Agricultural and horticultural organizations in Ontario differ from most other Ontario non-share capital corporations, as their governance requirements are set out in two different acts: the new Ontario Not-for-Profit Corporations Act, 2010 (the “ONCA”) and the Agricultural and Horticultural Organizations Act (the “Ag. and Hort. Act” or the “AHOA”). Consequently, there are particular compliance considerations that apply to these types of organizations by virtue of being governed by two statutes.
The ONCA at a glance
Agricultural and horticultural organizations should be aware of the rules under both the AHOA and the ONCA. By way of background, the ONCA generally applies to all non-share capital corporations incorporated under an act of the Ontario legislature, whereas the AHOA applies to every agricultural association, agricultural society or horticultural society incorporated or continued under the AHOA. Since the AHOA is an Ontario act, the ONCA generally applies to agricultural and horticultural organizations, with some exceptions.
The ONCA came into force on October 19, 2021, modernizing the legal framework for Ontario not-for-profit corporations. Most not-for-profits previously governed by the Ontario Corporations Act (the “OCA”) are now governed by the ONCA and will need to transition to this new statute. Not-for-profit corporations have until October 19, 2024 to amend their governing documents to comply with the rules under the ONCA.
The OCA previously applied to agricultural and horticultural societies and organizations prior to the coming into force of the ONCA to the extent that it did not conflict with the AHOA. Subject to limited exceptions, the provisions of the ONCA now apply to these societies and organizations. Where the ONCA and the AHOA conflict, the AHOA takes precedence over the ONCA. In other words, where the ONCA prohibits an organization from complying with a provision of the AHOA or the ONCA is silent with respect to a particular matter, the organization must follow the AHOA provision.
AHOA or ONCA?
The following list provides some examples of when the AHOA take precedence over the ONCA:
- Notice of board meetings must be provided to all directors at least seven days before the time fixed for the meeting (the ONCA does not provide a specific notice requirement);
- At least two weeks’ notice of the annual meeting shall be given to each member (rather than seven days under the ONCA);
- The corporation must charge an annual membership fee (no such fee is required under the ONCA); and
- The corporation must conduct an audit (as opposed to the option to waive an audit or review engagement under the ONCA in certain circumstances).
Organizations and societies governed by the AHOA that employ delegate voting need to pay particular attention to the transition requirements under the ONCA. Many AHOA organizations have delegates who represent a specific geographic region, acting on behalf of members from that region. The delegate voting structure is also commonly used by religious denominations, athletic associations and student unions. The OCA permitted by-laws respecting delegates which allow a corporation to provide for delegates to be elected by groups of members to vote on behalf of that group, without requiring separate classes of membership or corporate members. This structure allows for regional representation while maintaining one membership class and is typically used where an organization is composed of several branches or local organizations. This mechanism is particularly useful for organizations with a large membership.
Unlike the OCA, the ONCA does not provide for by-laws respecting delegates. The provisions respecting delegates made pursuant to the OCA in an organization’s by-laws or constitution will continue to be valid until the organization files articles of amendment under the ONCA (even after the October 19, 2024 transition date). This functions as an extended period of validity for provisions respecting delegates. Going forward, organizations with delegate voting may consider transitioning to a multiple class membership or membership consisting of local corporations or associations in order to maintain a representational structure.
New organizations will not be able to implement delegate voting as it functioned under the OCA. While the AHOA permits director representation of certain “districts” or “classes” of members, it is silent with respect to delegate voting, so organizations cannot rely on the AHOA to implement this structure.
We have included below a non-exhaustive checklist for agricultural and horticultural societies and organizations to consider when transitioning to the ONCA:
- Review your incorporating documents to confirm your incorporating statute (either Articles/Letter of Incorporation issued by the Ontario Ministry of Agriculture, Food and Rural Affairs (“OMAFRA”) or a special or general Act);
- Review your by-laws or constitution and prepare amendments, as required;
- Prepare Articles of Amendment;
- Obtain approval of directors and members for by-laws and Articles of Amendment, as well as approval of OMAFRA of the Articles; and
- File Articles of Amendment.
If you are involved in the governance and operations of an Ontario agricultural organization, agricultural society or horticultural society you should familiarize yourself with the new rules under the ONCA and conduct a corporate document review. Miller Thomson’s Social Impact Group is available to assist if you are unsure of what the transition to the ONCA means for your organization.