The provincial Ontario Not-for-Profit Corporations Act (ONCA) is expected to come into force in 2020. At that time, PSOs in Ontario (and many incorporated local associations and sport clubs) will have three years to transition from the current Corporations Act to the new ONCA. More information should be forthcoming about this new legislation and some details are already posted on the Ontario Ministry of Consumer Services website.
The provincial legislation is different than the federal legislation. Ontario PSOs may be affected by changes in their NSOs’ governance structures, due to NSOs’ compliance with the federal NFP Act – but Ontario PSOs will not need to make exactly the same governance or bylaws changes as their federal counterparts. Some changes will still be required, however, depending on the PSO’s current bylaws and governance structure.
Here is a brief list of some of the important issues that we have identified:
- Type of Corporation determines compliance path. Three types of not-for-profit organizations in Ontario will each need to comply with the legislation differently. The three types are: Charitable Public Benefit, Non-Charitable Public Benefit, and Non-Public Benefit.
- Audit may not be necessary. Under certain circumstances, depending on revenue, organizations may not be required to have a public auditor annually review the organization’s financial statements.
- Members’ rights expanded. As with the Federal NFP Act, non-voting members will have the right to vote on ‘fundamental changes’ that affect their rights. However, this provision will come into effect at least three years after the rest of the ONCA. There will also be more remedies available for members if it is believed that directors are not acting in the best interests of the organization.
- Directors are better protected but have more responsibilities. Directors will have a higher duty of care and greater responsibilities, but will also be better protected from personal liability. The legislation also includes procedures for identifying conflict of interest. Directors will also have their terms limited to four years.
- Past-presidents are allowed. Unlike the Federal NFP Act, ex-officio directors (which includes past presidents) are allowed under the Ontario NFP Act.
Many organizations will require a careful plan of changes to membership classes and board structures, and this will require member education, engagement, and approval. Even though the ONCA is not yet in force, it would be sensible to begin the conversation for transition as soon as possible given the many local incorporated organizations that may need to prepare as well.
Feel free to contact us at the Sport Law & Strategy Group to help your organization with the transition.
Our earlier writings on the Federal NFP and recent posts about the ONCA are listed below:
- ONCA Update – What’s New for Ontario Sport Organizations (January 2018)
- ONCA updates and current duties for Ontario-based organizations (June 2013)
- ONCA News (September 2013)
- Ontario NFP Act to come into force (September 2012)
- Are there problems with the Ontario Not-For-Profit Act? (September 2012)
- Why the new federal NFP Act is important to PSOs (February 2012)
- Don’t Overlook Some Financial Impacts of the NFP Act (February 2012)
- Wait and Hurry Up! New Corporations Act to Take Effect October 17, 2011 (October 2011)
- Is the New Federal Corporations Legislation on your Radar? (June 2011)
- New Corporations Act Creates Opportunities for NSOs (April 2011)
- Interesting Snapshot of NSO Board Structures (March 2011)
- Some Thoughts on Governance Reform (January 2011)
- Why and When You Are Required to Re-Incorporate Your Organization (December 2010)
- NPCA is on the Way (June 2010)