The Ontario Not-for-Profit Corporations Act (“ONCA”) to become law on October 19, 2021.

Written by: John Gobin

In our continuing series of blog posts on the ONCA, this post will focus on the implementation of the Act, new amendments to the legislation, what this means for Ontario sport organizations and what they have to do, and the relevant timelines for these actions.

If you are looking for an overview on what the ONCA is or for a background on the legislative process that the ONCA has been going through, feel free to scroll through our previous blog posts (https://sportlaw.ca/?s=onca) before reading this post.

To briefly summarize, the ONCA has a storied history. Despite becoming an official act of the Ontario legislature in 2010, the ONCA never received Royal Proclamation by the Lieutenant Governor, meaning it has yet to come into legal effect. While originally scheduled to come into force in 2012, after multiple delays and amendments, the ONCA will finally be proclaimed on October 19, 2021.

All not-for-profit Ontario sport organizations will need to become compliant with the ONCA by October 2024.

Unlike its predecessor, the Ontario Corporations Act (“OCA”), the ONCA will exclusively govern all incorporated not-for-profit organizations in Ontario, including sport organizations. Back in 2017, due to the delays in proclaiming the ONCA, the provincial government passed the Cutting Unnecessary Red Tape Act which amended the OCA to include some of the proposed changes in the ONCA. As a result, many organizations in Ontario may have already begun the process of becoming ONCA-compliant.

Now that the ONCA will finally take force, it means that all of the impending changes that sport organizations had to do in order to be compliant with the new legislation are now imminent. Existing not-for-profit corporations will have a three-year transition period (until October 19, 2024) once the ONCA comes into effect to make any necessary changes to their incorporating and other documents to bring them into conformity with the ONCA.

While three years may seem like a long period of time, there is much work to do in order to become ONCA-compliant, even for proactive organizations that have already begun to act. A full and thorough review or overhaul of all by-laws, policies, rules, and regulations can take months. Then, once written, they need to be edited, reviewed, distributed, debated, and adopted by organizational membership in accordance with by-laws amending procedures.

Furthermore, the ONCA that will be proclaimed on October 19, 2021 is nowhere near the same ONCA that was introduced back in 2010. As you will see from our numerous blog posts on the ONCA, there have been many proposed and accepted amendments to the legislation. In fact, since we last wrote about the ONCA updates back in 2018 as a result of the Cutting Unnecessary Red Tape Act, the Government of Ontario passed a motion that made a major change to the ONCA on September 21, 2020.

The most recent change only affects organizations that have more than one type of membership and at least one of those types does not have the right to vote. Originally, the ONCA was going to give non-voting members the right to vote on important decisions (like mergers or dissolution), as well as empower each type of membership with a collective veto on similarly important decisions (like amending or removing member rights). The government has completely removed this provision from the ONCA.

It is important to understand that once the three-year transitional period for the ONCA expires, the provisions within the ONCA shall supersede all conflicting by-laws at the organizational level. Essentially, if an organization has by-laws that are non-compliant with the ONCA, and a member asserts one of their newfound rights conferred unto them by the ONCA, the ONCA reigns supreme and this will indubitably create a logistical (and even legal) nightmare.

NEW ORGANIZATIONS

For new not-for-profit organizations incorporating after October 19, 2021, a standard organizational by-law approved by the Ministry of Government and Consumer Services under the ONCA will automatically apply to a corporation that does not pass an organizational by-law within 60 days after the date of incorporation. The standard organizational by-law deals with organizational matters, such as who can sit on the board, the duties of officers and members and how to call meetings.

This then creates an arduous administrative headache as the organization must follow the procedures set out in the ONCA in order to amend or repeal and replace the standardized by-law. As such, it is vital for organizations looking to officially incorporate to prepare by-laws that are ONCA-compliant beforehand, which is one of the many services that Sport Lawcan provide.

ONTARIO BUSINESS REGISTRY

Finally, in addition to the ONCA coming into effect on October 19, the provincial government will also be launching the electronic “Ontario Business Registry”. This online platform will enable not-for-profit organizations to electronically complete many transactions (over 90) that used to be done via physical mail, such as filing annual returns. A convenient feature of the new registry is that legal representation, such as Sport Law, will be able to perform transactions and access organizational accounts in the registry on a client’s behalf. We already fill this role for many organizations in BC that have a similar business registry (“Societies Online”).

We understand that the upcoming changes to how some organizations have operated for years can be daunting and overwhelming. However, the new legislation is intended to benefit both members and organizations in the short-term and long-term by creating more transparency, streamlining outdated logistical and administrative practices, and improving overall efficiency. Please do not hesitate to reach out to us if your organization requires any assistance or simply needs legal review to confirm that you are compliant with the new (and improved) ONCA.

For more information, please contact Steve Indig at sji@sportlaw.ca or Kevin Lawrie at krl@sportlaw.ca

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