Not-for-profits: are you ready to transition to the ONCA?

Ontario’s Not-for-Profit Corporations Act, 2010 (ONCA) was enacted on October 25, 2010 and proclaimed into force on October 19, 2021. The ONCA provides a modern legislative framework for Ontario’s not-for-profit corporations, including charities. The ONCA replaces Ontario’s Corporations Act (OCA) and applies automatically to all new not-for-profit corporations. Existing not-for-profit corporations incorporated under Part III of the OCA have until October 19, 2024 to bring their governing documents, such as original and supplementary letters patent, by-laws and special resolutions, into conformity with the ONCA.

What you need to know

• ONCA vs. OCA. The ONCA’s governance rules vary significantly from the rules under the OCA. For example, the ONCA provides for two types of corporations: public benefit corporations and non-public benefit corporations. The distinction will affect the corporation’s governance structure, including, among other things, whether employees can be on the board and whether audits are required.
• Transition period to ONCA. Any provisions in a corporation’s governing documents that are inconsistent with the ONCA will continue to apply and take precedence during the transition period; however, such provisions will be deemed to be amended to comply with the ONCA on October 20, 2024 (subject to a few exceptions). For corporations that do not formally amend their governing documents to ensure compliance prior to that date, deemed amendment will make it difficult and, in some cases, costly to identify which provisions are deemed to be amended and to comply with the amended provisions.
• Governance review process. Accordingly, OCA not-for-profit corporations should undergo a comprehensive governance review process to provide certainty with respect to the corporation’s governance structure and practices and to ensure compliance with the ONCA. The review process typically involves the following key steps:
  • Reviewing and assessing the corporation’s current governance framework and rules, including the corporation’s governing documents, and ensuring corporate compliance filings are up to date;
  • Drafting new articles of amendment, restated articles of incorporation (where applicable) and by-laws;
  • Obtaining board and member approval of new governing documents;
  • Filing the new articles of amendments and restated articles of incorporation (where applicable) with the Ontario government, upon which the government will issue a certificate of amendment and a restated certificate of incorporation.
• Opportunity for corporations to assess. Undergoing the procedure necessary to ensure compliance with ONCA offers the corporation a unique opportunity to review, reassess and, if desired, enhance its governance framework and rules.