The Brand-New Not-for-Profit Corporations Act

Today is a big day for all Ontario incorporated not-for-profit organizations!

Why you ask? A much-awaited piece of legislation finally came into force today – and by much awaited, we mean over 10 years in the making! Okay listen, we aren’t as nerdy as you think, this is actually pretty neat.

The legislation in question is the Not-for-Profit Corporations Act (“ONCA”), which originally received Royal Asset way back in October 2010!

Okay, we hear you – what’s the big deal?

Until today, all Ontario incorporated not-for-profits were governed by the Ontario Business Corporations Act (“OBCA”). However, the OBCA was seriously lacking when it came to content regarding not-for-profits. The ONCA fills the holes left in the OBCA, and provides much needed guidance for Ontario not-for-profits.  

The ONCA will not only make the incorporation process for new not-for-profits more efficient, but also provide greater certainty in some grey areas. For example, the ONCA clarifies that not-for-profits can in fact engage in commercial activities if the activities support the corporation’s not-for-profit purposes. The ONCA will also simplify the process for reviewing the not-for-profit’s financial records, eliminating the need entirely for audits in certain situations.

The ONCA further provides more guidance on the obligations of officers and directors, including a new duty to report conflicts of interest.

This is just the tip of the iceberg.

What does this mean for you? Well, if you have an Ontario incorporated not-for-profit, you need to ensure you are compliant under this new Act.

While the ONCA does give you some breathing room, by way of a 3-year transition period, you should still have your not-for-profit documents reviewed by a lawyer. If after 3 years you still haven’t brought your not-for-profit into compliance, anything in your corporate documents that conflicts with the ONCA will be considered to be automatically amended to comply with the new Act. This can result in some unwanted consequences for you and your not-for-profit.

Robin K. Mann, JD, Associate Lawyer