The Ontario Not-for-Profit Corporations Act, 2010 (“ONCA”) came into force on October 19, 2021. Not-for-profit corporations incorporated in Ontario will have a three year transition period to make changes to their governing documents to comply with the ONCA. Our ONCA Fast Facts series explores what is new and different in the ONCA. This week we discuss Member proposal rights.
The ONCA provides new rights for members to submit and discuss proposals. Under section 56 of the ONCA, voting members may give the corporation notice of any matter that the member proposes to raise at the meeting, referred to as a “proposal”. A member who has submitted a proposal shall pay any costs of including the proposal in the notice of meeting unless the by-laws or an ordinary resolution of the Members provide otherwise.
The corporation is generally required to include member proposals in the notice of the meeting and, if requested by the member, must include a statement in support of the proposal by the member and the name and address of the member. The corporation may refuse to include a member proposal in the meeting notice in certain circumstances:
- the proposal is not submitted to the corporation at least 60 days before the date of the meeting;
- it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against the corporation or its directors, officers, members or debt obligation holders;
- it clearly appears that the proposal does not relate in a significant way to the activities or affairs of the corporation;
- not more than two years before the receipt of the proposal, the member failed to present in person or by proxy, if authorized by the by-laws, at a meeting of the members, a proposal that had been included in a notice of meeting at the member’s request;
- substantially the same proposal was submitted to members in a notice of a meeting of the members held not more than two years before the receipt of the proposal and the proposal was defeated; or
- the rights conferred are being abused to secure publicity.
If a corporation refuses to include a proposal in a notice of meeting, it must notify and provide reasons to the member within ten (10) days of receiving the proposal. A member who feels aggrieved by the refusal may make an application to court, and if successful the court may restrain the holding of the meeting at which the proposal is to be presented and may make further orders as it sees fit.
The ONCA also provides members the right to submit proposals for nominations for the election of directors. Proposals for nominations of directors must be signed by not less than five (5) percent of the members or a class or group of members entitled to vote or a lower percentage set out in the by-laws.
Notwithstanding the proposal process and requirements, members are not precluded from discussing at the meeting any matter with respect to which the member would have been entitled to submit a proposal and nominations for directors are also not precluded from being made at the meeting.
The member proposal rights are statutory rights, meaning they cannot be restricted by a corporation’s by-law or nomination process policy.
Corporations are advised to review the new ONCA requirements around member proposal rights and align their governing documents and meeting procedures where appropriate.
For more information on the ONCA, continue to follow our ONCA Fast Facts series.
- ONCA Fast Facts
- ONCA Fast Facts: Incorporation as of right
- ONCA Fast Facts: Public benefit corporations
- ONCA Fast Facts: Audits and review engagements
- ONCA Fast Facts: Limits on board delegation
- ONCA Fast Facts: Proxies
- ONCA Fast Facts: Special resolutions
- ONCA Fast Facts: Records and registers
- ONCA Fast Facts: Annual meeting essentials