Deadline for Ontario Not-For-Profit Corporations to Transition Under the ONCA is Fast Approaching
The deadline for Ontario not-for-profit corporations to transition under the Ontario Not-for-Profit Corporations Act, 2010 ("ONCA") ends on October 18, 2024. This deadline is fast approaching.
The ONCA was proclaimed into force on October 19, 2021. As of its proclamation, the ONCA automatically applies to all non-share capital corporations under Part III of the Ontario Corporations Act ("OCA"). For the first three years after proclamation (i.e., until October 18, 2024), any provisions in their letters patent, supplementary letters patent, by-laws or special resolutions that are inconsistent with the ONCA would continue to apply and take precedence over any inconsistent ONCA requirements.
During these three years, corporations may undertake an optional transition process to amend their letters patent (by adopting articles of amendment) and to adopt ONCA-compliant by-laws to bring them intro compliance with the rules in the ONCA.
If no transition process is undertaken during this three-year period, commencing on October 19, 2024, any provisions in their letters patent, supplementary letters patent, by-laws, or special resolutions that are inconsistent with the ONCA will be deemed (subject to a few exceptions listed in subsection 207(3) of the ONCA) to be amended to comply with the ONCA. The problem with this deeming approach is that it will be difficult and confusing to determine which provisions are deemed to be amended and in what way they are to be deemed to have been amended to comply with ONCA.
It is now the end of August 2024. For those corporations that have not started the transition process, there may not be sufficient time to complete the transition process in time by October 18, 2024. While the good news is that failure to undertake or complete the transition process by this date would not result in the dissolution of the corporations, it would likely be difficult to live with the automatic deeming mechanism in the long run going forward. It would therefore be prudent for these corporations to speak with their legal counsel on the appropriate action to be taken as soon as possible to ensure compliance with the ONCA.
However, it is important to note that the October 18, 2024 deadline does not apply to share capital social club corporations under Part II of the OCA. These corporations have 5 years (i.e., until October 18, 2026) to continue out of the OCA and be continued under 3 options: (i) a non-share capital corporation under the ONCA, (ii) a co-operative under the Ontario Co-operative Corporations Act, or (iii) a share capital corporation under the Ontario Business Corporations Act. Although some social clubs have already completed their continuance, there are still many that have yet to do so. This continuance process is much more complicated than the transition process for non-share corporations explained above. With a little more than two years left, it would be prudent for these corporations to seek legal assistance to commence this process as soon as possible.
Read the August 2024 Charity & NFP Law Update
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.