Ontario's Not-for-Profit Corporations Act, 2010 ("ONCA") is not yet in force. The most recent amendments were made to it in 2015 and the government has said that they'll give us at least 2 years' notice before it becomes enforceable.

This law is intended to modernize corporate structure for non-profits in Ontario. Many organizations have kept their eyes on the law and even tinkered with their corporate documents, their by-laws and letters patent, in the hope of updating their structure and ensuring that they are in compliance with the latest requirements.

Where there is uncertainty, there is choice

Non-profits have a choice:

  • Make changes now or wait until the new law is in force.

There are different considerations for non-profits as they make this choice. Some organizations have even chosen to make changes and then wait to adopt them.

Changes now!

The benefits are that organizations will update to new best practices that will likely become the law in the next few years. This can be attractive especially for organizations that have not updated their corporate documents for a long period, such as a decade. Another benefit is for organizations to consider a few of the more complex changes and to have time to address them.

For instance, many organizations have taken the opportunity to review their membership structure in light of new requirements related to members.

  • For example, organizations may have different classes of membership listed solely in their by-laws. If there are two or more classes of members, ONCA requires that to be set out in the articles of incorporation rather than the by-laws. ONCA also gives non-voting members certain rights that they don't have under the Corporations Act.

View these changes as steps along a path. Keep in mind that this is unlikely to be a one-time change for the following reasons:

  • There may be further amendments to ONCA before it comes into force;
  • There are requirements under the Corporations Act that still need to be met until ONCA comes into force; and
  • The ONCA regulations have not yet been passed.

Wait and then make changes!

The benefits are that organizations will have more certainty about the new law and can make their changes once rather than tweak along the way. This approach works for organizations that are comfortable with their current structure while keeping an eye on the new developments. There is still time to fully consider options and implement changes later.

Risk of Legislative Fatigue

The risks for all non-profits is a fatigue that sets in after initially getting excited that changes are on the way, then getting concerned about the impact of those changes on the organization, and then wondering why there was all the excitement in the first place as the delay lengthens.

The benefit to taking its time is that the government seeks to do it right. For organizations, the right thing to do will be specific to the context of each organization.

In the meantime, all organizations can check the government's website1 to find a transition checklist that gives an overview of a few of the more complex issues to consider. Organizations can make their choices accordingly, even adopt a few changes now and keep a list of those to be made or considered later.

Other resources to consider include:

For non-profits and charities with less $1 million in revenues: https://www.probonoontario.org/corporateartistsnon-profits/

For further information and issues to consider: Get Ready for the ONCA at http://nonprofitlaw.cleo.on.ca/

Footnote

1  http://www.sse.gov.on.ca/mcs/en/Pages/Not_For_Profit.aspx  

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.