What Should we do for the Ontario Not-for-Profit Corporations Act?

February 25, 2016 | Kate Lazier

Charities incorporated under Ontario law have been waiting on the Not-for-Profit Corporations Act (“ONCA”) to come into force.  The ONCA was passed by the Ontario Legislature in 2010, but comes into force on a day to be named.  Recently, the Ontario Ministry of Government and Consumer Services announced that there will be at least 24 months’ notice before this will occur.

This delay has caused some uncertainty for corporations.  Should Ontario non-share corporations update their governing documents?  Should corporations continue the corporation into the Canada Not-for-profit Corporations Act (“CNCA”)?

Should corporations update their governing documents?

Ontario non-share capital corporations are currently governed by the Ontario Corporations Act (“OCA”).  For a corporation that is content with its current governance documents, the ONCA delay is not an issue.   Most of these corporations can wait until the ONCA is in place and its regulations have been released before making any changes.  This approach will help the corporation avoid the need to make further revisions to its governing documents once the regulations are released.

However, the ONCA will require some corporations to change their corporate structure when it takes effect.  For example, corporations with delegate voting systems or multiple membership classes may need to change their structure, and these corporations may benefit from updating their corporate documents before the ONCA comes into force.

Corporations that currently need to amend their governing documents for reasons other than to comply with the ONCA should also consider acting now. While these corporations will need to make further revisions when the ONCA comes into force, the ONCA provides that corporations will have three years to come into compliance. Thus, a corporation that updates its governing documents now could wait at least 5 years before it needs to update them again to comply with the ONCA.

Should Ontario corporations continue the corporation into the CNCA?

An Ontario corporation should consider moving to the CNCA if its corporate documents need to be updated now.  Moving to the CNCA allows the corporation to update its documents all at once, rather than updating the documents under the OCA and then updating again to comply with the ONCA when it comes into force.

However, before taking this step, corporations should be aware of differences between the ONCA and CNCA.  For example, the CNCA does not allow for ex-officio directors and it has lower audit requirement thresholds. Click here for more information on the differences between the two statutes.

Conclusion

The lawyers in the Charity and Not-for-Profit group at Miller Thomson LLP can review the particular needs of a corporation to help determine whether it should amend its governing documents and continue under the CNCA.

Disclaimer

This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

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