Ontario’s Not-for-Profit Corporations Act (ONCA), 2010 will make it easier for not-for-profit corporations to operate in today’s economy.
The government is fully committed to bringing ONCA into force at the earliest opportunity and will provide the sector with at least 24 months’ notice before proclamation. Existing corporations will have a three-year transition period once ONCA is in force and assistance will be available to ensure a smooth transition to implementation.
ONCA will make it simpler to incorporate and will ensure greater transparency and accountability in how not-for-profit corporations in Ontario are run. When ONCA comes into effect, it will:
ONCA will allow a review engagement process – a process for reviewing a corporation’s financial records that is simpler than an audit.
The ability to use a review engagement instead of an audit will depend on an organization’s annual revenue and whether the organization is a public benefit corporation.
ONCA makes a new distinction between public benefit corporations and other not-for-profit corporations.
A public benefit corporation is a charitable corporation or a non-charitable corporation that receives more than $10,000 a financial year in:
Members of a public benefit corporation with annual revenue of $100,000 or less can waive both an audit and a review engagement by an extraordinary resolution.
Members of a public benefit corporation with annual revenue of more than $100,000 but less than $500,000 can waive audit requirements and use the review engagement process by an extraordinary resolution.
If a public benefit corporation has annual revenue of $500,000 or more, an audit is still mandatory.
An extraordinary resolution is an approval from at least 80 per cent of the votes cast at a special members’ meeting or where all voting members consent.
If a corporation is not a public benefit corporation and has annual revenue of $500,000 or less, its members can waive both an audit and a review engagement by an extraordinary resolution.
If this type of corporation has annual revenue of more than $500,000, its members can waive the audit requirement and use the review engagement process by an extraordinary resolution.
The chart below outlines the type of financial review required under ONCA.
|Type of Corporation||Amount of Revenue||Type of Financial Review|
|Public Benefit Corporation||$ 100,000 or less||Waive*|
|More than $100,000 but less than $500,000||Review engagement*|
|$500,000 or more||Audit|
|Non-Public Benefit Corporation||$500,000 or less||Waive*|
|More than $500,000||Review engagement*|
*Approval to waive an audit or to waive both an audit and review engagement requires an extraordinary resolution.
ONCA will improve the rights of members of Ontario not-for-profit corporations.
Under ONCA, a corporation may have different types of members, including voting and non-voting members.
A corporation must have at least one class of voting members. Each member has one vote at a member’s meeting, unless the organization’s articles say otherwise. If a corporation has two or more classes or groups of members, it must be set out in its articles (some existing corporations may currently have this in their by-laws). Corporations must set out the conditions for memberships in their by-laws.
When ONCA takes effect it will apply to every corporation without share capital incorporated under an act of the Ontario legislature, including the current Corporations Act (CA).
Existing not-for-profit corporations will not be required to file articles of continuance for ONCA to apply.
There are some exceptions, including:
Existing not-for-profit corporations will have a three-year transition period once ONCA is in effect to make any necessary changes to their incorporation and other documents to bring them into conformity with ONCA.
For example, corporations may need to make changes to their by-laws, letters patent, supplementary letters patent and special resolutions. After the transition period, these documents will automatically be considered amended to the extent necessary to bring them into conformity with ONCA.
Existing corporations are encouraged to review their documents before the end of the transition period.
The government is preparing a set of tools to help corporations transition to ONCA. Also, Community Legal Education Ontario (CLEO) will provide support to not-for-profit corporations as they make the transition to ONCA.
A plain language guide will explain sections of ONCA that will likely have the most impact.
A transition checklist provides general information about the steps most existing not-for-profit corporations may need to take to conform with ONCA.
A draft default organizational by-law will deal with organizational matters. Existing not-for-profit corporations may wish to refer to it for language and content when reviewing and amending their own by-laws.
Once ONCA takes effect, the default by-law will automatically apply to newly incorporated not-for-profit corporations if they do not pass an organizational by-law within 60 days after the date of incorporation. These organizations may amend or repeal and replace the default by-law at a later date if they wish.
We encourage corporations to request an electronic toolkit by emailing ONCAtools@ontario.ca. This kit can be used to explain ONCA to members and stakeholders. It includes:
Corporations may change fonts and layouts to fit their own communication style. However, to ensure a consistent message, wording should not be altered in any way.