Canada: Canada And Ontario's New Not-For-Profit Legislation: What Changes Should You Expect? - An Update

This is an update to an article previously published in the Fall 2012 Minden Brief Although the majority of the requirements have remained the same, there are some significant updates. The law has drastically changed for the not-for-profit ("NFP") corporation with the enactment of the Canada Not-for-Profit Corporations Act ("CNCA") and the passing of the Ontario Not-for-Profit Corporations Act ("ONCA"). The CNCA came into force on October 17,2011 and it affects NFPs incorporated federally. The enactment of the ONCA has been delayed and is not expected to come into force until after July 1, 2014. This legislation will affect all NFPs incorporated in Ontario.

Prior to the enactment of the CNCA, federal NFPs were incorporated under and governed by the Canada Corporations Act ("CCA"). Ontario NFPs are currently incorporated under and governed by the Ontario Corporations Act ("OCA").

The ONCA and the CNCA are modeled on the Ontario Business Corporations Act ("OBCA") and the Canada Business Corporations Act ("CBCA"), respectively, which govern business corporations.

This harmonization of the NFP and for-profit laws will help clarify areas of the NFP legislation that previously lacked certainty, through the reference to settled cases in relation to business corporations. The following is an updated summary of some of the more important aspects of both the CNCA and the ONCA.

Ontario Not-For-Profit Corporations Act

Once the ONCA comes into force, there is an automatic continuance of all existing non-share capital corporations as well as all special act corporations under Ontario jurisdiction, unless otherwise specified under their special act. A corporation will have three years to amend its by-laws to conform to the ONCA, after which, the by-laws will be deemed to have been amended in accordance with the Minister's template by-law. The Ministry form of by-law will only contain bare essentials and most corporations will want to tailor them to fit their own needs. Recent amendments to the proposed ONCA have provided for a mechanism whereby any valid provision in the by-laws of the NFP corporation will remain in effect until three years after the ONCA comes into force, at which point the provisions will become invalid, unless they are incorporated into new by-laws or the articles of the corporation pursuant to the ONCA. If the corporation is newly-formed under the ONCA, it will have 60 days after formation to approve a new form of by-law that conforms with the ONCA, otherwise the Ministry form will apply.

Additionally, with new requirements under the ONCA to provide for certain provisions such as membership classes and distribution of assets upon dissolution in the corporation's articles, the NFP corporations may find themselves in precarious situations unless they properly continue under the ONCA. Prior to the ONCA, these provisions used to be included in the corporation's by-laws; however, the ONCA now provides that such provisions will be invalid three years after the ONCA comes into force, unless they are transitioned into the corporation's articles.

If the NFP corporation is not a public benefit corporationl and its articles do not provide for the manner in which the corporation1 assets will be distributed upon dissolution, the ONCA will automatically apply. As an example, where a NFP corporation under the OCA could provide in its bylaws that upon dissolution any remaining funds would be distributed to charities, under the ONCA, this provision must be stated in its articles, otherwise the ONCA provides that upon dissolution the remainder of its assets will automatically be allocated to the members.

An ONCA corporation may provide in its articles for a minimum or maximum number of directors or a fixed number of directors, but there is a minimum requirement of three directors.

The recent introduction of Bill 85 in June 2013 proposes certain amendments to the ONCA, one of which is that the ONCA will now require that an individual who is elected or appointed to be a director must consent in writing to hold office within 10 days after the election or appointment.

The ONCA reflects an objective standard of care as opposed to a subjective standard of care for directors and officers. The OCA does not speak on the subject of standard of care for directors and left the matter to the courts to interpret. This standard of care is now in tune with the standard of care for business corporations found in the OBCA and the CBCA.

The enactment of the ONCA also brings clarity to several areas of director responsibilities that were not clearly provided for in the OCA. Under the ONCA, a director must be appointed as the chair of the board of directors. Also, the ONCA specifically disallows a director to send a delegate or proxy to a directors' meeting in his or her place.

In addition to the benefits that are afforded to NFP corporations and their officers and directors as a result of the ONCA, there are new rights and remedies available to members. For example, the Act dictates that the by-laws must set out the requirements to become a member of the corporation and also that any termination of such membership must be done in good faith and in a fair and reasonable manner. It is highly recommended that the new by-laws of a NFP corporation provide for a proper procedure for the discipline of members so that a terminated or suspended member will have little grounds to challenge any disciplinary action undertaken by the corporation.

Additional member remedies now include an application for a compliance or a restraining order by a complainant or creditor, an application by an aggrieved party to have the registers or records of a corporation rectified. a dissent and appraisal remedy for certain corporations, the ability of a complainant to seek a court order for the commencement of a derivative action and a holder of 10% of the votes may requisition a meeting of members.

Canada Not-For-Profit Corporations Act

The CNCA contains very strict continuance provisions. It provides that any NFP that is currently incorporated under the old legislation, will have to apply for continuance under the new CNCA, otherwise the corporation will be dissolved on October 17,2014. This continuance does not happen automatically and many federal NFPs may find themselves in difficulty next year if appropriate steps are not taken to continue.

Currently, under the CCA, Industry Canada must approve any by-law. A CNCA corporation still has to file copies of its by-laws with Industry Canada within 12 months of confirmation by the members, but these by-laws no longer need to be approved by Industry Canada. If the by-laws are not filed within this period, Industry Canada's form of by-law will apply.

A CNCA corporation may have a minimum of one director in contrast to an ONCA corporation. However, if the corporation is a soliciting corporation, as defined in the Act, it must have a minimum of three directors, at least two of whom cannot be officers or employees. It is also necessary under the CNCA for the articles of the corporation to specify a fixed number or a minimum and maximum number of directors. Like the ONCA, the CNCA also reflects an objective standard of care as opposed to a subjective standard of care for directors and officers.

While there are many similarities between the CNCA and the ONCA, there are also several provisions that are different. For example, the ONCA specifically permits ex-officio directors2 , while the CNCA disallows this practice and provides that all directors must be elected by the members. Also, under the CNCA, the by-laws may provide for decisions to be made by consensus at meetings of directors and members as long as this term is defined, while the ONCA is silent on this point.

Another major difference between the ONCA and the CNCA is the fact that under the CNCA, members may enter into a unanimous members agreement to restrict the powers of the directors, similar to unanimous shareholders agreements under both the CBCA and the OBCA. In addition, the CNCA provides for a derivative action remedy for members in certain situations. The holders of 5% of the votes may requisition a meeting of members.


  1. This brief overview of the CNCA and the ONCA demonstrates the important changes to the legislative framework ofNFP corporations in Canada. With the enactment of these two Acts, there is significant harmonisation between the for-profit and NFP corporations.
  2. Currently, Ontario NFP corporations are operating under outdated legislation that does not take into account modern corporate governance practices.
  3. Directors, officers and members ofNFP corporations should seek advice about the appropriate time for continuance (in the case of CNCA corporations) and start thinking about the changes that are needed to ensure that the corporation's governance arrangements are improved or updated to conform to the new legislation.
  4. Minden Gross LLP can assist corporations to transition under the CNCA and the ONCA. Contact: Hartley R. Nathan, QC. or Ira Stuchberry.


1 A "public benefit corporation" is a charitable corporation or a non-charitable corporation that receives more than $10,000 per financial year from specific public sources.

2 There are complicated mecha nisms to "circumvent" this prohibition against ex-officio directors.

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.

Ira Stuchberry
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Borden Ladner Gervais LLP
Related Articles
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
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions