Transitioning under Ontario’s Not-for-Profit Corporations Act

After a lengthy delay, Ontario’s Not-for-Profit Corporations Act, 2010 (“ONCA”) was proclaimed into force on October 19, 2021, updating and modernizing laws for not-for-profit corporations and charities in Ontario as well as replacing provisions of the older Ontario Corporations Act.

Although ONCA is now in effect, there is a three year transition period for existing corporations to review and amend their governing documents to comply with the new legislation. During this transition period, corporation’s letters patent (and supplements thereof), by-laws and special resolutions remain valid and in effect until the end of the transition period. However, if these provisions still do not comply with ONCA after the transition period, the conflicting provisions will be deemed to be amended to conform to ONCA, subject to limited exceptions.

Notable Changes:

ONCA applies to not-for-profit corporations and charities incorporated under Ontario legislation and brings in a variety of changes to the governance of these entities, including:

• board of directors composition;
• new requirements for directors and officers to report conflicts of interest;
• enhanced member rights in respect of derivative actions, dissent and oppression remedies;
• increased flexibility for audits and reviews of financial statements; and
• distinction between “public benefit corporations” and other not-for-profit corporations.

Next Steps:

Not-for-profit corporations subject to ONCA should consider undertaking a review of their existing policies and governing documents (including by-laws, letters patent, and special resolutions) to determine whether amendments are necessary to comply with ONCA.

If you have questions about changes or transitioning under ONCA, please reach out to a member of KMB Law’s Corporate/Commercial team.