Canada: Bill 65 – Top Ten Things You Should Know About the New "Ontario Not-for-Profit Corporations Act, 2010"

Last Updated: November 9 2010
Article by Anne C. Corbett and Anna C. Naud

Most Read Contributor in Canada, September 2016


On October 19, 2010, the Ontario Government passed Bill 65, the new Not-for-Profit Corporations Act, 2010 (the NFPCA). The stated purpose of the NFPCA is to modernize the legal framework for Ontario's 46,000 provincially incorporated not-for-profit corporations (NFPs). The new legislation follows the federal Not-for-profit Corporations Act which received Royal Assent in June 2009 (not yet proclaimed in force) and which made similar reforms to the legislative scheme applicable to federally incorporated not-for-profit corporations.

The new Not-for-Profit Corporation Act, 2010 takes effect on a date to be named by proclamation. Once the Act is proclaimed, it will remove NFPs from the ambit of the present Ontario Corporations Act (the OCA). The NFPCA will affect every existing NFP in Ontario. Directors, officers, and executives should start thinking now about what actions they will need to take to ensure that their organization's governance structure and documents comply with the new legal framework.

This article provides a short synopsis of some of the main features of the NFPCA that may be of interest to an existing Ontario NFP and its directors, officers, and executives.


1. Continuing Under the NFPCA

If and when the NFPCA receives the approval of the Legislature and is proclaimed in force, NFPs currently incorporated under the OCA will have three years to file articles of amendment to amend their letters patent, supplementary letters patent, by-laws, or special resolutions to bring them into conformity with the NFPCA. If no such action is taken after three years, the necessary amendments will be deemed to have been made.

Failure to act and letting amendments be deemed to have been made will inevitably lead to ambiguity and uncertainty. The resulting questions, issues, and confusion may create more headaches and work than if articles of amendment had been filed properly within the three year window. Ontario NFPs would be wise to undertake a proactive governance review to assess whether their corporate governance documents and practices need to be updated or changed in anticipation of the NFPCA coming into effect.

2. Commercial Activities are Now Specifically Permitted & the Ultra Vires Doctrine has been Abolished

Currently, a NFP is limited to acting within the "objects" set out in the corporation's letters patent. Actions outside of these boundaries may be found to be ultra vires by the courts and declared null and void.

Under the NFPCA, NFPs will still be required to set out "purposes" in their articles of incorporation. Corporations will be permitted to have any purpose that is within the province's legislative authority. If any of the purposes are commercial in nature the articles must provide that these purposes are to advance or support the corporation's non-profit purposes.

Additionally, under the NFPCA, a corporation's actions will no longer be declared invalid (i.e. ultra vires) simply because they are contrary to the NFPCA or the corporation's articles or by-laws. For example, if a corporation enters into a transaction that is contrary to the corporation's articles, the transaction will no longer be declared invalid simply because it was contrary to the articles.

3. Public Benefit Corporations

The NFPCA differentiates between public benefit corporations and non-public benefit corporations.

A public benefit corporation is defined as (a) a charitable corporation (a corporation incorporated for relief of poverty, advancement of education, religion or other charitable purpose) or (b) a non-charitable corporation that receives more than $10,000 in a financial year either as donations/gifts from persons who are not members, directors, officers, or employees of the corporation, or as grants or similar forms of financial assistance from the federal government or a provincial or municipal government or an agency of any such government. As explained below, public benefit corporations are treated differently with regards to, for example, audit requirements.

A non-public benefit corporation is any corporation that is not a public benefit corporation.

4. More Flexibility Has Been Provided to Directors and Members When Planning Their Meetings

Under the OCA, directors may meet at any place in or outside of Ontario (if allowed in the by-laws) and may meet electronically. Members, on the other hand, are restricted to holding meetings within Ontario (unless stated otherwise in the letters patent) and must do so in person. Members may appoint proxies; directors may not.

Under the NFPCA, both directors, and members will be able to meet outside of Ontario and may meet by teleconference or electronically (unless stated otherwise in the articles or by-laws). Committees of directors may also meet by teleconference or electronically and unanimous written resolution in lieu of a committee meeting will be permitted. However, directors will still be prohibited from appointing proxies to attend meetings in their stead.

5. Directors: New Specifics

Currently, an Ontario NFP must have at least three directors and must provide for a fixed number of directors in its by-laws. Directors may be elected for terms of up to five years but at least three directors' terms must expire each year. Every director must be a member. Members may remove directors by special resolution (i.e. a 2/3 vote).

Under the NFPCA:

  • a corporation must continue to have at least three directors but may provide in its articles for a set number of directors or a minimum and maximum number of directors
  • where a range of directors (minimum and maximum is permitted) the directors may be authorized by the members to "fix" the number of directors from time to time
  • directors may not hold office for a term longer than four years
  • not all directors need be elected for the same term and there is no requirement that there be an election each year
  • the directors need not be members of the corporation, unless the by-laws so require;
  • directors may be removed by ordinary resolution of the members (i.e. a majority vote)
  • by-laws may provide for ex-officio directors and ex-officio members
  • not more than one-third of the directors of a public benefit corporation may be employees of the corporation or of any of its affiliates.

6. Protections for Directors and Officers

The NFPCA sets out directors' and officers' liabilities, as well as the standard of care to which directors and officers will be held accountable. This objective standard of care mirrors the standard of care set out in modern corporate statutes across Canada – to act honestly and in good faith with a view to the best interests of the corporation and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Directors are given a reasonable diligence defence and both directors and officers and former directors and officers are entitled to be indemnified by the corporation so long as the individual acted honestly and in good faith with a view to the best interests of the corporation and had reasonable grounds for believing that his or her conduct was lawful.

7. Enhanced Rights for Members

Under the NFPCA, the rights of dissenting members of a non-public benefit corporation are quite broad. For example, if a corporation resolves to amend its articles to add, remove, or change the activities that the corporation may carry on or the powers that the corporation may exercise, a member entitled to vote may dissent. If such resolution passes, the dissenting member will be entitled to be paid by the corporation the fair value of the membership interest, including any capital contribution, held by the member.

Additionally, a member entitled to vote may initiate proposals (a) to make, amend or repeal a by-law; (b) regarding any matter that is significantly related to the activities or affairs of the Corporation; or (c) to amend the articles to make certain fundamental changes. Such proposals will be required to be placed before a members' meeting. A proposal may also include nominations for the election of directors if such proposal is signed by not less than 5% of the members entitled to vote or of a class of members entitled to vote.

Under the NFPCA, the rights of non-voting members are also expanded. If a NFP is to have more than one group or class of members, the articles must provide for such multiple groups or classes and must provide at least one class or group with the right to vote. Otherwise, each member of each class or group will be entitled to one vote. Even if the articles specify that the members of a class or group of members are not entitled to vote, such members will nevertheless be entitled to vote on certain resolutions that affect the rights or conditions of that class or group of members or another class or group of members.

When contemplating filing articles of amendment, a NFP should therefore consider whether to add specific language to its articles limiting the rights of certain classes or groups of members, including the right to vote. The NFPCA sets out other standard rules regarding members that may also be changed by a corporation if set out in its articles. For example:

  • A membership is transferable only to the corporation unless stated otherwise in the articles or by-laws
  • A non-public benefit corporation may distribute the fair value of a membership to a member upon termination of that member's membership, unless stated otherwise in the articles or by-laws.

8. Appointing an Auditor and Conducting Audits

Currently, the members of an Ontario NFP must appoint an auditor annually and such auditor must conduct annual audits. A limited exemption from this requirement is available for NFPs with income of less than $10,000 and the consent of all members.

Under the NFPCA, most corporations will have to annually appoint either an auditor or a person to conduct a review engagement. However, recognizing that annual audits or review engagements may be financially onerous, the proposed legislation provides exemptions from such requirements for corporations with a certain annual revenue and member approval.

A public benefit corporation may pass an extraordinary resolution (requiring at least 80% membership approval) to (a) have a review engagement instead of an audit of a particular financial year if the corporation had an annual revenue in that financial year of more than $100,000 (or such other prescribed amount) and less than $500,000 (or such other prescribed amount); or (b) not appoint an auditor and not have an audit or review engagement of a particular financial year if the corporation had an annual revenue in that financial year of $100,000 or less (or such other prescribed amount).

A non-public benefit corporation may pass an extraordinary resolution to (a) have a review engagement instead of an audit of a particular financial year if the corporation had an annual revenue in that financial year of more than $500,000 (or such other prescribed amount); or (b) not appoint an auditor and not have an audit or review engagement of a particular financial year if the corporation had an annual revenue in that financial year of $500,000 or less (or such other prescribed amount).

9. Investigations

The NFPCA provides the Superior Court of Justice with the authority to order an investigation of a corporation or any of its affiliates when allegations of misconduct are brought by a member or creditor of the corporation. At the conclusion of an investigation, the investigator appointed by the Court must give a report to the Director who, unless ordered otherwise by the Court, will make the report available for public inspection.

10. Incorporating Under the NFPCA

The Minister of Government Services currently has the discretion to refuse a request for incorporation as an Ontario NFP, but under the NFPCA, an organization applying for incorporation may do so as "as of right"; in other words, so long as articles of incorporation and other required documents and fees are submitted correctly, an organization will be incorporated under the NFPCA.

If a by-law is not passed by a corporation within 60 days of the date of incorporation under the NFPCA, the corporation will be deemed to have passed the standard organizational by-law approved by the Director. A corporation will be able to amend, repeal, or replace such standard by-law at any time.


The new Not-for-Profit Corporation Act, 2010 will finally give Ontario not-for-profit corporations their own corporate legislation. At this time, executives, directors, and officers should view the legislation as an incentive to start thinking about what changes may need to be made to ensure that their corporation's documents conform with the NFPCA and whether their organization's governance arrangements need to be updated and improved.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.