Yesterday my colleague Victoria Prince tweeted "Further delays in ONCA implementation? Govt. site now states 6 month delay after passing of the amending legislation." I decided to ask her to provide an update on ONCA.
Question: When is ONCA expected to come into force?
Victoria: With the recent advisory from the government, ONCA could come into force as early as Spring 2014. However, more realistically, it may not come into force until Summer 2014 or even later, especially since it is expected that amendments to ONCA that were introduced in June 2013 will likely be debated in Fall 2013. If the Legislature passes the amendments, a 6-month transition period is expected after the passage.
Victoria: ONCA will immediately apply, but there is a partial 3-year transition period that applies to existing not-for-profit corporations. Assuming compliance with the existing legislation, the incorporating documents of those corporations will continue to be valid until the earlier of the end of the 3-year transition period (which period begins when ONCA comes into force) and the amendment of the incorporating documents to conform with ONCA. There are some subtleties to how the transitioning works and organizations currently governed by the Corporations Act (Ontario) should consider how ONCA will impact on them specifically.
Victoria: The Bill introduced in June makes transitional changes to dozens of other Ontario statutes that referred to the Corporations Act and must be modified to refer to ONCA. In addition, part of the intent of the Bill is to clarify the provision in ONCA that grants rights to non-voting members in certain circumstances. The Bill provides that the relevant provisions will not come into force for the 3-year transition period. Note, however, that the rights of voting members to vote as a class in special circumstances are not part of the amending provisions. There is thus still some uncertainty around those provisions.
Victoria: To the extent that the incorporating documents do not conform with ONCA, those portions will be deemed to have been amended in order to conform with ONCA. This could result in some confusion so organizations are encouraged to be pro-active about reviewing their own governing documents.
Question: How can not-for-profits start getting ready for ONCA?
Victoria: If they haven't already started, not-for-profits should review their incorporating documents in light of ONCA.
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