What is ONCA?
The Not-for-Profit Corporations Act, 2010 (Ontario) (ONCA) affects almost all Ontario corporations that were under the Ontario Corporations Act (OCA). ONCA came into force on October 19, 2021.
ONCA provides a modern legislative framework for Ontario’s not-for-profit corporations and charities. Existing non-profit corporations incorporated under Part III of the OCA should have amended their governing documents (i.e. letters patent, by-laws, etc.) to be consistent with the legal requirements of ONCA. The provisions of ONCA will be deemed to apply to your organization, and if you have not updated your governing documents, that could be problematic; therefore, it is good to have new compliant documents in place.
If your governing documents are updated to be consistent with ONCA, it makes it easier for the board and staff to understand and interpret these documents. On the other hand, if your governing documents are not updated and ONCA overrides provisions in these documents, and what you are reading is not actually what is required because of ONCA, it will be very confusing for the board and staff.
In addition, the Ontario government has also launched a new modern Ontario Business Registry system on October 19, 2021. Certain types of registrations or filings that previously had to be submitted by mail or fax, taking four to six weeks to complete, can now be done instantly through the new online system or within a matter of a week or two.
Organizations should consider whether to update their governing documents under ONCA or whether to move to the federal CNCA. There are advantages and disadvantages to both options.
The corporate changes provide an important opportunity for non-profits and charities to take stock of their governance practices and policies and move over to modern acts. If you wish to retain our law firm you can contact us.
How many Ontario non-profit corporations will be affected by ONCA?
It is difficult to know. While there are 59,000 Ontario non-profit corporations under the Ontario Corporations Act it is clear that many are dissolved or inactive. However, even if there are 30,000 Ontario corporations that need to deal with ONCA this will be a very large number of non-profits making changes in a very short period of time. Also about 20,000 of these Ontario non-profits are registered charities which makes their governance changes more complicated.
What is the difference between the CNCA and ONCA?
The “Canada Not-for-profit Corporations Act” (CNCA) which came into force in 2011 affects Federal non-profits and it does not affect Ontario non-profits that used to be under the Ontario Corporations Act and are now under ONCA. Ontario non-profits can move/continue to the CNCA if it is allowable/desirable.
Do you need legal advice when moving over from the old act to the new act?
Technically you don’t need to hire a lawyer as with most legal matters you can do it yourself or you can obtain legal assistance. However, many Ontario non-profits may find that the ONCA transition is quite challenging, especially for organizations with larger membership, registered charities, groups with many stakeholders, and groups that have not changed their governing documents recently. It may be helpful for some organizations to work with lawyers who are knowledgeable about corporate law, governance, charity law, and practical issues affecting non-profits and charities. It can save the non-profit or charity significant time and aggravation. The biggest mistake that many organizations make is to allow these corporate transitions to distract them inordinately from other important priorities and compliance obligations. Sometimes also decisions are made without fully contemplating the consequences. While for some the change in acts will be a more technical matter others can use the change to improve governance practices. We have helped clients make seamless transitions so they focus on fundraising, programs, and other matters that are central to the non-profit or charity.
What are some preliminary issues non-profits and charities should consider as part of the new CNCA and ONCA changes?
- Are you a federal or Ontario non-profit corporation? It makes a difference! Check out your letters patent (articles of incorporation) or try searching the free Corporations Canada database. Here is also a list of Ontario corporations obtained by Blumbergs and a link to the new Ontario Business Registry (OBR).
- Ontario corporations may want to consider continuing to the Federal jurisdiction. We have written about this increasingly popular option and you can find out more in our ONCA directory.
- Do you have copies of letters patent, supplementary letters patent and by-laws for your Ontario non-profit? Do you have a minute book? If not, copies of governing documents can be obtained through the OBR.
- Are purposes/objects up to date and relevant? Do they cover all of your current activities? If not, consider updating your purposes. If you are a registered charity, you may need to ask CRA for preapproval. This can take between 6-8 months and CRA will need to be provided with both purposes and a detailed description of activities for CRA to review. You need to be careful and precise with purposes, otherwise, they may be considered broad and vague and not charitable. Updating purposes for a registered charity is particularly tricky, and you should obtain legal advice from a lawyer who is very familiar with registered charities.
- Is your governance structure appropriate? If not, what do you want? Is it “working board”, “policy board”, “fundraising board”, or a dysfunctional board?
- By-laws – Are there any particular features of your by-law that need to be kept for the new by-law? Generally, it is best to start with a new clean by-law under a new act and modify it as required
- Members – Do you know who your members are? (This is not board members!) Members are like shareholders in a for-profit company. Does the organization require more than one membership class? If so, what attributes will each membership class have (ie. Name, vote, etc)? Are you aware of new member rights and how even non-voting members may have lots of rights?
- Name – Does the organization want to maintain its current name? Or does it want to use a different name, and if so, do you have various proposed names? NUANS name search should be conducted for the new proposed names
- Current list of directors with their residential addresses, occupations, e-mail addresses, and telephone numbers
- Current list of officers – eg. Chair, President, Secretary, Treasurer, etc.
- Office Addresses – Registered or head office, mailing address, etc.
- Are you up to date in corporate filings? – If not, you may want to do arrears in filings
- Annual Meeting – When is the organization’s annual general meeting held? Does the organization wish to obtain membership approval at the AGM or does it wish to have another Special General Meeting to approve the corporate changes necessary?
We have assisted many Ontario non-profit corporations with strategic discussions around whether to stay in Ontario or move to the Federal CNCA. Contact us if you wish to retain our law firm for such a discussion on your Ontario non-profit or charity.