Neil McCormick
Partner
Article
6
At last, the Government of Ontario has announced that the Ontario Not-for-Profit Corporations Act, 2010 ("ONCA") will enter into force on October 19, 2021 – the same day the new Ontario Business Registry is set to launch. When ONCA enters into force, it will largely replace the antiquated Ontario Corporations Act ("OCA"), a statute that has governed non-share capital (i.e., not-for-profit) corporations in Ontario for decades. This is welcome news for Ontario not-for-profit corporations as many of them have deferred by-law amendments until ONCA enters into force – a date that always seemed to be around the corner, until now.
The differences between ONCA and the OCA are significant and will impact all Ontario non-share capital corporations with limited exceptions. All corporations transitioning to ONCA will need to understand how these differences will affect their corporations. We will outline some of these differences in future articles and content.
Generally speaking, corporations will not have to approve the transition to ONCA itself. Instead, they will become subject to it automatically. The transition provisions in ONCA provide that any provisions in a corporation's letters patent, supplementary letters patent, by-laws, or special resolutions that are in effect before ONCA enters into force on October 19, 2021 will remain in force, despite any non-conformity with ONCA, for a period of three (3) years.
Within the three (3) year period, corporations are advised to amend their constating documents to align them with ONCA. With some exceptions, if a corporation fails to align its constating documents with ONCA within that period, the provisions that do not align with ONCA will be deemed to be amended "to the extent necessary to bring [the provisions] into conformity with the [ONCA]".
Such deemed amendments have the potential to create a confusing patchwork of obligations. Unless an analysis is performed, it may not be clear which by-law provisions are still in force and which have been superseded by ONCA. The adoption of new, fully-compliant by-laws or by-law amendments is therefore advisable.
It is worth noting three exceptions to the foregoing transition requirements.
While these changes are significant for existing Ontario not-for-profit corporations, they are also significant for entities that have yet to be incorporated. For years, prospective incorporators of not-for-profit corporations in Ontario only had one real option: to incorporate under the Canada Not-for-profit Corporations Act ("CNCA"). This was because the OCA was so outdated and because the CNCA is relatively modern. With ONCA coming into force, prospective incorporators will have two corporate statutes from which to choose: ONCA or the CNCA. This is a good thing.
The Gowling WLG Charities & Not-for-Profits team stands ready to assist you to consider these issues. Watch for other articles and content of value on this topic in the near future.
For permission to republish this or any other publication, contact James Hatch.
Related Experience
Related Insights
NOT LEGAL ADVICE. Information made available on this website in any form is for information purposes only. It is not, and should not be taken as, legal advice. You should not rely on, or take or fail to take any action based upon this information. Never disregard professional legal advice or delay in seeking legal advice because of something you have read on this website. Gowling WLG professionals will be pleased to discuss resolutions to specific legal concerns you may have.