Recent legislation has been introduced, both federally and in the province of Ontario, that will create significant changes to not-for-profit entities that operate under these jurisdictions. These new pieces of legislation (the ‘Canada Not-for-profit Corporations Act’ (‘CNCA’) and the ‘Ontario Not-for-profit Corporations Act’ (‘ONCA’)) will replace old legislation with the intent of modernizing the legislation relating to the not-for profit sector.
What Are the Changes for Not-for-profit Organizations
Although both the new pieces of legislation attempt to reach the same goal, there are differences between them. A brief overview of the new items of each is discussed below.
CNCA offers a new, clear set of rules for those that offer internal governance of not-for-profit businesses. The CNCA offers more flexibility to make business decisions, such as amalgamations, that were previously not allowed under the prior legislation. It also aims to simplify business processes, giving an objective standard to assist the board of directors and others who provide management and governance.
Any not-for-profit organization incorporated under the Federal Act may be required to make changes to their incorporating documents and bylaws prior to October 17, 2014. As such we recommend federally incorporated not-for-profit organizations contact their legal counsel to discuss this issue.
The ONCA offers changes to the not-for-profit sector as well. ONCA has streamlined the process to incorporate, significantly reducing the time it takes to register. It also allows additional remedies to members when they feel that the mission of the not-for-profit is not being properly represented.
The ONCA also has expanded definitions within the not-for-profit sector, distinguishing between charitable and non-charitable organizations, as well as public benefit and non-public benefit ones.
The new legislation for Ontario not-for-profit organizations is expected to come into force on July 1, 2013. This legislation allows organizations three years to make any required changes to their incorporating documents and bylaws. This would require the organization to make required changes prior to July 1, 2016.
For further advice or assistance with these or any other financial issues, please contact a Millards representative at (519) 759-3511.