Meals charities make up a few of Canada’s oldest not-for-profits. These charities proceed to play an integral half in Canada’s public assist structure. In our expertise working and volunteering with meals charities, the operations on the bottom are wholly consuming: employees, administration and administrators are enthusiastic about pursuing the charitable functions of the group. At occasions, non-operational points of some charities can find yourself shuffled down the agenda at board conferences, for higher or worse.
It’s for these organizations in Ontario, meals targeted or not, who we write to on this weblog publish. We wish to inform meals charities and not-for-profits that they possible have optimistic authorized obligations to maneuver their company from previous laws to new. Maybe in a extra optimistic vein, this transition – referred to as a “continuance” – presents Ontario charities and never for earnings the chance to re-evaluate how they have interaction with members and different key stakeholders. It’s a time to show a corporation’s thoughts to the query of whether or not it’s structured appropriately to make sure compliance with Ontario’s laws and engagement with its neighborhood.
The Ontario Not-for-Revenue Companies Act, 2010
The Ontario Not-for-Revenue Companies Act, 2010 (“ONCA”) got here into power on October 18, 2021, changing the earlier Ontario Companies Act (“OCA”). Each not-for-profit in Ontario is required to amend their present articles by way of the method of continuance to adjust to ONCA by October 18, 2024.
ONCA ushers in a brand new period for not-for-profits. It’s designed to permit not-for-profit firms to perform extra like a standard enterprise company. In some ways it follows the same construction to the Canada Not-for-Revenue Companies Act which got here into power on June 23, 2010, and regulates federal not-for-profit firms.
Key Modifications Underneath ONCA
Though ONCA continues to function with members, quite than shareholders, ONCA gives further rights to those members that resemble these of shareholders. Considerably extra info is contained within the articles quite than by-laws, and there are clear majorities and thresholds set forth in ONCA. An indicator of OCA not-for-profits and charities was that the company was, to a big diploma, merely left to the members and administrators to set out of their by-laws. By comparability, ONCA is much extra prescriptive. Different key options of ONCA, embrace: the transition from the time period “letters patent” to the time period “articles of incorporation”, the flexibility for not-for earnings to have functions of their articles that are business in nature, and the requirement of a minimal of three administrators who don’t should be members, except the by-laws state in any other case.
Concerns for Not-for-Income: Membership
These enhanced membership rights imply that members have rights underneath ONCA which should be thought-about in relation to the needs of the group. Accordingly, from a course of perspective, reviewing membership class phrases must be accomplished earlier than continuance. If you’re creating a couple of class of membership, these courses and their voting rights have to be outlined within the articles. The by-laws will doc the extra situations required for membership.
Not-for-profits can create one, or two or extra completely different courses of membership with various situations of membership. Frequent not-for-profit membership classes embrace:
1. Closed Membership: The administrators and members are the identical people. Different members may be known as a non-membership class, like associates, associates, supporters, or congregants.
2. Open Membership: Anybody who helps your not-for-profit’s imaginative and prescient, mission, and values can turn into a member.
3. Semi-Open/ Conditional Membership: Situations of membership may be outlined within the bylaws. For instance, bylaws can specify who can turn into a member, how they’ll turn into a member, what code of conduct they have to comply with to remain a member, and the utmost variety of members. The situations of membership can not take away the rights that members have underneath ONCA (for instance voting proper if there is just one class).
4. Self-Perpetuating Membership: Administrators don’t need to be members underneath ONCA. Nevertheless, bylaws can say that administrators would be the solely members. This construction is named “self-perpetuating” as a result of the administrators, appearing as members, elect all new administrators.
5. Hybrid Membership: The administrators are your solely voting members, and a non-voting class is open to anybody who helps your not-for-profit’s work.
6. Consultant Membership: The administrators make up one class of voting members. Even have a number of different voting courses made up of members who’re elected by and signify various kinds of stakeholders.
Different Concerns for Not-for-Income
Though not-for-profits will not be required to go new bylaws throughout continuance, strategically it is smart to make sure your articles and bylaws align along with your group’s imaginative and prescient and mission similtaneously continuance. These adjustments could embrace amendments to each the articles of incorporation and the by-laws themselves.
There are a selection of different small and basic adjustments between the OCA and ONCA. We advocate for all not-for-profits to fulfill with a lawyer to debate how this transition will immediately impression their company. If you’re a meals not-for-profit in Ontario, ONCA will apply to you. The continuance includes varied steps and drafting of some paperwork to switch the company to ONCA. If you happen to require recommendation and assist concerning the transition to ONCA, please contact us at information@gsjameson.com.
