The Deadline For Nonprofit Corporations To Bring Their Articles And Bylaws Into Compliance With The Ontario Not-For-Profit Corporations Act (“ONCA”) Has Officially Passed – Compliance – Corporate/Commercial Law
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First proclaimed on October 19th, 2021, ONCA officially came into force on October 18th of this year. The generous three-year timeframe caused many nonprofits to delay conducting compliance reviews…
Canada
Corporate/Commercial Law
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First proclaimed on October 19th, 2021, ONCA
officially came into force on October 18th of this year.
The generous three-year timeframe caused many nonprofits to delay
conducting compliance reviews, only to be left scrambling at the
eleventh hour. Now that the deadline has passed, those who failed
to meet it are left wondering what to do next.
What is ONCA?
ONCA replaces the Corporations Act as the rulebook for the
creation and governance of nonprofit corporations, including
charities. It deals with everything from how directors are elected,
to the conduct of meetings, to the distribution of assets upon
dissolution and winding up.
What’s new?
ONCA contains many new provisions that require organizations to
update their articles and bylaws. This often requires
organizations—or provides them with the opportunity—to
modify the way they do things. Amongst other things, changes
include new notice requirements for meetings, added financial
disclosure requirements, new restrictions on board composition, and
modernized rules for conducting electronic meetings.
What does the deadline mean?
Non-profits had until October 18th to bring their
constating documents into line with ONCA. Fortunately, those who
failed to meet the deadline will likely not face significant
penalties. They will, however, be deemed to have adopted the
standard organizational bylaw provided by the government. The
danger here is that the government’s bylaw may be lacking in
key areas or be inconsistent with current practices. It is very
important to ensure the bylaw and articles accurately reflect the
structure and goals of the organization, which is rarely achieved
without some level of customization.
What to do?
We strongly recommend that any nonprofits who missed the
deadline conduct a compliance review of their constating documents
to ensure they are in line with the new legislation. More than
strict compliance, this is opportunity to take advantage of the
additional flexibility provided by ONCA. Many organizations are
surprised to learn that some of the more onerous provisions of the
previous legislation have been discarded in favour of more flexible
ones.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
