Ontario’s Not-for-Profit Business Corporations Act (ONCA), which received royal assent back in 2010, is finally set to come into force on October 19th. Businesses that will be governed by this new legislation will have a three-year grace period, until October 19, 2024, to bring themselves into compliance with the changes under the Act. Below, we will provide an overview of which organizations will fall within the scope of the ONCA, and what changes they should be prepared to consider in order to remain compliant. In addition, we will briefly discuss the new Ontario Business Registry, which is also set to launch on October 19th.
The new ONCA will apply to non-profit organizations incorporated under provincial legislation. Therefore, any non-profit incorporated under the federal Not-for-Profit Corporations Act, even if they operate within Ontario, will not be subject to the incoming changes.
Specifically, the ONCA applies to charitable and non-charitable businesses that meet the following requirements, and were incorporated under provincial law:
According to a guide to the ONCA published by the Ontario government, some key changes will impact the incorporation process itself, with aims to make it simpler, as well as a simplification of the process for reviewing financial records. In addition, the ONCA will impose a new duty of care for directors, as well as a limitation on personal liability in certain circumstances. Some of the key changes are listed below, and a full list can be found here.
To ensure compliance with the new rules, non-profit organizations should prepare by examining existing documents for potential necessary updates. For example, they should review their Articles of Incorporation and By-Laws to determine whether updated language will be needed.
In addition to the new legislation, the province is also launching the new Ontario Business Registry on the same day. The Registry is designed to allow businesses to complete over 90 transactions online, with 24 hr/day, 7 days/week access. The system will be used by both for-profit corporations, as well as not-for-profit organizations, as well as their intermediaries such as lawyers or accountants.
The new system will allow businesses to incorporate or dissolve instantly, rather than waiting four to six weeks for a filing to be processed. In addition, annual returns, which were previously filed with the Canada Revenue Agency, will move to the Registry, allowing organizations to manage all of their filings in the same place.
The above changes are aimed at making it easier for non-profit organizations to do business in Ontario, however, directors and officers need to be aware of their new obligations under the ONCA to avoid liability issues.
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