Business corporations in Ontario are generally incorporated under the Business Corporations Act (Ontario) (OBCA). Not-for-profit corporations in Ontario may be incorporated under the Corporations Act (Ontario) (OCA) (generally under Part III). The OCA specifically does not apply to corporations incorporated under the OBCA (OCA section 2).
The Not-for-Profit Corporations Act (Ontario) (ONCA) was passed in 2010, but as of the date of writing, it has not yet been proclaimed into force. When it does come into force, corporations without share capital formed under Part III of the OCA (which is the case for many Ontario not-for-profit corporations) will be governed by the new ONCA (ONCA subsection 4(1)). Corporations incorporated federally under the Canada Not-for-profit Corporations Act (CNCA) will not be affected by the new ONCA.
When the ONCA is proclaimed into force, not-for-profit corporations under the OCA will have 3 years to become compliant with the ONCA. After the 3 year transition period, to the extent the governing documents of the not-for-profit corporation are not in conformity with the ONCA, the provisions of the ONCA will take precedence (ONCA section 207).
When it comes into force, the ONCA will, among other changes:
- simplify the incorporation process
- clarify that not-for-profit corporations can earn a “profit” through commercial activities as long as it is reinvested to support the corporation’s not-for-profit purposes
- allow some corporations to use a review engagement instead of an audit
- enhance members’ rights
Certain corporations with share capital formed under the OCA, which might apply to some golf, tennis, country, or social clubs, will have 5 years after the ONCA comes into force to transition into either a non-share capital corporation under the ONCA, a share capital corporation under the OBCA, or a co-operative corporation under the Co-operative Corporations Act (Ontario).