Governance overview: What changes do you need to make?

Letters patent

Does your purpose as stated in your letters patent* and supplementary letters patent still reflect the purposes of your nonprofit today?

*The ONCA will replace the term “letters patent” with “articles of incorporation” or “articles”.

The ONCA says:

  • Your nonprofit’s purpose must appear in its articles.
  • If you have any commercial purposes, your articles must state that the commercial activity is meant only to support non-profit purposes of the nonprofit.
  • See section 8.

Do your letters patent or bylaws give your nonprofit specific powers or restrict its powers (for example, its ability to borrow money)? The ONCA says:

  • Nonprofits automatically have the powers and rights of a natural person, so your bylaws do not need to confer specific powers.
  • Unless your articles or bylaws state otherwise, your directors may borrow money on behalf of the organization.
  • Nonprofits cannot exercise activities or powers that are contrary to its articles.
  • See sections 15, 16, and 85.

Directors and officers

How many directors does your nonprofit have? The ONCA says:

  • You must have at least three directors.
  • Your articles may specify a minimum and maximum number of directors.
  • See section 22.

How long are the directors’ terms? Are there restrictions on the number of terms they are allowed to serve? The ONCA says:

  • The maximum term length is four years, but there is no limit on re-elections of directors.
  • Directors’ terms do not need to be the same length.
  • See section 24.

Are directors required to be members? The ONCA says:

  • Unless your bylaws state otherwise, directors do not need to be members.
  • See section 23.

Can an individual become a director by reason of holding a particular office (for example, past presidents of your nonprofit or officers at another nonprofit)? The ONCA says:

  • Your bylaws may state that a person may be a director by virtue of their office.
  • See section 23.

What is the process for filling vacancies on the board? The ONCA says:

  • Members elect directors by ordinary resolution (majority vote), as needed, at annual meetings.
  • To fill vacancies between annual meetings, a quorum of directors may appoint up to one third of the number of directors elected at the last annual meeting.
  • See section 24 and section 28.

Can your directors appoint new directors to the board? The ONCA says:

  • A quorum of directors may appoint new directors to the board, up to one-third of the number of directors elected at the last annual meeting. The appointed directors hold office only until the next annual meeting.
  • See section 24 and section 28.

Do your letters patent or bylaws say anything about conflicts of interest for directors? The ONCA says:

  • Section 41 sets out comprehensive rules about directors’ conflicts of interest.
  • Your bylaws may not override these rules.

Are directors allowed to be employees* of the nonprofit? If so, how many? The ONCA says:

  • For public benefit organizations, only one-third of the directors may be employees of the nonprofit or of any of its affiliates.
  • See section 23.
Registered charities should be aware of charity law and CRA restrictions on directors as employees.

Can directors or officers receive remuneration* for services they provide to the nonprofit in another capacity? The ONCA says:

  • Unless your bylaws state otherwise, directors, officers, and members may receive reasonable remuneration and expenses for any services in another capacity.
  • See section 47.
Registered charities should be aware of charity law and CRA restrictions on remuneration.

Do your letters patent, supplementary letters patent, or bylaws say anything about the number, qualifications, and/or election of officers (for example, chair, president, secretary, treasurer)? The ONCA says:

  • Unless your articles or bylaws state otherwise, directors may establish offices, appoint officers, assign their responsibilities, and delegate their authority.
  • Unless your articles or bylaws state otherwise, directors may be officers and one person may hold two or more offices.
  • See section 42.

Members

Can members receive remuneration for services they provide to the nonprofit in another capacity? The ONCA says:

  • Unless your bylaws state otherwise, directors, officers, and members may receive reasonable remuneration and expenses for any services in another capacity.
  • See section 47.

Do any of your letters patent, bylaws, or register of members describe different types (or classes) of members? If so, how do the classes differ? The ONCA says:

  • If you have different classes of members, that must be stated in your articles.
  • At least one member class must have the right to vote.
  • See section 48.

How do individuals become members? Are there multiple ways to become a member? The ONCA says:

  • Your bylaws must specify the conditions of membership in each class.
  • See section 48.

Are other organizations or agencies able to become members? The ONCA says:

  • Your bylaws must specify whether nonprofits or other entities may become members.
  • See section 48.

How many members and what level of member participation do you want? The ONCA says:

  • There is no limit on the number of members or member classes that you may have.
  • At least one class must have the right to vote.
  • All voting members have the right to submit proposals for discussion at members’ meetings.
  • 5% of voting members may together nominate a director. Your bylaws may specify a lower percentage.
  • 10% of voting members may together demand that the directors call a members’ meeting. Your bylaws may specify a lower percentage.
  • See sections 48, 56, and 60.
  • Find out more about membership structures.

Are members able to transfer their membership to another person? The ONCA says:

  • Unless your articles or bylaws state otherwise, a membership may be transferred only to the nonprofit.
  • See section 48.

Can the board impose membership dues or contributions? The ONCA says:

  • Unless your articles or bylaws state otherwise, directors may require annual dues or contributions from members and may determine the manner of payment.
  • See section 86.

Can the board discipline members? The ONCA says:

  • Your articles or bylaws may state that the directors can discipline a member or terminate memberships.
  • If so, your articles or bylaws must describe when and how that power may be exercised.
  • See section 51.

How do memberships end? The ONCA says:

  • Unless your articles or bylaws state otherwise, memberships end when members die or are expelled, when their term expires, or when the nonprofit dissolves.
  • If your articles or bylaws allow directors to expel members, then your articles or bylaws must also describe when and how that power may be exercised.
  • See sections 50 and 51.

Do you have vulnerable members who might object to their contact information being shared with other members? The ONCA says:

  • If a member makes a proposal prior to a members’ meeting, the nonprofit must include the proposal and the member’s name and address in the meeting notice.
  • All members and their legal representatives are entitled to a list of the current members’ names and addresses for purposes related to the organization’s activities.
  • See sections 56 and 96.

Meetings

How often do you have board and members’ meetings? The ONCA says:

  • There is no requirement for the frequency of board meetings.
  • Directors must hold an annual members’ meeting at least every 15 months.
  • Directors may call a special meeting of the members at any time.
  • See section 52.

Where do you hold board and members’ meetings? The ONCA says:

  • Unless your articles or bylaws state otherwise, directors may meet at any place that the bylaws require.
  • Members’ meetings must be held in Ontario.
  • If your bylaws do not specify a place for members’ meetings, the directors may decide on a place.
  • See sections 34 and 53.

Do your bylaws discuss whether board and/or members’ meetings can happen electronically? The ONCA says:

  • Unless your bylaws state otherwise, members and directors may attend meetings electronically.
  • See sections 34 and 53.

What are the notice requirements for board and members’ meetings? The ONCA says:

  • Unless your articles or bylaws state otherwise, the board may meet at any notice the bylaws require.
  • Members must receive notice at least 10 days before a meeting, but no earlier than 50 days before.
  • See sections 34 and 55.

Can notice of meetings be waived, and if so, how? The ONCA says:

  • Directors and members may waive their right to notice.
  • Attendance at the meeting will be considered waiver of notice.
  • See sections 34 and 55.

Voting and quorum

Do you allow voting by proxies? The ONCA says:

  • No one can act for an absent director at board meetings.
  • Voting members are entitled to vote by proxy. Nonprofits must send members a proxy form with or before notice of a meeting.
  • See sections 23, 64, and 65.

What is quorum for board meetings? The ONCA says:

  • Unless your articles or bylaws state otherwise, a quorum of directors is a majority.
  • See section 34.

What is quorum for members’ meetings? The ONCA says:

  • Unless your bylaws state otherwise, a quorum of members is a majority of voting members whether present in person or by proxy.
  • See section 57.

Dissolution

Do your letters patent or bylaws explain how the nonprofit’s assets should be distributed upon voluntary dissolution? The ONCA says:

  • For non–public benefit organizations, your articles may specify how your assets are distributed. If your articles do not mention this issue, then the nonprofit’s assets will be distributed to its members in a way that reflects their rights and interests in the organization.
  • For non-charitable public benefit organizations, assets must be given to another public benefit organization with similar purposes or to a government agency.
  • For charitable organizations, assets must be given to another charitable organization with similar purposes or to a government agency.
  • See sections 150 and 167.

 

Reviewed: May 2014