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18 April, 2024

Deadline looms for charities to comply with ONCA

The clock is ticking! The Ontario Not-for-Profit Corporations Act (“ONCA”) was proclaimed into force on October 19, 2021. In general, not-for-profit and charitable organizations incorporated under the Corporations Act (Ontario) were given until October 18, 2024, to bring their letters patent and by-laws into compliance with ONCA. During this transition period, from October 19, 2021, until October 18, 2024, an organization’s existing governing documents under the Corporations Act continue to be valid. However, on October 19, 2024, governing documents will be automatically deemed to have been amended to comply with the new legislation, with limited exceptions. This has the potential to create operational and administrative confusion for unprepared charities and not-for-profit organizations. An organized transition into the ONCA can avoid these challenges.

Differences between Corporations Act and ONCA

In addition to new requirements with respect to by-laws and letters patent, ONCA also introduces numerous other changes that organizations should be aware of. I’ve highlighted some of these below:

Financial review

The rules surrounding financial review have been changed with the introduction of ONCA. ONCA identifies organizations as either “Public Benefit Corporations” or “Non-Public Benefit Corporations”. Generally, organizations that are Public Benefit Corporations have more stringent financial review requirements and are limited in their ability to employ directors.

Directors and Officers

As opposed to the Corporations Act, which required organizations to appoint a President and a Secretary, ONCA only requires that the organization has a Chair of the Board of Directors. As opposed to the Corporations Act, ONCA does not stipulate additional required offices. The ONCA also caps the term of directors at 4 years as opposed to the Corporations Act which permitted organizations to elect directors for a period of 5 years.

What does the transition process entail?

The transition process is often a beneficial exercise for many not-for-profit and charitable organizations, allowing them to review and re-evaluate current governance practices. Organizations transitioning to ONCA will generally take the following steps:

  1. Review corporate governance and constating documents;
  1. Update letters patent, more recently referred to as articles of incorporation, and file the changes with the Province of Ontario; and
  1. Update by-laws and other corporate documents including policies, procedures, and manuals, to ensure compliance with the ONCA.

How long does the transition process take?

There are over 50,000 charities and not-for-profits in Ontario. Many of these organizations will be making the transition to ONCA over the next 6 months, potentially leading to significant delays with the Ontario Government. We have assisted many charities and not-for-profit organizations with their transition to the ONCA. Depending on the circumstances of each not-for-profit or charitable organization, the transition process can take anywhere from two to four months. As such, we recommend beginning the process of transitioning to ONCA as soon as possible to avoid potential delays and to ensure compliance and a successful transition prior to October 19, 2024.

We’re happy to help!

If your organization requires assistance in navigating ONCA or transitioning to ONCA from the Corporations Act, do not hesitate to contact us.

Michael Haight is a wills and estate lawyer at Harrison Pensa and advises charities and not-for-profits including compliance for new record-keeping obligations.

Image credit: ©highwaystarz – stock.adobe.com

a headshot of Michael Haight
About the author

Michael Haight

Associate
  • Charities & Not-for-Profits,
  • Charities & Not-for-Profits,
  • Estate Administration,
  • Estate Planning,
  • Tax Law,
  • Tax Law,
  • Wills, Estate Planning & Trusts
Meet Michael

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