More than ten years after being passed by the legislature, the Ontario Not For Profit Corporations Act, 2010 (“ONCA”) will finally come into force on October 19, 2021, the same date the new Ontario Business Registry will launch. The ONCA is the successor legislation to the Ontario Corporations Act, (“OCA”) which will generally apply automatically to all Ontario not-for-profit corporations.
The ONCA is a welcome change. It modernizes Ontario’s not-for-profit corporation laws and brings them in line with other Canadian jurisdictions, notably the federal Canada Not-for-Profit Corporations Act, which came into effect in 2011.
However, it will require existing not-for-profit corporations to re-evaluate their existing structures and execute on transition plans. Directors of not-for-profit corporations will have to consider how the transition to this new governing legislation will affect their organization and what steps need to be taken.
Top 3 Highlights
The ONCA contains many substantive and important changes compared to the OCA. Here are our top 3 highlights:
- Existing not-for profit corporations will have until October 19, 2024 to bring their governing documents (i.e. letters patent, supplementary letters patent, and by-laws) into compliance with the ONCA, after which time those governing documents will be deemed to be amended to comply with the new statute (subject to certain exceptions) (Section 207 of ONCA);
- Clarification that not-for profit corporations can engage in commercial activities so long as associated profits support the organization’s stated purposes and the not-for-profit corporation’s articles state that its commercial activities are intended only to advance or support its non-profit purposes (Section 8 of ONCA); and
- Not-for profit corporations may be subject to simpler (and less costly) financial review and reporting requirements depending on whether the not-for-profit corporation is considered a ‘public benefit corporation’ and the amount of annual revenues it receives in a given financial year (Sections 68 and 76 of ONCA).
Planning for Transition
A review and update of existing corporate documentation is suggested well before October 19, 2024 to avoid any unintended consequences of deemed compliance. Further, while the three-year transition period will give organizations time to make updates to their articles and by-laws, the ONCA will generally be in force as of October 19, 2021 – so it is important for existing not-for-profit boards to gain an understanding now as to how ONCA will affect their organizations.
Cunningham Swan’s business law group would be happy to discuss the ONCA in further detail and help your not-for-profit corporation manage the transition to this new legislation. Please do not hesitate to contact us.