New In Force Date
As many of you know, the in-force date of the Ontario Not-For-Profit Corporations Act, 2010 (the “ONCA”) has been a moving target. The last government announcement was that the ONCA would come into effect no sooner than January 1, 2014. In September, the government revised this date. Now the government expects that the ONCA will come into effect not earlier than six months after the passage of a bill that will amend the ONCA. This bill was introduced in June 2013 and is expected to be debated in the fall of 2013.
The Ontario government also released a toolkit of communications material for corporations. The toolkit includes:
- Newsletter and bulletin articles of varying lengths;
- Web text;
- Facebook posts; and
- Meeting/presentation materials: presentation slides, speaking points to accompany the slide deck, and presenter Q and A.
The Ministry suggests that the toolkit resources can be used by not-for-profit corporations to explain the ONCA to its members and stakeholders. A copy of the toolkit can be requested by emailing: ONCAtools@ontario.ca.
The toolkit materials provide a broad overview of the ONCA. The lawyers at Miller Thomson LLP can provide assistance to understand the details of the ONCA and the points made in the toolkit.
The Ministry requests that corporations do not alter the wording of the toolkit materials to ensure consistent and accurate messaging. In keeping with this request, below we have highlighted a few of the provisions from the toolkit using the exact wording in the toolkit.
On transition to the ONCA (the “Act”) the toolkit states:
- All the provisions of the Act will apply automatically to new not-for-profit organizations that incorporate under it.
- In general, the provisions of the Act will apply automatically to existing corporations where their incorporating documents (i.e., letters patent, supplementary letters patent, by-laws and special resolutions) do not say anything about a particular requirement of the Act.
- Existing not-for-profit corporations will have a three-year transition period once the Act is in force to amend their incorporating documents. Existing corporations are encouraged to review their documents before the end of this period.
The government takes the position that provisions of these documents that are valid under the current Corporations Act will continue to be valid until the end of the three-year transition period or sooner if the corporation amends them to conform with the Act. Corporations are encouraged to review their documents before the end of this period.
For existing corporations, the toolkit notes that items to consider as part of the transition include:
- Letters patent and supplementary letters patent
- Review the corporation’s purposes to make sure they reflect current or proposed future activities and are consistent with other laws or court decisions that may govern the corporation.
- Review special provisions, such as the number of directors, powers of the corporation and the distribution of a corporation’s remaining property when it winds up or dissolves.
- Review the corporation’s articles. If the corporation has two or more classes or groups of members, at least one class or group needs to be given the right to vote at member meetings, and this must be set out in the articles. Many existing not-for-profit corporations have these in their by-laws.
- Review director and officer provisions, for example, to make sure a director’s maximum term of office lines up with what is in the Act.
- Review member provisions. The by-laws must set out the conditions for being a member.
- Review borrowing powers. Under the Act, a not-for-profit corporation does not need to pass a by-law for borrowing powers.
- Consider whether any changes should be made to voting methods in light of the new requirement for mandatory proxies or alternative means of voting at members’ meetings such as mailed-in ballot, telephone or electronic means.
- Consider whether or not to add a provision allowing membership transfers. Otherwise membership may only be transferred to the corporation.
The Ministry has other resources on its website, including a plain language guide, a full transition checklist and draft default by-law. The toolkit notes to “Check the Ministry of Consumer Services” website regularly to confirm the effective date.”
The lawyers in Miller Thomson LLP’s Charities and Not-for-Profit Group can assist corporations to make a smooth transition into the ONCA and to understand these new statutes. We will continue to update our readers on ONCA developments.