This week, the Ontario Government announced that the Not-for-Profit Corporations Act, 2010 will come into force on October 19, 2021.
The legislation, which was first introduced in 2010, provides a modern legislative framework for Ontario’s not-for-profit corporations and is intended to reduce the bureaucratic burden on them, moving from paper-based filings to digital services and providing enhanced flexibility. Under the legislation, Ontario not-for-profit corporations will be able to access an online government system for registrations and filings, as set out below.
Current Regime for Not-for-Profits
Currently, not-for-profit corporations incorporated in Ontario are governed by the Corporations Act. Not-for-profit corporations are organizations that carry on activities without pecuniary gain.
The most common types of not-for-profit corporations are:
- General type – such as professional associations, community organizations, etc.;
- Sporting and athletic organizations;
- Social clubs;
- Service clubs; and
Overview of Not-for-Profit Corporations Act
When the Not-for-Profit Corporations Act comes into force it will:
- Simplify the incorporation process;
- Clarify rules for governing a corporation;
- Clarify that not-for-profit corporations can earn a “profit” through commercial activities provided it is reinvested to support the corporation’s not-for-profit purposes;
- Introduce a new process for reviewing a corporation’s financial records called the “review engagement” in place of an audit;
- Outline members’ rights where they believe directors and officers are not acting in the corporation’s best interest; and
- Give members greater access to financial records.
Additionally, the current Corporations Act will be significantly amended to account for the coming into force of the new legislation.
Which Corporations Are Affected?
The Not-for-Profit Corporations Act will generally apply automatically to every corporation that does not issue ownership shares that is incorporated under an act of the Ontario legislature, including the current Corporations Act.
The legislation will not apply to certain corporations, such as insurance corporations under Part V of the Corporations Act, corporations without share capital that fall under the Co-operative Corporations Act and companies with social purposes.
Affected corporations will be given a 3-year transition period to make any necessary changes to their governing documents.
Launch of the Ontario Business Registry
In conjunction with the above changes, the Ontario Government is launching the Ontario Business Registry, which will allows businesses and not-for-profit corporations to complete over 90 transactions through the new online registry, including registering a new business and dissolving an existing one.
As such, registrations or filings that were previously submitted by mail or fax can be done through the online registry. In addition, this means that the migration of annual return filings that were previously completed through the Canada Revenue Agency will be available through the Ontario Business Registry.
For more information on the registry, go to Ontario.ca/BusinessRegistry.
Not-for-profit organizations and charities operate under a unique legal framework due to their special tax status and related compliance requirements. As a result of their respective specialized structures, both charities and not-for-profit organizations require guidance and advice from lawyers who have significant experience representing clients in these distinct areas.
At Baker & Company,we have more than 30 years of experience advising clients in this highly specialized area of law. We rely on our interdisciplinary knowledge across a wide range of practice areas to provide fulsome, broad-reaching advice that touches on every type of issue that may arise in the charitable and not-for-profit world.
At Baker & Company, we take the time to meet with you and understand your unique needs in order to offer solutions to the diverse problems that you may encounter. We rely on our broad base of experience and expertise to provide exceptional legal guidance. Call us at 416-777-0100 or contact us online for a consultation.