Ontario Not-for-Profit Corporations Act (ONCA) Proclamation Date Announced – October 19, 2021
The ONCA codifies the way in which not-for-profit corporations are created, governed and dissolved, and will be proclaimed on October 19, 2021. Though the ONCA received royal assent in 2010, it has taken over a decade to be proclaimed. At the same time, Ontario will make the new Ontario Business Registry available.
What is the ONCA?
The ONCA is a statute designed in part as a modernization of the not-for-profit incorporation process. Prior to the ONCA’s proclamation, Ontario not-for-profit corporations had been governed by the Business Corporations Act (1990) (BCA). Under the BCA, Ontario NPCs were required to abide by a lengthy paper application process.
As part of the launch of the new Ontario Business Registry, the ONCA enables not-for-profit corporations to conduct business-related affairs remotely. Over 90 transactions, including registering a new business and dissolving an existing one will be available at all times through this registry. The modernity of the ONCA, therefore, is reflected in its paperless, streamlined system as a method of enabling not-for-profit corporations to participate in this new system.
Prior to Proclamation: Recent Changes to the ONCA, and What You Need to Know
Does the ONCA Apply to Your Corporation?
The ONCA applies exclusively and automatically to every corporation that does not issue ownership shares, also known as non-share capital corporations, and that features either: (1) more than one type of membership class, or (2) at least one type of membership class that does not have voting rights.
Public Benefit Corporation or Not-for-Profit Corporation?
The ONCA now makes a distinction between two classes of corporations that do not issue ownership shares: (1) Public Benefit Corporations, and (2) Non-Public Benefit Corporations.
A public benefit corporation is a charitable corporation or a non-charitable corporation that receives more than $10,000 per financial year in either donations from those that are not members, directors or employees of the corporation, or from any government grant.
If an not-for-profit corporation is classified as a Public Benefit Corporation, new rules will be in place for the purpose of reviewing the corporation’s financial records. Depending on the corporation’s annual revenue, the organization may be audited, subject to a review engagement or may be eligible to waive the financial review requirement altogether.
How will the ONCA Impact the Corporation Directly?
By October 19, 2024, Ontario not-for-profit corporations will be required to conform to the new ONCA. For some organizations, this may require an amendment of by-laws, articles and resolutions. For instance, the ONCA will require that any not-for-profit with two or more classes of members must explicitly set these classes forth in the articles of incorporation, rather than in any by-law or resolution. Furthermore, whereas it may have been the case that the ONCA would allow non-voting class members the right to vote on material changes to the corporation, the new ONCA will not grant such classes the above-noted opportunities.
If your not-for-profit is looking to update its articles and by-laws in preparation for the ONCA coming into force or throughout its three-year adoption period, our not-for-profit team would be pleased to assist.
This article is not intended to serve as a comprehensive treatment of the topic and is not legal advice. All legal matters are dealt with pursuant to their specific facts and circumstance. Nothing replaces retaining a qualified, competent lawyer.