Ontario's new Not-for-Profit Corporations Act, 2010 (Bill 65) - a timing update

01 October 2012

Recently, several of our clients, under the impression the Ontario Not-for-Profit Corporations Act, 2010, Bill 65, ("the Act") is now in force, have asked when they must comply with the new Act. This misunderstanding is likely caused in part by the amount of time which has passed since the Act received royal assent, on October 25, 2010, almost 2 years ago.

In fact, the Ontario Not-for-Profit Corporations Act, 2010 is not yet in force.

On September 26, 2012, the province updated its targeted date for implementing the new Act to July 1, 2013. We had previously reported that the province intended to have its default by-law drafted and published, and provide a plain language guide and other tools by the fall of this year. The province hoped that January 1, 2013 would be the date the Act comes into force. While the province still hopes to have the default by-law and the guide for the transition in place this fall, they now intend for the Act to come into force on July 1, 2013.

This means that there is still plenty of time for organizations to amend their by-laws and seek supplementary letters patent under the existing regime. There are some advantages to doing that for some organizations. For example, some not-for-profits may wish to clearly do away with non-voting members to ensure that they do not receive unintended rights when the new Act comes into force.

There continues to be some confusion about when conformity with the Act is required. Unlike the new Canadian Not-for Profit Corporations Act, the new Ontario Not-for-Profit Corporations Act does not require an existing Ontario Corporations Act corporation to take the steps to actively transition to the new Act. An existing corporation will not be automatically dissolved. Instead, its letters patents, supplementary letters patent, bylaws and any special resolutions will be deemed to have been amended to conform with the Act if it does not actively do that within 3 years of the Act coming into force. The Act's provisions will always supersede existing letters patents, supplementary letters patent, or by-laws of the corporation.

That does not mean not-for-profit corporations should do nothing. Failure to update your organization's constating documents can cause great confusion and significant problems even if it is not fatal. There are likely to be inconsistencies between the existing documentation and the Act's requirements. If the directors, members and employees of that corporation continue to look to their existing by-laws and letters patent for guidance, they may assume that no changes to existing practices are required. The corporation, its directors and members may act in ways that contravene the Act, but appear to comply with the old documents. Furthermore, the Act's new or additional requirements may go unnoticed and unfulfilled without an update of the corporation's by-laws and articles.

Assuming that the Act does go into force on July 1, 2013, an existing Ontario not-forprofit corporation should restate its articles and adopt new by-laws no later than June 30, 2016.

Concise explanatory notes on the new Ontario Not-for-Profit Corporations Act, 2010 can be found here.

See here for our more comprehensive analysis of the Act can : http://www.gowlings.com/KnowledgeCentre/article.asp?pubID=2037

For more information, please contact:

David Tang

Partner

Tel: 416-862-3547

Email: david.tang@gowlingwlg.com.


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