The Ontario Not-for-Profit Corporations Act, 2010 (“ONCA”) has marked a significant shift in the governance landscape for not-for-profit organizations across Ontario. Although ONCA received Royal Assent over a decade ago, it was not until October 19, 2021, that the legislation finally came into force. This legislation replaced Part III of the Ontario Corporations Act (OCA), introducing critical updates to modernize the framework for non-share capital corporations.
The Impending Deadline: October 18, 2024
As we approach the October 18, 2024, transition deadline, it’s imperative for Ontario not-for-profit corporations (NFPs) to ensure their governing documents—letters patent, supplementary letters patent, by-laws, and special resolutions—comply with the ONCA. Failure to do so could result in these documents being automatically deemed compliant, potentially creating a confusing patchwork of obligations for your organization.
The Risks of Inaction
While it might seem convenient to let the ONCA’s default provisions apply automatically, this approach carries significant risks. Allowing deemed provisions to take effect without a thorough review can lead to confusion regarding your corporation’s governance obligations. This ambiguity can cause improperly held meetings, invalid corporate decision-making, and a general uncertainty about which by-law provisions are still in force and which have been superseded by the ONCA.
Why Compliance Matters
The ONCA’s transition period was designed to give NFPs ample time to align their governing documents with the new legal requirements. However, as the deadline nears, many organizations may find themselves unprepared. If your organization has more than one class of membership, for instance, the ONCA now requires that all classes, their conditions, and voting rights be included in your articles—no longer just in your by-laws.
Additionally, ONCA introduces the concept of Public Benefit Corporations (PBCs), subjecting these entities to stricter financial oversight and specific rules regarding the distribution of assets upon dissolution. Organizations that fall under the PBC category, particularly those receiving more than $10,000 in public funds annually, may also face mandatory audited financial statements.
What Should You Do Next?
To avoid the pitfalls of non-compliance, it’s crucial to conduct a detailed review of your governing documents now. This review should include your letters patent, by-laws, supplementary letters patent, finances, and any other pertinent documents. If necessary, updates to your letters patent should be made through Articles of Amendment, filed with the Ontario Ministry. By-law amendments must follow the existing procedures outlined in your current by-laws, not as they will be after the transition.
How CEO Law Can Assist
Transitioning to ONCA compliance is not just a legal requirement—it’s an opportunity to strengthen your organization’s governance and ensure it is well-positioned for the future. At CEO Law, our team of experienced business law professionals is here to guide you through this process. We understand that the transition can seem daunting, but with our expertise, we can help you review, update, and file the necessary documents well before the October 18, 2024, deadline.
Don’t wait until the last minute to ensure your not-for-profit organization is compliant with ONCA. Contact us today to start the process and safeguard your organization’s governance for years to come.