The Ontario Not-for-Profit Corporations Act, 2010 (“ONCA”) has been percolating in the back of our minds off and on for years. Is it moving forward? Have there been changes? How does it impact us? Given that ONCA was enacted over 10 years ago (!!) its deadline was extended to avoid being subject to repeal.
Carters Professional Corporation issues a regular Charity & NFP Law Update to keep us in the know. Below we have included two recent updates on the ONCA from Theresa Man.
The FORUM editorial committee is following this story and will keep you updated.
In another step towards bringing the Ontario Not-For-Profit Corporations Act, 2010 (“ONCA”) into force, Ontario’s Ministry of Government and Consumer Services published Proposed regulations to support proclamation of the Not-for-Profit Corporations Act, 2010 (the “Draft ONCA Regulations”) on June 5, 2020.
Two draft regulations were released – a Draft General Regulation and a Draft Corporations Sole Regulation. The Draft General Regulation contains provisions related to technical matters under the ONCA, including setting out standards and requirements for financial statements, corporate registers, and proxy form; setting out what information that must be in writing (such as directors’ or auditors’ resignations, and members’ consent to the dissolution of a corporation).
The Draft Corporations Sole Regulation lists 55 provisions under the ONCA that apply to corporations sole, with applicable modifications. A corporation sole is a corporation constituted in a single person who, in right of some office or function, has corporate status. It is created by special legislation. Unlike other not-for-profit corporations, corporations sole do not have boards of directors, officers, or members. Examples of ONCA provisions proposed to apply to corporations sole include: section 5 regarding conflict with other law; section 15 regarding the corporation having the capacity, the rights, powers and privileges of a natural person); section 46(1), (6) and (7)(a) regarding indemnification of directors and officers, and ability to purchase and maintain directors’ and officers’ insurance, subject to meeting the requirements of the Ontario Charities Accounting Act by charitable corporations; and section 77 regarding requirements for annual financial reviews. The Draft Corporations Sole Regulation also defines the individual whose office is the corporation sole as being the “office holder”. Where certain sections of the ONCA refer to directors and officers, modifications have been made for those sections to instead apply to office holders in the case of corporations sole. Examples of these modified sections include section 40 liability to employees for wages; subsection 46(1) and (6) indemnification and insurance provisions; sections 70, 72, 75, 78 and 79 audit provisions; and remedy provisions under sections 182 and 191.
In addition to the Draft ONCA Regulations, the Ministry of Government and Consumer Services also released Proposed regulations to support proclamation of schedules, 6, 7 and 8 of the Cutting Unnecessary Red Tape Act, 2017 and the proclamation of the Not-For-Profit Corporations Act, 2010 (the “Draft Red Tape Regulations”) on June 5, 2020. The Draft Red Tape Regulations include 11 separate draft regulations under the ONCA, Business Corporations Act, Business Names Act, Corporations Act, Corporations Information Act, Extra-provincial Corporations Act, and Limited Partnerships Act. These draft regulations contain provisions to accommodate electronic filing; rules governing names and naming conventions; the content, form and filing of articles, applications, and other documents, both in paper format and electronically; required supporting documents for articles and applications filed under the respective legislation; and removing requirements for manual signatures.
The Legislative Assembly of Ontario carried a vote in favour of Motion 89 on September 21, 2020, extending the final deadline for the Ontario Not-for-Profit Corporations Act, 2010 (“ONCA”) to be passed. Pursuant to the Legislation Act, 2006, legislation that remains unproclaimed for nine or more years prior to December 31 of the preceding calendar year is subject to repeal by December 31st of the 10th year. In relation to the ONCA, which was enacted in 2010, it means that the ONCA must be proclaimed by December 31, 2020, or it would be subject to repeal.
Motion 89 extends the proclamation period by one year, allowing the ONCA until December 31, 2021 to be proclaimed into force. However, the extension does not apply to provisions in the ONCA dealing with class voting and non-voting members’ rights