV would not be as good as saying that it is a Sony 30 inch flat screen TV with Serial Number: 29845.  There is a box on the form which will allow you to put in a description of the security which is 2 or 3 lines long.  Take advantage of this opportunity.

How Long is the Information Retained in the PPSR System

Lenders must select the time period for the registration.  Business loans may be registered for as long as 25 years, or for a perpetual period.  The longer the time period, the more money it is to register a PPSA.  In the case of consumer loans, lenders can register only for up to five years at a time but the PPSA registration can be renewed for a further five years.  The onus would be on the lender to ensure it re-registers at the appropriate time.

How Does a PPSA Registration Become Discharged

When the consumer loan is repaid the lender is required to register a “discharge” within 30 days.  Frequently this is not done so if you are the borrower you should ensure that this is done on your behalf by the lender.

Even if the borrower has paid the lender all of the money that he or she owes to the lender, the borrower should not discharge the PPSA registration on his or her own.  The borrower should contact the lender and request that the PPSA registration be discharged.

What Should You Do if the Lender Does not Discharge the PPSA Registration After All Payments Have Been Made

Where the secured party (in this situation the lender), without reasonable excuse, fails to register the financing change statement, or certificate of discharge or partial discharge, or all of them, as the case may be, required pursuant to the Personal Property Security Act (Ontario) within 10 days after receiving a demand for it, the secured party shall pay $500 to the person making the demand (in this case the borrower) and any damages resulting from the failure.  The sum and damages are recoverable in any court of competent jurisdiction.

If no discharge is registered the PPSA registration will remain on the system until the end of the registration period.

Why Should You Do a Search Before Buying a Used Product

Before buying a used car or other used goods, consumers should do a PPSA search to protect themselves financially.  For example, a search may indicate that the seller or a previous owner has obtained a loan and that the seller may not have full rights in the used car that the consumer wants to buy.  A PPSA search might ascertain that there is an outstanding amount still owed against the used car.  It may be that this loan is paid off already but the discharge has not been done.  If so, the search results will enable the consumer to contact the seller to confirm whether or not the loan taken out by the seller is still in effect, and to obtain further details.  If the loan has been repaid but there is still a PPSA registration on file respecting the loan, the buyer should insist that the seller to promptly register a discharge before the sale is completed.  However, if there is an outstanding loan, the consumer may either decide against completing the sale or require the seller to arrange for payment of the loan as well as registration of the discharge.  It would be a terrible situation for you if you were to buy a used car and later find out that a bank loan was outstanding regarding that vehicle and that you do not actually own it at all.

If the seller has rights in the used car and a search is not done, the car could later be seized if the buyer fails to repay the loan.  A PPSA search is not required when buying a new item such as a car.

What Information is Required to Do a Search Against a Business Name

The legal name of the business must first be determined.  If the business is a corporation, the incorporated name should be searched, i.e. 279482 Ontario Inc.  In the case of a partnership a search should be done against the partnership name.  If a company or business carries on business under a trade name, such as 279482 Ontario Inc. operating as Joe’s Used Car Sales, the search must also be done under the business name.  It is important that you know the exact and proper name of a company or business before you do a search otherwise your search may not provide you with the proper information.  If you have any concerns about whether you have an accurate name of a company Resources for Canadian Business Owners may be able to help you with this as a free service.  Contact us and we will see what we can find out for you prior to you performing a PPSA search.

What Information is Needed to Search Against an Individual’s Name

There are two types of individual PPSA name searches when searching an individual’s name.  You may request that either an individual specific or an individual non-specific be done.

You must supply the first given name, initial of second given name (if any), surname and date of birth of an individual to do an Individual Specific Search.  This information should be verified against an official document such as a birth certificate, change of name certificate or certificate of Canadian citizenship.  The search is called “Specific” because you have specific information about this person beyond his or her first and last names.  You might have a birth date and/or a middle name.

A Non-Specific Search requires only the first given name and surname.  This search should be done when a consumer does not know the individual’s date of birth or the initial of the second given name or wants to lessen the risk of missing a registration due to error.  Sometimes a registration might be done against an individual by their first and last name and at other times by their first, second and last name.  Therefore sometimes doing a non-specific search will give you wider results and thereby not miss the registration you are looking for.  Keep in mind though if the name is common you could wait a few weeks to get the results since if the number of pages of the search is extensive the search results have to be mailed rather than pdfed to you by email.

The results for both types of searches will disclose only registrations that set out the exact name (and birth date for a specific search) which is searched.

The search results are provided in pdf form unless the search criteria is so vague the results are too expansive.  For instance if you search John Smith it is possible to get 50 pages back from the government and this would have to be mailed.  There would also be a time delay with this type of search.

How to Change Information on a Registered PPSA Financing Statement

It is possible to register a financing change statement in order to amend or update a registered PPSA financing statement.

Stock Dividends

Stock Dividend

Subject to the Articles, the directors of a corporation may declare and a corporation may pay a stock dividend by issuing fully paid shares of the corporation or options or rights to acquire fully paid shares of the corporation.

All shareholders of a corporation own shares.  When a dividend is declared upon a class of shares of a corporation all shareholders that hold shares of that class are entitled to receive the dividend equally in proportion to the number of shares they own.

To understand how these dividends are declared, consider the following scenario.  The directors of the Corporation approve a stock dividend on the issued common shares of a company on the basis of 10 common shares for every issued and outstanding share owned.  The corporation has the following shareholders:

John Doe (holding 10 common shares)

Jim Holding Company Limited (holding 20 common shares)

If a stock dividend is declared on the issued shares of a corporation providing for ten:one ratio, after the stock dividend is issued the additional number of shares each shareholder will own is:

John Doe (10 x 10) – 100 common shares

Jim Holding Company Limited  (20 x 10) = 200 common shares

The total number of shares owned by each shareholder including the original number of shares held and the additional shares allotted pursuant to the stock dividend are:

John Doe – 110 common shares

Jim Holding Company Limited  – 220 common shares

Subsequent to the approval of a stock dividend each of the shareholders having a right to the stock dividend shall receive a share certificate for the additional shares they received.

Below is an example of a directors resolution approving a stock dividend:

Stock Dividend


Buy Dividend Resolutions

If you wish to make things easy refer to this link for a number of templates that can be purchased relating to Approving Dividends Templates.


For more information about dividends refer to:

Declaring a Dividend

Capital Dividend

Capital Dividend Upon Redemption


Capital Dividend Upon Redemption

Capital Dividend Upon Redemption

Under certain circumstances, and provided the Articles of the Corporation provide, the directors of a Corporation may approve a deemed capital dividend upon redemption of a class of shares.

Redemption of Shares Resulting in a Capital Dividend upon Redemption

When shares are redeemed they are cancelled and, in some cases, returned to Treasury.  The Articles of a corporation set out the basis pursuant to which a class of shares can be redeemed and the amount of money those shares can be redeemed for.  If the Articles do not contain any provisions for redemption, the shares cannot be redeemed.

Statute Governing Capital Dividends Upon Redemption

Section 83 of the Income Tax Act (Canada) governs the basis upon which a capital dividend can be declared .  Refer to Section 83 of the Income Tax Act for more information on the legal requirements to be followed when declaring a capital dividend upon redemption.

Director Approval of a Capital Dividend Upon Redemption

The directors of a Corporation must approve a capital dividend upon redemption and a certified copy of such resolution must be filed with Revenue Canada Agency along with the election form.

Once issued shares of a corporation are redeemed, the share certificate evidencing those shares will be marked cancelled and the share register for those shares will be reduced by the number of shares redeemed.

Example of Directors Resolution Approving Capital Dividend Upon Redemption

Below is an example of a directors resolution approving a deemed capital dividend upon redemption:


Capital Dividend upon Redemption of Shares

Certified copy of Resolution of the Directors Approving a Capital Dividend upon the Redemption of Shares:

Capital Dividend upon Redemption of Shares

Many statutes will have a legal requirement which provides that a company cannot declare a dividend unless there are reasonable grounds it will be able to pay its liabilities.  Below is a form of confirmation of Solvency by the President of a company upon a redemption.

Solvency Certificate

Buy Dividend Resolutions

If you wish to make things easy refer to this link for a number of templates that can be purchased relating to Approving Dividends Templates.


For more information about dividends refer to:

Declaring a Dividend

Capital Dividend

Stock Dividend


capital dividends

Capital Dividend

Under subsection 83(2) of the Income Tax Act (Canada), the directors of a private Canadian corporation may pay a capital dividend to its shareholders out of the capital dividend account of the Corporation.

Capital Dividend Account

The capital dividend account records tax-free surpluses accumulated by a Canadian private company. These surpluses may be distributed free of tax in the form of capital dividends to the Canadian resident shareholders of a corporation.

Revenue Canada Election Requirement for a Declaration of a Capital Dividend

A corporation that intends to pay a capital dividend must file an election in respect of the dividend when the dividend is paid or becomes payable, although a late filing can be done only in certain circumstances.

Revenue Canada Agency Rules Respecting Capital Dividends

For more information about the Revenue Canada Agency rules around capital dividends, refer to:

Election for a Capital Dividend

Election Form and Procedure for Paying a Capital Dividend

The directors of a corporation must approve a capital dividend.  This can be done by holding a validly held directors meeting or by all of the directors signing a directors resolution.  Examples can be found at Ontario Directors Resolutions.

Once approved the President, or another officer, must certify that the resolution approved by the directors respecting the capital dividend is in full force and effect.

The certified copy of the resolution must be filed together with Election Form T2054.  There are very specific rules around the timing of filing of the election form.

Directors Resolution to Approve a Capital Dividend

Below is an example of a directors resolution approving a capital dividend:

directors resolution approving a capital dividend


Below is an example of a certified copy of a directors resolution approving a capital dividend which must be annexed to Form 2054:

directors resolution approving capital dividend

Buy Dividend Resolutions

If you wish to make things easy refer to this link for a number of templates that can be purchased relating to Approving Dividends Templates.


For more information about dividends refer to:

Declaring a Dividend

Capital Dividend Upon Redemption

Stock Dividend

Certificate of Status

When is a Certificate of Status Issued

A certificate of status can be obtained for any registered company. These certificates are not issued for sole proprietorships or partnerships or business names. Sometimes a certificate of status is called a certificate of good standing or a certificate of compliance but they are all the same type of document.

In most cases the information inserted onto a certificate of status will be the same for every jurisdiction and in Canada this is the case.

It will include the most current name of the company, the date of incorporation and confirmation that the company is in good standing.  If the person or company that has requested a certificate of good standing from you wants additional information on the certificate it may be necessary to obtain a legal opinion instead.

certificate of status

How do you Confirm  a Partnership or Sole Proprietorship is in Good Standing

The only way to do this is to order a partnership or sole proprietorship search. The search will show the buisness is active. Since there is no requirement for these types of registrations to do annual reports the only thing that needs to be in good standing is the registration itself. Some of these registrations will only last 3 years or 5 years and therefore if you have not renewed your registration you will not be able to obtain a clear search showing the registration is current.

What does in Good Standing Mean

In each jurisdiction in Canada and elsewhere it can actual mean something different. In some cases such as the federal jurisdiction and the BC jurisdiction all corporate annual returns or reports must be filed with the government in order to obtain a clear report.

These reports are required in many provinces and are to be filed annually. They are filed with the Companies Branches and they do not have anything to do with Revenue Canada filings.

A certificate of status in Canada does not confirm that federal tax returns are up-to-date, however, if the company has been dissolved by the Companies Branch for non-filing of tax returns, which normally takes 3 or four years of default filings to happen, then a clear certificate of status will not be able to be obtained.

Therefore if a few tax returns are outstanding you will still be able to obtain a certificate of status for your company as long as any corporate annual reports or returns have been filed.


What Goes in a Minute Book

What Goes in a Minute Book


Below is an detailed explanation of what goes in a minute book.  When a new company is incorporated there is a three step process:  (1) obtaining a Certificate of Incorporation, (2) setting up a minute book and, in some cases, (3) filing an Initial Return.

Many new business owners do not want to pay to set up a minute book for their company.  Since they are able to open up a bank account without showing a minute book they will forego having a book prepared.  This can be problematic in the future. For more information refer to Why a Company Needs a Minute Book.


Minute BookSetting Up Your Minute Book

The very first documents that are included in the minute book are called the “organizational documents of the company”.  The documents that will be prepared and inserted in the minute book will be:

General Operating By-law – A by-law is a list of rules.  Some of the things that you will find in a by-law are:

  1. How many people must attend at directors and shareholders meetings for the meeting to be validly called
  2. What the procedure is for calling directors and shareholders meetings to ensure it is a valid legal meeting
  3. How many votes are required to approve an item of business at a directors or shareholders meeting
  4. Which directors and officers can sign agreements on behalf of the company and obligate and bind the company under those agreements
  5. What is the procedure for removing a director or officer of a company
  6. How is an officer or director replaced or new officers and directors appointed
  7. Who can borrow money upon the credit of the company

A general operating by-law in most cases sets out the provisions of the statute governing the company but some of those provisions can be varied for the particular circumstances.

All companies must have a general operating by-law which is enacted by the directors and confirmed by the shareholders.   If you obtain a general operating by-law for your company you will be able to determine how to conduct business properly.

If meetings are held that violate the legal requirements for a meeting you could have issues with this in the future and in particular, in the case where a director or shareholder is objecting to an approval that was put through.  If the approval at a meeting was not documented or documented incorrectly it could invalidate that approval and you may be forced to set aside that resolution.

In some provinces the general operating by-law provisions are included as part of the Articles of the company in a document called a Memorandum of Association.


Borrowing By-law – This by-law provides who has authority to borrow on behalf of the company and normally provides for the directors and officers to have this right.  Banks frequently wish to see this by-law if the company wishes to borrow money.

Need a By-law?  Purchase a Microsoft Word Version of By-law.

First Directors Resolutions – The individuals who agreed to be the first directors on the articles of incorporation have a legal obligation to approve certain things right after incorporation including:

  1. Appointing the officers
  2. Allotting shares and confirming the amount paid for those shares
  3. Enacting the general operating by-law

Once the first director has approved these matters he can then resign if he wishes or he can continue as a director of the company.

First Shareholders Meetings – There cannot be a first shareholders meeting until the shares have been allotted.  As indicated above the first directors allot the shares to the shareholders.  A shareholder (owner of a company) does not have to be a director and a director does not have to be a shareholder, however, frequently the owners of a company also wish to manage the company so they will be both a shareholder and a director.  Some of the items approved at the first shareholders meeting are:

  1. Determine how many directors there will be
  2. Appoint the Auditor or the Accountant
  3. Accept any resignations of the first directors and confirms the appointment of all directors

Consent to Act of directors – Directors need to consent to act as directors and this consent must be signed and inserted into the minute book of the company.  This ensures that a director is not elected to the board of directors and his name is not put on the public record without his or her consent.

Exemption from Appointment of an Auditor – Most private companies are not required to have audited books.  However, in many cases the statute governing the Canadian company will require that the shareholders approve an audit not being performed.

Registers – All statutes have a requirement that registers be prepared for a company.  The registers you will find in a minute book are:

  1. Directors Register – lists the dates of appointment and resignation of each of the directors and their addresses
  2. Officer Register – lists the dates of appointment and resignation of each of the officers, the positions they hold in the company (i.e. President, Secretary, Vice-President) and their addresses
  3. Shareholder Register – lists all of the individuals or companies that hold shares in the company, the number of shares they own and the date they received those shares.  It also records when shares are returned to the company or transferred to other individuals or companies
  4. Shareholder Ledgers – Each shareholder will have a ledger showing the date upon which he or it received shares, how many shares were allotted and the reason why those shares were allotted.  It will also show when those shares are transferred to others, if applicable.

Forms – All companies must file returns with the particular Canadian government under which they are incorporated.  When changes to directors and officers occur the government will expect you to provide them with an amended form showing all current addresses.  This section of the minute book contains a record of all filings made to the government.  It does not typically contain tax returns but you can store any documents you wish in a minute book.

Example of Share Certificate
Example of Share Certificate

Share Certificates – Every shareholder has a right to a share certificate.  This certificate evidences ownership.  If you have not set up a minute book for your company you will not have any proof of ownership.


Maintaining a Minute Book for a Company

After the initial “organization of the company” there may be circumstances where there may have to be changes to the structure.  Some of the circumstances where changes may occur are:

  1. A new by-law may need to be enacted such as a by-law to vary the borrowing rights of the company
  2. New investors may be needed to move the company forward and those investors may wish to hold shares in the company
  3. A director may resign and a replacement may need to be elected or new directors may be brought on because a new shareholder wants to be a director as well
  4. The company may wish to enter into a major transaction and the directors may need to approve the form of agreement respecting same
  5. A shareholder may wish to leave the company and will want to transfer his shares back to treasury or transfer the shares to the other shareholders on a prorated basis
  6. The company may wish to conduct business in other jurisdictions in Canada or countries outside of Canada and those governments may request the directors to approve the registration


For information on directors meetings refer to How to Conduct a Proper and Legal Directors Meeting.

 Buyer Beware – Blank Minute Book

We all like bargains.   There are services on the market which claim to provide you with a completed minute book for a reduced price.  What you are given is a book with a number of blank resolutions, blank registers and blank share certificates.

In some cases you will be provided with the resolutions and the by-law but they will not be filled out and you will be left with trying to figure out how to complete them properly.  In many cases there will be no instructions for this.

When you purchase a minute book be sure to ask what you are getting.  The organization and set up of a company does cost a bit of money because it takes a number of hours to put together.  The questions you should ask are:

  1. Will there be a by-law?
  2. Are there resolutions in the package which will show the actual names of the directors or officers or do the resolutions have blanks in them for insertion of the names?
  3. Are you provided with a questionnaire which asks (1) who will the officers be, (2) who will the shareholders be and how many shares will be held which would indicate the company is setting up the company properly?
  4. Will the registers be filled in with the proper individuals’ names?
  5. If the resolutions will have blanks for names and numbers of shares will there be an instruction sheet included?

Depending on what you feel confident about doing, price shopping should be considered to ensure that the product you are receiving warrants the price paid in comparison to the different types of packages you can buy. i.e. the price of a blank minute book should be much lower than the price of a personally completed minute book.


If you are provided with no by-law and no resolution templates then you will need to understand how to complete the documents from scratch.

If you are provided with a by-law and resolutions with blank spaces for names, then you will need to be confident enough to fill in those blanks.

In the long run it is easier to have someone skilled at completing the documents for you.