After a very extensive waiting period of more than 10 years, the Ontario Not-for-Profit Corporations Act (ONCA) will be made official on October 19, 2021. This legislation will catch Ontario up to the Canada Not-for-profit Corporations Act in ensuring the industry operates under certain standards fitting of organizations that work toward the greater good.
What is the purpose of ONCA?
ONCA is a set of rules and guidelines for not-for-profit organizations who are incorporated in the province of Ontario. The purpose of ONCA is to modernize how not-for-profit corporations are created, operated, governed, and dissolved. Prior to ONCA, Ontario non-profits were governed under standard corporation legislation that did not reflect the way they operate.
What will ONCA do?
According to the Government of Ontario website, ONCA will:
- simplify the incorporation process, making it easier and more efficient
- clarify rules for governing a corporation and increase accountability
- clarify that not-for-profit corporations can earn a “profit” through commercial activities (e.g., selling T-shirts) if it is reinvested to support the corporation’s not-for-profit purposes
- allow some corporations to use a “review engagement” in place of an audit
- enhance members’ rights and outline actions they can take if they believe directors and officers are not acting in the corporation’s best interest
- give members greater access to financial records
Who will it impact?
When ONCA is proclaimed in October of 2021, it will apply automatically to not-for-profit organizations that are incorporated in Ontario. In it’s simplest of terms, a not-for-profit corporation is dedicated to purposes other than achieving a profit and does not issue ownership shares. Not-for-profits include both charitable and non-charitable organizations such as trade organizations, professional associations, social and sporting clubs and many more.
Ontario incorporated not-for-profits will be given a 3-year transition period once ONCA is put into law to make any necessary changes to their governing documents such as by-laws and policies.
Redstone can help!
We understand that change is scary, and that this announcement will create some nervousness among Ontario non-profits. However, Redstone’s senior leadership has been preparing our clients to go through this change for years. In 2014, when the Canada-Not-for-profit Corporations Act became law, we supported our federally incorporated not-for-profit clients of the time make a similar transition.
If you and your organization need help reviewing your bylaws, policies, or other governing documents to ensure compliance with ONCA, reach out to see how our association management professionals and our legal counsel can help!
Additional resources:
- Ontario Nonprofit Network
- Plain-language Guide to ONCA
- Transition considerations
- Community Legal Education Ontario (CLEO) – Dedicated tools and support to help the transition to ONCA
- Not-for-Profit Incorporator’s Handbook – General information about not-for-profit corporations and guidelines on how to incorporate.
- Office of the Public Guardian and Trustee – Information for Ontarians who use, run or donate to charities.
- Charities – Canada Revenue Agency – How to register and operate as a charity in Canada.