ONN Asks the Minister of Consumer Services to Make Amendments to the Ontario Not-for-Profit Corporations Act

December 6th, 2011 by Iler Campbell LLP

The Ontario Nonprofit Network writes, in a press release:

The Ontario Not-For-Profit Corporations Act (ONCA) is due to be proclaimed in the fall of 2012. However, many organizations in the nonprofit sector will have great difficulty using the Act and face the risk of it destabilizing the governance mechanisms of their organizations. We believe that our proposed amendments to the Act, as outlined in the attached brief (pdf), will make it a model piece of nonprofit corporate legislation.

ONCA Background: The ONCA was designed to maximize uniformity with the Ontario Business Corporations Act. The new Act has many favourable components, namely

  • the contemporary approach to incorporation as a right;
  • the provision recognizing a nonprofit corporation’s right to earn revenues to support its mission; and
  • the modernization of e-mail as a legitimate form of notice and other important legislative improvements.

However, the intent and purpose of a nonprofit organization with its commitment to mission is very different from that of a business corporation with its responsibility to maximize value for shareholders. Thus, this legislation presents serious problems for nonprofit organizations.

Nonprofits: The public, funders and those in the nonprofit sector believe that nonprofit organizations in their communities all meet the same core criteria; they all

  • have a public purpose and mission;
  • operate for the public good not personal gain;
  • reinvest any excess revenue in its public purpose; and
  • retain their assets in the public domain for the public good.

Unfortunately, in its current form, the ONCA does not permit the sector to meet these four basic criteria.

Nonprofit organizations need to follow this issue very closely. Please read the full brief for details. ONN has forwarded the attached briefing note along with a letter to the Minister of Consumer Relations requesting a meeting with her and her officials to discuss the proposed amendments. We are very optimistic this meeting will occur early in the new year and as a result of this dialogue, anticipate the modest changes outlined in our submission will be incorporated into the legislation prior to its proclamation.

We will keep the sector posted as we move forward.

ONCA Amendments (PDF)

Brian Iler is a member of ONN’s Non-profit Corporations Act Expert Committee, and is ONN’s liaison to the Ontario Bar Association’s Charities and Non-profit Law Section.

Filed in: Not for Profit Law

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