October 19, 2021 will bring changes for both not-for-profit and for-profit entities in Ontario.
The Ontario Business Registry (OBR)
First, the Ministry of Government and Consumer Services will launch the OBR on October 19, 2021.
The OBR will allow Ontario entities to complete over 90 transactions, including registering a new business, dissolving an existing business, and filing documents required by incorporation statutes such as the Corporations Act and Ontario Business Corporations Act. The OBR will be a single portal for filing, and as such, corporations can no longer (since May 2021) file Corporations Information Act Annual Returns through Canada Revenue Agency (CRA). Read the CRA notice here.
The OBR will be available 24 hours a day, all year, and will simplify processing and filing requirements for organizations through pre-populated fields, validation features, instantaneous confirmation and receipting, and other features.
The OBR will be available through an organization’s access key and unique credentials.
Read more about the OBR, including important transition information, here.
The Not-for-Profit Corporations Act, 2010 (ONCA)
Second, on October 19, 2021, and after more than 10 years, the ONCA comes into force. During that long wait, other Canadian jurisdictions have modernized their not-for-profit statutes. For instance, federally, the Canada Not-for-profit Corporations Act came into force in 2011, and British Columbia’s Societies Act came into force in 2016.
The ONCA replaces Part III – Corporations without share capital, of the Corporations Act, and as such applies to all not-for-profits incorporated under Part III. When the ONCA comes into force, it will not be possible to incorporate a new not-for-profit under Part III. The ONCA will not apply to some existing not-for-profits, including cooperatives and not-for-profits incorporated under special acts.
The ONCA applies automatically to an existing not-for-profit corporation under Part III. Automatic application means that there is no need to continue or formally transition an existing organization under the ONCA. This is administratively easier than in some other jurisdictions that implemented new statutes. For instance, in British Columbia, when the Societies Act came into force, not-for-profits had to complete a transition process involving the refiling of its corporate documents and other steps by 2018. Failure to transition formally, could have resulted in automatic dissolution and, for registered charities, the result would have been a revocation of their charitable status in that event.
Ontario not-for-profits will have three years to comply with the ONCA. They will have three years from October 19, 2021, to bring letters patents, supplementary letters patent, bylaws, and special resolutions, also referred to as constating documents, in line with the ONCA.
Three years after October 19, 2021, with limited exceptions described below, any non-compliant provision in a constating document will be deemed amended to the extent necessary to achieve compliance.
The limited exception to the deemed amendment provision is that certain provisions, for instance, those related to the number of directors and voting rights of members, if they were valid immediately before October 19, 2021, will not be deemed amended. These excepted provisions will remain as is until the entity changes those provisions. This exception reduces the administrative burden on smaller not-for-profits.
Meeting your duty of care
Proactively review constating documents to make them compliant with the ONCA. Although there is a three-year period to achieve compliance, begin the review now because many of the new provisions may be unfamiliar to many boards, governance committees, and management teams. Some existing provisions may be inconsistent with the ONCA or may be redundant. Others are nuanced. For instance, the ONCA requires that some provisions, for example, provisions establishing two or more classes of membership, must be in the articles, not the bylaws. (However, the bylaws should state the conditions for membership in each of the classes). By ensuring that all provisions in constating documents are compliant with the ONCA, organizations can avoid governance disputes, the potentially undesirable outcome of deemed amendments to existing provisions, or other adverse effects of non-compliance.
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