This page tells you what Ontario’s Not-for-Profit Corporations Act (ONCA) says about directors and officers.
If you incorporated before ONCA was proclaimed on October 19, 2021, your bylaws or articles may not comply with the rules explained below. You have until October 18, 2024 to review, update, and file your governing documents with the Ontario government. Until then, the rules in your articles and bylaws continue to be valid. This is true as long they were valid before the ONCA took effect.
You must have at least 3 directors. Your articles can specify a minimum and maximum number of directors (section 22). The minimum can be 3 or more.
The maximum amount of time, or term, a director can serve for is 4 years, but there is no limit on how many times a director can be re-elected (Section 24). The default bylaw sets a one-year term for directors, or until the next election is held. However, you can change the length of your directors’ term in your bylaws.
The length of your directors’ terms can be different. If you want to have a “rolling board” (Section 24), your directors must have different lengths of terms.
But if you want them to be members, you have to put this in your bylaws (Section 23).
Your bylaws can say a person can be a director because of their office (Section 23).
Directors appointed by the board during the year stay on the board only until the next annual meeting (Section 28).
Section 41 of the ONCA has rules about directors’ conflicts of interest. You must follow these rules. Your bylaws cannot say that they don’t apply.
Yes, employees can be directors of a nonprofit if the nonprofit is not a public benefit corporation or a charity.
For public benefit corporations, only one-third of the directors can be employees of the nonprofit or of any of its affiliates (section 23). An organization is considered an affiliate of a nonprofit if the nonprofit controls it, or they are both controlled by the same organization or person (Section 3). So an individual joining the Board of a public benefit corporation may wish to know whether this limit has already been reached.
In all cases, the director must follow the conflict of interest rules that apply directors. This means immediately declaring the existence of the conflict and not being present at any meeting where the contract with the individual is discussed.
|For charities, there are very limited circumstances under which an employee is allowed to be a director. This guide provides more details about what those situations are and what procedures the charity must follow.|
You can pay directors, officers, and members a reasonable amount for the work they do in another capacity, and for the expenses they have when doing that work. But if your bylaws say you cannot pay them, then you cannot (section 47).
|Registered charities should be aware of charity law and CRA restrictions on remuneration. For charities, in some situations, you can get permission from the Public Guardian and Trustee to pay your directors. You can’t pay them for the work they do as directors. For more information see this guide.
If an entire board resigns, the senior staff member becomes legally responsible for whatever the nonprofit does until the members meet and elect a new board of directors.
No, the ONCA says they won’t be one until they agree to it in writing, for example, in a letter. The letter can say: I, (INSERT NAME OF DIRECTOR), consent to act as director of (INSERT NAME OF NONPROFIT) beginning on (INSERT DATE OF ELECTION).
The director has to sign the letter, which must also include their mailing address. The nonprofit must keep their letter agreeing to be a director. (section 24).
There are three ways in which an individual can be removed as board member:
- The members vote at a members’ meeting to remove the board member (50%+1) or pass a unanimous written resolution outside of a members’ meeting.
- The individual ceases to qualify as a director. For example, if a director is required to be a member, then if the director is removed as a member they would automatically stop being a director.
- The individual resigns or is deemed to resign. For example, articles or bylaws can provide that a director is deemed to resign if they engage in certain conduct or miss a certain number of meetings per year.
No one but the members have the right to unilaterally decide that a director is removed.