Transition Under the Ontario Not-For-Profit Corporations Act, 2010

April 30, 2012 | Kate Lazier

Non-share capital corporations incorporated in Ontario under the Corporations Act (Ontario), or under their own special legislation, will soon be governed by the Not-for-Profit Corporations Act, 2010 (ONCA).   The ONCA will come into force on a day to be named.   The Ontario Ministry of Consumer Services website states that it anticipates that the in-force date will be in late 2012.

On the day that the ONCA comes into force, the ONCA will immediately apply to corporations without share capital incorporated by or under a general or special Act of the Ontario Legislature.  These corporations will not need to take any action to have the ONCA apply to them on the day that is named.  This process is different from that which applies to federally incorporated non-share corporations, which need to apply for a Certificate of Continuance in order to come under the new Canada Not-For-Profit Corporations Act.

While the ONCA will apply immediately on the in-force date, Ontario corporations will still need to take action in order to ensure full compliance with the ONCA. The ONCA is significantly different from the Corporations Act (Ontario) and thus an Ontario non-share corporation will need to revise its governance documents (letters patent and by-laws) to accord with the ONCA.

Once the ONCA is in force, a corporation may obtain Articles of Amendment and revise its by-laws to conform to the ONCA.  If a corporation does not do so within three years, the ONCA deems the governing documents to be amended to the extent necessary to conform to the ONCA.

After the ONCA is in force and before the governing documents are amended, issues may arise as to what rules the corporation must follow.   In law, typically a statute prevails over governance documents.  However, the ONCA deems the by-laws into compliance only after three years and thus this provision of the ONCA implies that corporations should continue operating on the basis of their current bylaws until they are amended or the three-year deadline expires.  This view is echoed by the Ministry of Consumer Services website which states that the corporations will have three years after the ONCA comes into force to amend their letters patent, by-laws and special resolutions to conform with the ONCA.  Thus, each corporation should adapt its governing documents within three years of the ONCA coming into force.  However, corporations that want to conform
with the ONCA, and especially those corporations that regularly experience governance challenges, are encouraged to amend their governance documents sooner.

Miller Thomson LLP’s Charities and Not-for-Profit Group can assist corporations to transition under the ONCA.

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