Getting Ready for the ONCA: An Update

Authored by Derek B.M. Ross.

If your charity is incorporated in Ontario, you are probably already aware of the Ontario Not-for-Profit Corporations Act2010 (“ONCA“), but you may not know when it comes into force or what your organization needs to do to get ready for it. If so, you are not alone, but read on! These questions are both addressed below. 

When does the ONCA come into force?

The ONCA received Royal Assent on October 25, 2010, and was originally targeted to come into force on January 1, 2013, but for various reasons, has been delayed several times. The most recent update from the government states that the ONCA will not be proclaimed into force until at least six months after an enabling statute, Bill 85, is made law. Bill 85, also known as the Companies Statute Law Amendment Act, 2013, is expected to be debated in the Ontario legislature this Fall, so the ONCA will probably not come into force until mid-2014, at the earliest. 

What do charities need to do to get ready?

Once ONCA is proclaimed into force, it will automatically apply to most provincially incorporated charities in Ontario. Thus, unlike the Federal CNCA, no formal application for continuance will be necessary.1 However, Ontario charities may need to amend their constating documents2 to bring them into conformity with the new legislation. If they fail to do so within three years of the ONCA coming into force, any inconsistent provisions in their governing documents will be deemed to be “amended to the extent necessary” to bring them into conformity with the Act (s. 207(2)). In addition, under a new requirement proposed by Bill 85, charities may be required to move certain provisions from their by-laws to their articles during the three year transition period, otherwise those provisions will become “invalid”.[3. This proposed rule is found in s. 33 of Bill 85, and would apply to  “any provision that is required…to be contained in the corporation’s articles”. It appears that this would include provisions related to membership classes and the number of directors on the board, and possibly other provisions as well (the ONCA’s regulations have not yet been finalized).

Noteworthy is provided for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.

Since these “deeming” and “invalidating” provisions may cause gaps, confusion, and uncertainty in a charity’s governing documents, it is advisable to begin the process of reviewing the changes that will be introduced under the new ONCA and determine whether amendments or restructuring is necessary. Professional advice is recommended, but as an interim step, charities may wish to take advantage of the following resources:

  1. CCCC has developed resources to assist charities in their review of their governing documents. For more information, see our recent article “The Importance of Bylaws for Charities – And What They Should Contain”. We will be developing additional resources in the future. In the meantime, consider attending our 2013 Annual Conference, where we will have a workshop specifically devoted to this topic.
  2. The Ministry of Consumer Services has prepared tools to assist not-for-profit corporations with this transition. A general information page, transition checklist, and a draft default bylaw are now available on its website. The government has also released a plain language guide explaining the ONCA and its requirements.
  3. The government has granted funding to Community Legal Education Ontario (CLEO) to provide a variety of supports to not-for-profit corporations regarding implementation of the new Act. These supports will include webinars, workshops, a website, development of tools, such as fact sheets and checklists, and customized support.
  4. CCCC members may access a Q&A document recently prepared by the Ministry of Consumer Services, available here on our website.

Although the ONCA is not yet in force, Ontario charities should take advantage of the time now available to ensure that their transition is a smooth and successful one.

NOTES:

  1. For information about the CNCA continuance process, see our CCCC Bulletin article, “Getting Your Corporation In Order Under the CNCA”.
  2. This includes letters patent, supplementary letters patent, by-laws and special resolutions.

Noteworthy is provided for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.