Introducing Bill 65, the Not-for-Profit Corporations Act (Ontario), 2010

The Ontario government introduced Bill 65, Not-for-Profit Corporations Act (Ontario), 2010 to the legislature on May 12, 2010 for first reading.  This Act, if passed, will replace the existing Ontario Corporations Act which deals with non-profit corporations.  Almost 8 million people volunteer for not-for-profits in communities across Ontario.  Why there is suddenly such a rush to replace the current Corporations Act is uncertain; it only crossed the century mark three years ago and was last updated in 1953. 

The government touts that the proposed Not-for-Profit Corporations Act will provide a modern legal framework that addresses the needs of today’s not-for-profit corporations in Ontario; that the government “is taking action to make it easier for not-for-profit corporations to operate and do business in today’s marketplace while strengthening the economy and creating jobs”.  Although often overlooked, Ontario’s not-for-profit sector is not insignificant.  It employs about 16 per cent of all employed Ontarians.  It generates nearly $50 billion in annual revenues. The new Act would, if passed, provide the province’s plus or minus 46,000 not-for-profit corporations with a more modern, legal framework. 

The New Act will focus on certain areas, namely, it will enhance corporate governance and accountability, it will simplify the incorporation process and it expand rights of members and give better from personal liability to directors and officers.  The main highlights of Ontario’s proposed Not-for-Profit Corporations Act are as follows.  First there will be a simplification of the incorporation process. The current incorporation process is complex and lengthy, normally taking six to eight weeks to incorporate. Under the new Act, incorporation could take only a few days.   There will be an enhancement of corporate governance and accountability by providing a statutory duty of care for directors; and, at the same time, providing specific protection from liability for directors.  Likewise, member democracy will be enhanced by expanding member remedies to ensure that the directors are acting in the corporation’s best interests. It will allow for a less expensive review engagement or audit exemption in appropriate circumstances on one hand, while increasing transparency for financial information and access to records when disciplinary action is contemplated against a member on the other hand. Finally, the new Act will allow not-for-profit corporations to expand their ambit of activity to include more commercial activities as long as the revenues are reinvested in the corporation’s not-for-profit purposes (we saw a foreshadowing of this with the recent abolition of the Charitable Gifts Act which the writer reported to you in a another article.

This statute is an attempt to harmonize with other Canadian jurisdictions that have modern legislation, such as the Canada Not-for-Profit Corporations Act which received Royal Assent on June 23, 2009 and the Saskatchewan Non-profit Corporations Act, 1995.  The proposed changes come out of extensive consultations across the province which includes three consultation papers, a web advisory panel to engage in online consultation with key stakeholders on preliminary policy recommendations and held regional workshops in Ottawa, London, Toronto and Thunder Bayattended by more than 200 organizations. This initiative is part of the government’s Open Ontario plan to grow key sectors of the economy and create a climate where business can thrive.  If passed, this statute will streamline operational and administrative requirements and improving the processing efficiency of applications.  It also touches on Ontario’s Poverty Reduction Strategy by facilitating the operations of not-for-profit corporations focused on improving housing, education, food and employment assistance.