Changes to the ONCA
On September 21, 2020, the Government of Ontario passed a motion that made a major change to Ontario’s Not-for-Profit Corporations Act (ONCA).
This change takes effect on January 1, 2021. It applies to nonprofits that have:
- more than one type of membership, and
- at least one type of membership that does not have the right to vote.
ONCA was going to give:
- non-voting members the right to vote on important decisions like mergers and winding down the non-profit, and
- each type of membership a collective veto on important decisions like changing member rights.
This is no longer true. Non-voting members and membership types that don’t have voting rights, will not get the right to vote on important decisions after ONCA comes into effect.
COVID-19 emergency measures for nonprofits and charities
In response to COVID-19, the Government of Ontario passed some laws and guidelines that make it easier during the pandemic for:
- nonprofits to hold members’ meetings and board meetings, and
- charities to access funds if they’re in danger of closing.
Options for holding meetings
To help nonprofits hold board and members’ meetings safely during COVID-19, the Government of Ontario passed some laws and guidelines earlier this year. These changes apply until December 31, 2021.
Here are some of the things a nonprofit can do even if their letters patent or bylaws do not allow it or don’t say anything about it.
- Non-profits can hold members’ meetings and board meetings online or by phone. But if you hold a board meeting online or by phone, directors must be able to speak, listen to, or live chat each other at the same time.
- The chair of a members’ meeting that is held online or over the phone can decide how members will vote to elect directors. The chair can decide to ignore what the nonprofit’s bylaws say about how to vote, if the method isn’t practical during COVID-19.
- The chair of a members’ meeting that is held online or over the phone can decide how to record votes taken at the meeting. The chair can decide the best way to do this if, for example, a member asks how votes will be recorded.
Deadline for annual members’ meetings
If the deadline for your annual members’ meeting would have been:
Then your new deadline is:
during the state of emergency
October 22, 2020
within 30 days of the state of emergency ending
November 21, 2020
Accessing restricted funds
The Office of the Public Guardian and Trustee (OPGT) has developed temporary guidelines to help charities that are in danger of closing due to lack of funds. These charities may be able to use the income and capital of restricted purpose trust funds to continue their day-to-day operations.
Usually, charities can only use restricted purpose trust funds for specific reasons.
A charity has to meet certain conditions and get permission from the PGT before it can use these funds.
Changing your bylaws before the ONCA takes effect
While the government is working to bring Ontario’s Not-for-Profit Corporations Act (ONCA) into force, they’ve said their target is no longer early 2020. No new date has been announced yet. Most nonprofits should not make changes to comply with the ONCA, as certain rules haven’t been published.
If your nonprofit’s interested in changing your bylaws either to bring them closer to ONCA or for other reasons, here are some things to keep in mind.
We’re now known as Nonprofit Law Ontario! Our site began in 2013 to help nonprofits “Get Ready for the ONCA”. Over the years however, we added content on other areas of nonprofit law. Our new name better reflects the information, resources, and tools our site now offers.
The Ministry of Government and Consumer Services funded Community Legal Education Ontario (CLEO) to develop “Get Ready for the ONCA”. This funding has now ended. CLEO is exploring options to maintain our nonprofit law content. We’ll do our best in the interim to respond to the questions that you send us.
We thank the Ministry of Government and Consumer Services for their financial support over many years.
In January 2018, many important parts of the Cutting Unnecessary Red Tape Act, 2017took effect. The Act, also known as Bill 154, makes changes to current laws and brings us closer to Ontario’s Not-for-Profit Corporations Act, 2010 (ONCA). The government has said they are working to bring ONCA into force as early as possible.
Bill 154 changes OCA and ONCA
Below is a quick overview of some of the most important changes that…
Bill 154 makes changes to Ontario’s Corporations Act. Because of these changes, you now have some new options. In some cases you will need to change your bylaws to take advantage of these new options.
These new options make it easier to:
Hold meetings of members…
Unless your bylaws do not allow it, you can have meetings of members over the phone or electronically. You can also give notice of a meeting of members electronically.
Recruit directors outside the nonprofit…
If your bylaws allow it, you can have directors who are not members of your nonprofit.
Remove troublesome directors…
If your letters patent or bylaws currently require a two-thirds majority vote at a meeting of members to remove a director, you can take out that requirement and now remove a director with just over half of the votes at a meeting of members.
Waive an audit for small nonprofits…
If your nonprofit receives less than $100,000 in revenue in a year, you can now waive an audit for that year with 80 percent of the votes in favour at a meeting of members.
Some changes in Bill 154 don’t require any action on your part but they are still good to know about.
What’s expected from directors…
Whether your director is a lawyer or a lumberjack, the same basic things are now expected of all directors.
What can incorporated nonprofits legally do…
Before January 13, 2018, an incorporated nonprofit could only do what the OCA, its letters patent, and its bylaws said it could do. Now, an incorporated nonprofit can do everything an individual can do unless the law, its articles or its bylaws say it cannot. In all cases, nonprofits should only do things that help achieve the goals listed in its letters patent.
What happens when the OCA conflicts with other laws…
If the OCA conflicts with other laws, for example, charity law, then those other laws should be followed.
Bill 154 contains a number of important changes to the ONCA that nonprofits and charity lawyers requested. Since Bill 154’s changes to the ONCA will not take effect until the ONCA takes effect, you do not need to worry about them now.
Here are some highlights:
- The sections giving non-voting members certain important voting rights will be delayed to at least 3 years after the ONCA takes effect.
- The sections giving each class of voters a collective veto on important decisions will also be delayed to at least 3 years after the ONCA takes effect.
- Nonprofits no longer have to give their members proxy voting rights, unless your bylaws say so. Bylaws can say that only members are allowed to be proxies. Also, your bylaws can provide for mail-in or electronic voting if you wish.
- Ontario Nonprofit Network
- Gray, Whitley LLP
- Carters Professional Corporation (OCA) (ONCA)
- Drache Aptowitzer (OCA) (ONCA)
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