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. On May 24th, 2023, we hosted our Miller Thomson LLP Board of Directors Webinar Series for the Health Industry on ONCA Annual Meeting Essentials. We are pleased to provide a summary of the highlights.
ONCA changes some practices and procedures that will impact upcoming annual meetings of members of non-profit corporations (formally called the annual general meeting or AGM).
- Under the previous Corporations Act (Ontario), members had a right to vote by proxy and organizations could not restrict this right and could not prescribe who could hold a proxy. Under the ONCA proxies are not required unless provided for in the corporation’s articles or by-laws and the corporation can restrict who can act as a proxy. ONCA includes requirements for the form of proxy. [For more information on proxies, please see our ONCA Fast Facts: Proxies].
Member proposal rights
- Section 56 of ONCA provides members with rights to submit and discuss proposals. Voting members have a right to submit a proposal concerning any matter they may wish to raise at a meeting and members may discuss any matter at the members’ meeting with respect to which they were entitled to submit a proposal. There are some restrictions such as if the proposal is an attempt to secure publicity or does not relate to the affairs of the Corporation, etc.
Member nomination of Directors
- Members have the right to submit proposals for nominations for the election of Directors. Proposals for nominations of Directors must be signed by not less than 5 per cent of Members or class/group of Members entitled to vote or a lower percentage set out in the by-laws, but does not preclude nominations being made at a meeting. This right cannot be restricted by By-Law/Policy nomination process.
- If the corporation board size is a range, the minimum and maximum number of directors is to be stated in the articles of incorporation. The number is to be fixed by a special resolution of members (2/3rds vote in favor) or the members may, by special resolution, empower the directors to determine the number by resolution of directors.
- Section 24(8) of ONCA contains a new requirement for director consent to hold office. Written consent of a director to hold office must be obtained before or within 10 days after election but if it is received after 10 days, than the election is still valid. The consent does not apply to a director who is re-elected with no break in their term of office.
- Directors are no longer required to be Members.
- Section 36(2) of ONCA provides new limitations on delegation by the Board. Directors may not delegate certain powers to a committee of Directors, for example, appointing additional directors, adopting, amending or repealing by-laws, filling vacancies on the Board or in the position of auditor, etc. [For more information, please see our ONCA Fast Facts: Limits on Board delegation.]
Audit versus review engagement
- Some corporations may pass an “Extraordinary Resolution” of the members (80%) to conduct a review engagement in place of an audit or be exempt from the requirements altogether if they are within certain monetary thresholds. Different rules apply for public benefit corporations. [For more information, please see our ONCA Fast Facts: Audit and review engagements and our ONCA Fast Facts: Public Benefit Corporations.]
- Auditors and persons appointed to conduct a review engagement have a right to receive notice of member meetings, including annual and special meetings, receive notice of audit committee meetings, attend and be heard at meetings, and call a meeting of the audit committee.
Records and Registers
- The ONCA contains updated requirements for corporate records and registers of members, directors, officers and interests in land. [For more information, please see our ONCA Fast Facts: Records and Registers.]
- Corporations are required to file an Annual Return with the Ministry of Public and Business Service Delivery within six months of the corporation’s financial year end to update the public record. The Annual Return provides an updated slate of Directors and Officers to the Ministry, as well as any changes to the corporation’s name or address. Annual Returns must now be filed through the Ontario Business Registry.
Organizations are encouraged to review new ONCA requirements impacting annual meetings and to make appropriate adjustments to governing documents and procedures.
For more information on the ONCA, see our ONCA Fast Facts series.