Is it Time to Amend the By-laws of Ontario Not-for-Profit Corporations?

January 30, 2015 | Kate Lazier

Many Ontario non-share corporations have been waiting on the Not-for-Profit Corporations Act (“ONCA”) to come into force before updating their corporate documents.  Should these corporations continue to wait or should they update their corporate documents now?

The ONCA was passed by the Ontario Legislature in 2010 and will come into force on a day to be named by proclamation.  In April 2012, we wrote that non-share capital corporations incorporated in Ontario under the Corporations Act (Ontario), or under their own special legislation, will soon be governed by the ONCA. But this did not occur.  Instead, the government has changed its projected “in force” date incrementally over the last few years to January 2013, July 2013, January 2014, and then six months after certain amending legislation (Bill 85) was to be passed. Currently, the ONCA is not expected to be in force until 2016.

As the ONCA has been imminent for several years, we have advised some clients to wait until the ONCA is in place and its regulations have been released before changing their governing documents. This approach means that a corporation may avoid the need to make further revisions to its documents once the ONCA is in force. However, for some organizations it may be appropriate to consider changes now, given that the “in force” date is at least a year away and remains a moving target.

The ONCA will require some corporations to change their corporate structure.  For example, corporations with delegate voting systems or multiple membership classes may need to change their structure.  These corporations may benefit from updating their corporate documents before the ONCA comes into force.

Corporations that 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 legislation provides that corporations will have three years before compliance is mandatory. Thus, a corporation that updates its by-law now could wait at least 4 years before its by-law must comply with the ONCA.

Corporations that do not need to update their corporate documents, but are considering making changes to comply with the ONCA, may want to hold off on making changes until the technical amendments to the ONCA are passed and the regulations to the ONCA are released.

Lawyers in Miller Thomson LLP’s Charities and Not-for-Profit Group can assist corporations to decide when would be the best time to update their corporate documents to comply with the ONCA.

 

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