The Ontario Not-for-Profit Corporations Act (ONCA) came into effect on October 19, 2021, replacing the Ontario Corporations Act (OCA) as the primary legislation governing not-for-profit corporations in Ontario. The ONCA aims to simplify and modernize the legal framework for not-for-profits, enhancing transparency, accountability, and governance.
Key Features of ONCA
1. Applicability
ONCA applies to not-for-profit corporations incorporated in Ontario, except those governed by specific legislation, such as co-operatives or charities under federal jurisdiction.
2. Simplified Incorporation Process
The new Act streamlines incorporation by replacing the outdated letters patent system with a certificate of incorporation, making it easier to create not-for-profit entities.
3. Enhanced Member Rights
- Members have the right to access financial records and vote on fundamental changes.
- Members can also apply for a court order if directors fail in their fiduciary duties.
4. Board of Directors Requirements
- A minimum of three directors is required.
- At least one director must be a resident of Canada.
- Directors must act honestly, in good faith, and in the best interests of the corporation.
5. Financial Accountability
- Corporations must provide financial statements to members annually.
- Different audit and review engagement requirements exist based on annual revenue:
- Under $100,000: No audit or review engagement required (if members consent).
- $100,000–$500,000: Review engagement required (audit optional).
- Above $500,000: Audit required.
6. Bylaws and Transition Period
- Not-for-profit corporations had until October 18, 2024, to ensure compliance with ONCA.
- Organizations must review and update their bylaws and governing documents accordingly.
Impact on Charities
For registered charities, ONCA works alongside the Ontario Public Guardian and Trustee (OPGT) and the Canada Revenue Agency (CRA). Charities must ensure compliance with both ONCA and federal charity regulations.
Steps to Transition to ONCA
- Review your governing documents to ensure they align with ONCA.
- Update bylaws as needed.
- Hold a member meeting to approve changes.
- File necessary documents with the Ontario government.
Conclusion
The Ontario Not-for-Profit Corporations Act (ONCA) marks a significant step in modernizing not-for-profit governance in Ontario. Organizations should take proactive steps to comply with ONCA requirements before the October 18, 2024 deadline. Consulting a legal professional can help ensure a smooth transition.
Legal Assistance
For assistance with ONCA compliance, contact Hashmi Law Group at 905-503-1486 or 647-772-8187 or email us at nhashmi.law@gmail.com.
We have offices in Toronto and Mississauga. We have more than 15 years of legal experience, nationally and internationally. In addition to regular business hours, we offer weekend and after-business-hours appointments if required. For more information about our legal services, please visit our website https://nhashmilaw.com/.
