Ontario’s legislature wasted no time following the passage of the Canada Not-for-profit Corporations Act to enact its own Act to revise the law in respect of not-for-profit corporations (Bill 65). We spoke of the bill last when it was introduced in May. The Bill received royal assent on October 25, but the government hasn’t set a date for it to come into force yet. The current best guess from the Ministry of Consumer Services is some time in 2012. Regardless, Ontario not-for-profit corporations will operate under a drastically different legal regime. Like the federal not-for-profit corporations law, the main goal of Ontario’s Not-for-Profit Corporations Act, 2010 is to modernize the operating law for not-for-profits and make it easier for organizations to carry out their activities. Broadly, to:
- Enhance corporate governance and accountability
- Simplify the incorporation process
- Give more rights to members
- Better protect directors and officers from personal liability
To that end, the law will give not-for-profit corporations many of the same rights as for-profit corporations: “A corporation has the capacity and, subject to this Act, the rights, powers and privileges of a natural person.” The law also effectively separates not-for-profits from for-profit corporations, giving them each their own law.
Terrance S. Carter and Jane Burke-Robertson write in a recent “Charity Law Bulletin” about some of the final changes the Act underwent before it passed its final reading. Specifically, the definition of “charitable corporation” has been updated to “reflect the common law definition of charity … consistent with the approach used by Canada Revenue Agency in administering registered charities under the Income Tax Act.” Directors’ powers have also been clarified in the final version. The previous version stated that, absent any prohibiting article or bylaw, “the directors may by resolution make, amend or repeal any by-law that regulates the activities or affairs of the corporation, except in respect of matters referred to in subsection 102 (1).” The new version clarifies the exceptions. With respect to subsection 102 (1), directors may only:
- Add, change or remove a provision respecting the transfer of a membership
- Change to whom the property remaining on liquidation after the discharge of any liabilities of the corporation is to be distributed
- Change the method of voting by members not in attendance at a meeting or the members
See the “Charity Law Bulletin” for several other pertinent notices on the final version of the Ontario Not-for-Profit Corporations Act. And remember, Not-for-Profit PolicyPro from First Reference covers everything you need to know about operating a not-for-profit organization, and is updated four times a year with need-to-know information such as these new laws at the federal and provincial level.
Also, we predict that the rest of the provinces will follow suit and enact their own modernized not-for-profit corporations acts. Keep an eye on Inside Internal Controls for additional news about the federal and provincial laws, such as operational guidance from stakeholders and the government and coming-into-force dates.
First Reference Human Resources, Compliance and Internal Controls Editor