Changes to the Ontario Corporations Act that will affect Ontario non-profits before ONCA applies

October 29, 2017 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: What's New from the Charities Directorate of CRA, Canadian Charity Law, New corporate non-profit acts, Non-Profits that are not registered charities

As we noted earlier the Ontario government has been working since September 14, 2017 on passing legislation called The Cutting Unnecessary Red Tape Act, 2017 that not only makes some changes to the new ONCA but also changes the old Ontario Corporations Act.  I was a little bit surprised to see the changes to the OCA and how extensive they were.  I worry that this could be an indication that ONCA is not coming in for a very long time.  On the other hand, most of the changes to the OCA will be beneficial.  For many Ontario non-profit corporations under the OCA moving to the new Federal Canada Not-for-profit Corporations Act ("CNCA") makes a lot of sense and could save a lot of aggravation.  But for those who don't want to move to Federal you will stay under the OCA and later ONCA and these changes will be applicable.  

From a recent presentation given by 4 lawyers from the Ontario government at the Blumbergs' Charity Law Institute 2017 they identified a number of changes with my comments in [brackets] which will apply to some or all OCA corporations:

The proposed amendments to the Corporations Act would include some key features of ONCA to benefit Ontario not-for-profit corporations.

•Electronic notice of members’ meetings [easier to call members' meetings]
•Members’ meetings by electronic means [easier to hold members meetings - can use electronic means such as video conference or teleconference, but not by email.]
•Natural person capacity and powers* [the Ontario corporation has power of natural person and don't need letters patent or by-law to give powers]
•Extraordinary sale, lease or exchange of the undertaking of the corporation* [need special resolution for sale, lease, exchange or disposing of all or substantially all of the undertaking]
•Adoption of pre-incorporation contracts [not likely relevant if you were incorporated a long time ago.]
•Objective standard of care for directors and officers* [more of interest to lawyers]
•Removal of directors by majority vote [except when letters patent or by-laws provide otherwise]
•Lower approval threshold for members to waive an audit* [now need extraordinary resolution - 80% of members voting at a meeting to waive audit if revenue no more than $100,000 -they did not change audit threshold even though ONCA is up to $500,000 - but Ontario government inserted "$100,000 or such other amount as may be prescribed by the regulations made under this Act." which could mean that the amount will increase]
•Directors not required to be members, if so provided in by-laws [this is probably the most important change - now you can have an Ontario corporation having as little as one member - which might be helpful for example with affiliated organizations and maintaining alignment. It will also mean some organizations can do away with multiple membership classes of voting and non-voting members.]
•Court may appoint directors if corporation has neither directors nor members [this may be helpful in certain situations]
•Export continuance protection* [this will not affect continuances - the most important one being from Ontario to Federal - it just enshrines that the assets and liabilities of an Ontario corporation continue even if it continues to another jurisdiction]

*To come into force 60 days after Royal Assent

So for Ontario corporations that are not moving to the Federal CNCA, this will make the next few years of purgatory be a little more comfortable.  OCA corporations will need to assess whether these changes are relevant or helpful to their non-profit corporation and some may wish to use these changes long before ONCA comes in.   

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

mark@blumbergs.ca
416.361.1982
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