Step 6: Update and file changes to articles
In steps 1-5 you made all the changes you needed to make internally to comply with Ontario’s Not-for-Profit Corporations Act (ONCA). In this final step, you will update and file the changes to your articles of incorporation (formerly known as your “letters patent”). This will make your transition to the ONCA official.
This page explains what changes you might want to make to your articles and how to file those changes to make your transition official.
What may need to change in your articles
There are many changes you can make to your articles or your bylaws, but some changes can only be made in your articles. The following are examples of changes that, if you want to make them, must be made to the articles.
You may have been incorporated a long time ago with purposes that no longer reflect what your nonprofit does. It is a good idea to take this opportunity to update your purposes to make sure they reflect your nonprofit’s current mission and activities.
If you are a registered charity, it is important to ensure that any changes you make to your purposes are consistent with charity law. You are going to have to submit the changes to the Canada Revenue Agency for approval. You need to obtain the approval of Canada Revenue Agency before you file your articles of amendment. If you do not get approval of your changed purposes from Canada Revenue Agency before filing your articles of amendment, Canada Revenue Agency may reject your changes which will force your organization to amend your purposes again. Any issues with the purposes may affect your charitable status.
ONCA, like Ontario’s Corporations Act (OCA) before it, requires that you have at least three directors. But, instead of having a fixed number of directors, the ONCA allows you to set a minimum and maximum number of directors. When preparing your articles of amendment, you must include either the fixed number of directors, or if you prefer, the minimum and maximum number of directors in the articles of amendment.
You must list your classes of members in the articles (not in the bylaws). You must include the classes of members in the special provisions section of your articles. If you want to have more than one class of members, then you must set the names of these classes out in the special provisions section of your articles. You must then set out the conditions for joining, leaving, and transferring between classes in your bylaws or articles. You may also choose to include other details.
If you only have one class of members, then each member is allowed one vote at every meeting of members. If you have more than one class of members, then you must set out the voting rights of each class of members in the special provisions section of your articles. If you don’t specify what voting rights different classes have, each member of every class of members will be allowed one vote at every meeting of members. If you want some classes of members to have more than one vote or have no votes, then you must write this in the special provisions section of your articles.
If you want your members’ meetings to take place outside of Ontario, then you must specify the location in your articles. If you do not specify the location, then all your members will have to agree to have it outside of Ontario.
Under ONCA, nonprofits have all the legal powers of a person. Decisions are made primarily by the directors. Therefore, if you want to restrict the power of your nonprofit in some way, which means restricting the powers of the directors to act on behalf of the nonprofit, you can do so by including a restriction in the special provisions section of the articles or bylaws. By including the restriction in your articles, you make it more difficult to change, since a fee and filing with the Government of Ontario is needed.
For example, some nonprofits restrict the power of the directors to borrow or to sell certain assets without approval of the members. If you want to restrict the right of the directors to borrow on behalf of the nonprofit without authorization of the members, you can include this restriction in the special provisions section of the articles, if you do not want to include this restriction in the bylaws. There are some restrictions that you can only put into the articles.
It is common for nonprofits to include a line in the special provisions section of their articles saying what will happen to the nonprofit’s property if it dissolves. For example, it is common to say that the property must be distributed to another nonprofit with similar purposes. Registered charities have to follow charity law. There are restrictions on what a registered charity can do with its property if it dissolves. For a dissolution clause to be valid, it must be included in the articles. Furthermore, public benefit corporations must follow additional rules.
Filing articles of amendment
Once you have made the necessary changes you may file articles of amendment in one of three ways: