Charity and Not-For-Profit

ONCA delay provides 'golden opportunity' to Ontario non-profits

A further two-year delay in updating Ontario’s Not-For-Profit Corporations Act is a “golden opportunity” for organizations to take a good long look at their structure in preparation for inevitable change, says Toronto lawyer Taras Kulish.

Kulish, a senior associate practising corporate-commercial, intellectual property and charity/not-for-profit law at Steinberg Title Hope & Israel LLP, says the announcement by the Ministry of Government and Consumer Services comes after more than two years of ongoing efforts to update not-for-profit corporations in Ontario.

The changes were to be originally tabled under Bill 85 but it died when the provincial election was called in 2014.

In a statement, the provincial government said Ontario’s Not-For-Profit Corporations Act (ONCA) “cannot come into force until the Legislative Assembly passes a number of technical amendments to the legislation and related acts and technology is upgraded to support these changes and improve service delivery.”

It pledged to bring about the changes “at the earliest opportunity” and to provide at least 24 months’ notice before proclamation. Existing corporations will have a three-year transition period once ONCA is in force. It also said there would be assistance “to ensure a smooth transition to implementation.”

Kulish tells this delay is a golden opportunity for many non-profits to review what they do and to think about what they want to be going forward.

“Many smaller organizations are fearful of making the changes and have been putting them off. They either don’t have the money to pay a lawyer or they don’t understand that big changes are coming,” he says. “It’s human nature really, but they should be getting their ducks in a row.”

Bylaws and constitutions should be reviewed, Kulish says, to be ensure compliance with the ONCA once it comes into force.

For example, Kulish says, one of his clients is a mosque that is in the process of incorporating another mosque into its fold, with the two institutions operating under one umbrella.

“As often happens with different religious organizations, there are different factions with differing ideas about what direction they want to go,” he says. “So this all adds to the time it takes to get a consensus.”

The mosque in question wants to settle the question now of different classes of membership and powers of founders, so it started a review process in committee, came up with recommendations and has engaged Kulish to ensure that their desires will dovetail with the anticipated new requirements of the ONCA.

But, he adds, any time there are passions involved — such as working with causes concerning animals, assistance to victims of cancer, or the environment to name just a few — there are potentially going to be conflicts and delays. Kulish says this can also happen when an organization has been founded by a visionary but at some point new members want to go in a different direction.

As such, non-profits should start considering and making the changes now so they will be ready to file when the rules are updated.

“We don’t know exactly what all the technical amendments to the legislation and related acts will be, but at least we know the content of the ONCA,” Kulish says. “So, it's a good time to look at the constitution, bylaws, who should be a member within the definitions of the act, what the purpose or object of the organization is and how they can control members who don’t support or subscribe to that purpose.”

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