These legal documents, filed with the Ontario government, set out your corporate name, the province where your registered office is located, the purposes of your nonprofit (also called your “objects”), and the names of the people who incorporated your nonprofit (usually the first board of directors). Articles (for short) are the same as “letters patent”. Most nonprofits are incorporated under the Ontario Corporations Act (CA) with letters patent. The ONCA calls these same documents “articles”.
Articles include any changes that are filed with the government since you incorporated, for example, if you changed your nonprofit’s name or purposes. These are called articles of amendment, or under the CA, supplementary letters patent.
This independent and systematic review of your financial statements and accounting records determines if they are a true and fair record. Under the ONCA, an auditor must be a certified public accountant who is independent of the nonprofit. Auditors also perform financial review engagements.
These are the rules adopted by the directors and members to govern the internal operations of a nonprofit. Bylaws include rules for dealing with different issues, such as calling and conducting meetings of directors and members, and establishing the qualifications and duties of officers. The ONCA has some requirements that must be in your bylaws, but bylaws may modify or give alternate rules for areas that are optional in the ONCA. Or they may deal with issues not mentioned in the ONCA.
Canada Revenue Agency (CRA)
The Charities Directorate of the Canada Revenue Agency is the federal government department that is responsible for approving and regulating registered charities.
A conflict of interest is a situation where a person in an official position can benefit themselves or someone they are close to, from something they can do in that position. An example of this is a director deciding on a contract that their family member has bid on.
A corporation without share capital is a corporation whose goals do not include gain or profit for its members. Any profit the corporation makes must be used towards its goals and not given to its members. A non-share capital corporation has members, not shareholders.
- A for-profit corporation or “company” has shareholders instead of members. Unlike members of a non-share capital corporation, these shareholders may get profits paid in the form of dividends.
The Ontario government has provided a draft organizational bylaw that meets the requirements of the ONCA. It is called a “default” bylaw because it will automatically apply to a new nonprofit that incorporates under the ONCA unless that nonprofit passes its own organizational bylaw within 60 days after the incorporation date.
Existing nonprofits don’t need to adopt the default bylaw as is. You can submit your own bylaw that complies with the mandatory requirements of the ONCA but adds the options or additional provisions you want. There are requirements in the ONCA that aren’t duplicated in the default bylaw, so you may want to refer to the ONCA legislation as well.
The process through which a nonprofit’s existence is legally ended. Dissolution can happen voluntarily, by court order, or by the unilateral action of the Director appointed by the Minister of Government and Consumer Services in accordance with the ONCA.
A fiduciary duty is a duty to act in the best interests of vulnrable people. Because nonprofit corporations cannot look after their own interests, directors of nonprofits are expected to look after their best interests for them.
A financial review engagement is less time-consuming and less expensive than an audit. A certified accountant that is independent of your nonprofit provides assurance that the financial information confirms to generally accepted accounting principles and is plausible. The degree of assurance from this review is less than what results from an audit.
An in-camera meeting is a type of board meeting that is usually attended only by its board directors. Other people, for example, a member, non-member, or staff, might attend an in-camera meeting if they’ve been invited to it. But they don’t have a right to attend. An in-camera meeting is sometimes called an executive session.
“Incorporating” means making your nonprofit an independent legal body. Before January 13, 2018, an incorporated nonprofit could only do what the OCA, its letters patent, and its bylaws said it could do. For example, it could only borrow money if its letters patent or bylaws said it could.
After January 13, 2018, this will no longer apply. An incorporated nonprofit can do anything, as long as:
- the activity helps achieve the goals in its letters patent, and
- the activity is not prohibited in any law or in your articles or bylaws.
A nonprofit doesn’t have to incorporate. If it does not, it stays as an unincorporated association.
“Indemnify” means to compensate someone financially for damage, injury, financial loss, or legal liability. For example, if a board member is sued for something they did or didn’t do for the nonprofit that was part of their role as a board member, then the nonprofit may cover some or all of their legal costs. Many nonprofits indemnify their board members.
“Liability” means that the law holds you responsible for something. For example, if a director of a nonprofit does something that they are not allowed to do in that role, they may be held personally liable, for their actions. They may get sued by those who suffered as a result of their action or inaction.
“NUANS” is an acronym for Newly Upgraded Name Search. It is a computerized search system that checks if an organization wanting to incorporate has a proposed name that is similar or identical to an existing organization. Before incorporating a nonprofit in Ontario, you must get a NUANS report.
“Officer” means president, chair of the board of directors, vice-president, secretary, assistant secretary, treasurer, assistant treasurer, manager or any other person labeled an officer by the by-laws of the corporation. In addition to being officers, the president and the chair of the board of directors must also be directors or members of the not-for-profit corporation. Other officers do not have to be directors or members unless the by-laws require it.
When proclaimed, a piece of legislation takes effect and is considered to be in force. The ONCA was debated and passed by the Ontario legislative assembly in 2010, but it is not yet in force. The ONCA will apply to new nonprofits as of the proclamation date targeted for early 2020. The three-year transition period provided in the ONCA for existing nonprofits will start as of the date of proclamation targeted for early 2020.
In the ONCA, a proposal is “any matter that the member proposes to raise” at an annual members’ meeting. (Section 56(1)) Only members with voting rights can submit proposals, and the proposals must meet all of these conditions:
- Members must submit proposals to the nonprofit at least 60 days before the date of the meeting.
- The proposal must clearly:
- Relate in a significant way to the affairs and activities of the nonprofit.
- Not be primarily to enforce a personal claim or grievance against the nonprofit or against its directors, officers, members, or against people or corporations who are owed debts by the nonprofit.
- Not abuse the right to put forward a proposal in order to secure publicity. (Section 56(6)(f))
- If a proposal includes nominations for the board of directors, the proposal must be signed by at least five percent of members with voting rights or a lower percentage as set out in the nonprofit’s bylaws. If there is no proposal, members still have the right to nominate directors at the meeting.
Members with voting rights are entitled to discuss at the annual meeting any matter that would have qualified as a proposal, even if they do not submit a proposal in advance.
Nonprofits must meet their obligations related to member proposals:
- They must include the proposal in the notice of the annual members’ meeting.
- If requested by the member making the proposal, the nonprofit must include the following with the notice of the meeting: member’s name, address and a statement from the member supporting the proposal.
The proposal and the statement must, together, not go over the maximum number of words or characters allowed for proposals (this number will be determined in the ONCA’s regulations). The member must cover the costs of circulating the proposal and the statement, unless the bylaws state otherwise or more than a majority of the members present at the meeting where it is presented vote otherwise (Section 56(3) and 56(4)).
The nonprofit does not need to accept a proposal if:
- “Substantially the same proposal” was submitted to the members in a notice of an annual members’ meeting within the last two years and that proposal was defeated (Section 56(6)(d)), or
- The member submitted a proposal that was included in a notice of an annual meeting to members within the last two years but the member failed to present the proposal to the meeting either in person or by proxy. (Section 56(6)(e))
If the nonprofit intends to refuse a member’s proposal, it must let the member know within 10 days of receiving the proposal that it intends to send out the notice of the meeting without the proposal, and include the reasons for the refusal.
Public benefit corporation (PBC)
The ONCA makes a distinction between nonprofit that serve the public and nonprofit that primarily serve their members, like clubs and trade associations. Registered charities are automatically public benefit corporations. Whether other nonprofits are public benefit corporations or are non-public benefit corporations depends on their funding. Learn more.
Public Guardian and Trustee (PGT)
This is the short name for the Office of the Public Guardian and Trustee (PGT), which is part of Ontario’s Ministry of the Attorney General. The PGT plays a role in regulating charities, as part of protecting the public interest in charitable property.
A minimum number of people entitled to vote at a meeting must be present for business to be conducted. The default quorum for directors’ and members’ meetings under the ONCA is a majority of directors or members, but you can set a different quorum for either kind of meeting in your bylaws.
Reviewed: Sep 2017