In 2010, the Ontario legislature enacted the Not-for-Profit
Corporations Act, 2010 (the "ONCA"). The
ONCA has not yet been proclaimed in force. It is expected to be
proclaimed in force in late 2012. Currently, the Corporations Act
(Ontario) (the "OCA") governs non-share
capital corporations in Ontario.
CURRENT APPLICATION OF THE OCA TO SPECIAL ACT CORPORATIONS
Corporations incorporated by an Ontario special or private act
("Special Act Corporations") may be
governed by a combination of their particular special acts and the
Corporations Act. There are two basic approaches to the
relationship between the OCA and a Special Act Corporation. One
approach is to exclude the OCA except to the extent that specific
provisions of the OCA are made applicable to the Special Act
Corporation by the special act (example: "The OCA does not
apply to SpecialActCo. except for Sections X, Y, and Z:
"Exclusionary Approach"). The second
approach is to adopt the OCA in total except to the extent that the
special act excludes specific provisions of the OCA (example:
"The OCA applies to SpecialActCo. except for Sections X, Y,
and Z: the "Inclusionary Approach").
Under the OCA, if a Special Act Corporation's special act
does not choose either approach, the default rule is the latter:
the OCA applies to every Special Act Corporation except to the
extent otherwise provided. Therefore, if a Special Act Corporation
does not exclude any part of the OCA, all of the OCA applies.
However, once the ONCA is proclaimed in force, certain
provisions of the OCA, including those that state that, by default,
the OCA applies to every Special Act Corporation, will be
automatically repealed. In other words, at such time, the OCA will
no longer, by default, apply to a Special Act Corporation.
FUTURE APPLICATION OF THE ONCA TO SPECIAL ACT CORPORATIONS
With respect to non-share capital corporations, the ONCA will
take the same approach as the OCA: once proclaimed in force, the
ONCA will automatically apply in its entirety to every body
corporate without share capital incorporated by or under a general
or special Act of the Legislature except where it is otherwise
expressly provided. In the event of a conflict between the ONCA and
the special act, Section 5 of the ONCA states that the special act
will prevail. Therefore, if a special act Corporation does not want
the ONCA in whole or in part to apply to it, it will have to have
its special act amended to specifically exclude the ONCA as
It is important to note that the Lieutenant Governor in Council
has been granted the authority to make regulations under the ONCA
prescribing the provisions of the ONCA that will apply to Special
Act Corporations, regardless of what their relevant special acts
CONTINUATION UNDER THE ONCA
Two options are provided to a Special Act Corporation under the
ONCA: (1) it can continue to be governed by its special act, and
also be subject to certain parts of the ONCA as specified in the
special act; or (2) it can continue under the ONCA, in which case
the Special Act Corporation will be subject to all of the sections
of the ONCA and the special act will no longer govern the Special
If a Special Act Corporation chooses to be governed by both its
special act and certain provisions of the ONCA, it will need to
have an amendment or regulation made to its special act specifying
the application of the ONCA.
If the Special Act Corporation elects to continue under the
ONCA, it will need to have its members agree, by special
resolution, to apply for a certificate of continuance under the
ONCA. Once consent is obtained, the Special Act Corporation will be
able to apply for a certificate of continuance by filing articles
of continuance together with any other prescribed documents and
information and the required fee, if any.
Upon the issuance of a certificate of continuance, the special
act will cease to apply to the Special Act Corporation. As a
result, by-laws complying with the ONCA should also be prepared
that will take effect upon the date of continuance.
Typical reasons for continuance include a desire to escape the
political charter amendment process and the usual benefits arising
from operating under a modern corporate statue. Many Special Act
Corporations may also opt to have the ONCA apply, in part, to them
because of the lack of detail in their special acts. However, being
governed by both a special act and a piece of legislation can be
confusing. A Special Act Corporation should therefore consider
choosing a sphere to exist under in entirety (e.g. the special act
or the ONCA) in order to minimize any governance ambiguity and
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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