The Ontario Not For Profit Corporations Act 2010

The Ontario Not For Profit Corporations Act 2010 (the “Act”) is a long overdue modernisation of the legislation governing not for profit corporations. The not for profit sector in Ontario (and Canada as a whole) and the impact that the not for profit, volunteer-driven sector has on our everyday lives is vast.

The Act is intended to simplify the incorporation process for not for profit corporations and also ensure greater transparency and accountability in their operations by creating a structured and clear governance framework. Amongst other things, it clarifies and confirms that, so long as funds that are generated from any commercial activities carried out by the not-for-profit corporation are plowed back into the organization and used for the corporation’s not-for-profit purposes, the entity does not lose its status as a not-for-profit corporation.

Another key feature of the Act is the creation of enhanced members rights, akin to those rights afforded to shareholders in for-profit corporations. Members will have the tools needed to hold the directors and officers of such not-for-profit entities to task in the event that they believe that they are not acting in the best interests of the corporation. The Act also affords members greater access to the corporation’s records and books of account.

Despite having received Royal Assent in 2010, the Act still has to be proclaimed into force and this is not expected to occur until 2016 at the earliest. Once the Act is proclaimed into force, Ontario’s not-for-profit corporations have three years within which to apply to the Ministry of Government and Consumer Services for what is known as Articles of Continuance which “continues” the corporation under the new Act.

The application for continuance affords not-for-profit entities with the perfect opportunity to review and revise their current by-laws and operating provisions in order to ensure that they are both in compliance with the new legislation and still operationally meeting the needs of the organization.