Tens of thousands of Ontario non-profit corporations that were originally incorporated under Part III of the Corporations Act (Ontario), had a 3-year transition period during which to bring their constating documents (i.e. letters patent, by-laws, etc.) into conformity with the Ontario Not-for-Profit Corporations Act (“ONCA”). The 3-year transition period ended on October 18, 2024. Now the default provisions of ONCA will be deemed to apply, subject to certain exceptions, to ONCA corporations.
It is not clear how many non-profits have made necessary changes to bring themselves into compliance with ONCA, but I am going to guess that it is a very small minority. The Ontario government has done almost nothing to assist groups with these governance changes, and these changes, especially for registered charities, are much more complex than many organizations understand.
So, for the vast majority of Ontario non-profits that have not dealt with this transition, either because they were not aware or could not get around to dealing with the changes, what should they do?
ONCA groups essentially have two options. Bring their organization into alignment with ONCA or move to the Federal Canada Not-for-profit Corporations Act (“CNCA”). We will only look at the first option in this note.
Doing nothing is not really an option for many groups. Doing nothing could, at some point, be quite problematic as your group’s governing documents will probably not be compliant with ONCA. In addition, from a practical point of view, it will be difficult for staff and directors to understand and interpret documents, their governing documents and specifically whether what they are reading is not actually what is required because some provisions of ONCA may override your corporate documents. The final reason for groups to update their documents is that often the governing documents are completely outdated and not appropriate for the non-profit. For example, purposes that are no longer relevant for a charity or rules in your letters patent and by-laws that are no longer being followed or don’t make sense. It is amazing how much change there is in this world – but some non-profits think that documents created 50 or 70 years ago are just fine! Many groups should have made changes decades ago, but better late than never.
It is important to note, as some may be confused, that, unlike the Federal CNCA transition that happened about ten years ago, an Ontario non-profit that does not meet the deadline or make changes under ONCA will not be dissolved.
Here is a rough outline of the typical steps involved in bringing an Ontario non-profit’s Letters Patent, Supplementary Letters Patent, if any, and By-laws into conformity with ONCA.
- Obtain a “company key” from the Ontario Ministry of Public and Business Service Delivery (the “Ministry”).
- Review of your organization’s Letters Patent, Supplementary Letters Patent (if any) and By-laws and discussion about matters such as purposes, corporate name, membership, board of directors, terms of directors, etc. and whether you wish to make any changes along with the ONCA transition.
- Preparation of Articles of Amendment (Ontario Form 5271E), Restated Articles of Incorporation (Ontario Form 5273E) and a new By-law under ONCA.
- Preparation of the necessary Board Resolution and Special Resolution of the members of the Corporation to approve the Articles of Amendment, Restated Articles of Incorporation and new By-law;
- Review of draft documents by the Corporation and providing comments and suggested changes. Final documents to be approved by a Resolution of the board of directors and a Special Resolution of the members.
- If your group is a registered charity, and your purposes have not been approved recently by CRA (and you have no changes in activities), it is recommended to either seek pre-approval from CRA, Charities Directorate, before formally amending the purposes of the charity or at least providing the new governing documents after they are passed with a detailed statement of activities. This process can be time-consuming and may take 10-12 months because of a backlog at CRA for CRA to review and possibly ask for further information and to approve the proposed purposes.
- Update the list of directors and address for service of each director with the Ministry. (When Restated Articles of Incorporation are filed with the Ministry and the Ministry issues a Certificate of Restated Articles of Incorporation, the Ministry will automatically also include in the document the names and addresses of the directors of the Corporation on record with the Ministry. Since the Certificate of Restated Articles of Incorporation and Restated Articles of Incorporation will become a public document (anyone can request a copy from the Ministry upon payment of the requisite fee), we suggest that, if any directors are concerned about privacy and listing their residential address, residential addresses not be listed with the Ministry but that a director’s business address (provided it is not a PO Box address) or the office address of the Corporation be listed as the director’s address for service.)
- If the Corporation is also changing its corporate name as part of the transition process, a NUANS Name Report will need to be obtained in order to determine if the proposed new name is available for use as a corporate name under the ONCA. If the new corporate name will have the word “Charity”, “Charitable” and “Foundation”, or a variation thereof, the organization must seek approval from the Ontario Public Guardian and Trustee (“PGT”).
- If you are a registered charity and if you have obtained CRA’s pre-approval of any proposed purposes, PGT’s pre-approval of the new corporate name and purposes (if applicable) and if the resolutions mentioned above have been passed, then you can proceed with filing Articles of Amendment (Ontario Form 5271E) and Restated Articles of Incorporation (Ontario Form 5273E). While the Ontario Ministry’s standard processing time is 5 to 7 business days, it often takes over a month as the Ministry is backlogged. We would mention that there is a $130 government filing fee for filing Articles of Amendment and $130 government filing fee for filing Restated Articles of Incorporation). Upon receipt of the Certificate of Amendment and Certificate of Restated Articles of Incorporation issued by the Ontario Ministry, submit copies of the said documents to CRA for their acceptance and records.
- If you are a registered charity and if you have not obtained CRA’s pre-approval of your purposes, then upon receipt of the Certificate of Amendment and Certificate of Restated Articles of Incorporation issued by the Ontario Ministry, you need to provide to CRA your purposes and a detailed statement of activities for their review and approval.
- You should register or amend business names with the Ontario Ministry, if applicable.
This is a lot of work and a lot of documents. However, when one makes these changes, and a law firm is involved, it would generally be as a package with all the documents included, such as Articles of Amendment, Restated Articles of Incorporation, By-laws, directors’ consents, Notices, Resolutions for directors, resolution for members, etc.
Also, these documents, such as Articles and by-laws, will generally come into effect at the same time, namely after the Articles of Amendment are effective. Generally, as the old OCA and new ONCA are so different, you don’t want to pass your new by-laws and have them be effective before the Articles are effective.
If your organization requires assistance with the ONCA transition, let us know, and we may be able to assist.
We are often asked about fees, and it is complicated as every organization is different. The cost for our law firm to assist with these changes generally depends on the time involved.
As a rough estimate, if one is a non-profit and not a charity/registered charity, the corporate changes to amend your Ontario governing documents to either be compliant with ONCA or to continue to Federal jurisdiction under the CNCA would typically involve legal fees of around $5,000 – 7,000 plus HST and disbursements which could be between $500 – 700, over a period of approximately 5-8 months. This is a rough estimate, but the actual cost will depend on the time spent on the file.
For a registered charity, the governing documents will ultimately be provided to the CRA, and it is important that your purposes are appropriate. CRA is not “grandfathering” purposes, and therefore, even if they have been approved by CRA in the past, it does not mean that they are acceptable anymore. More importantly, CRA does not just review purposes but wants to see both purposes and a detailed statement of activities. The CRA review process used to be 2 months but is now backlogged and taking about 10-12 months typically. Therefore, for a registered charity, there are the corporate costs referred to above and also the costs of dealing with the CRA on purposes, which, depending on the nature of the changes, can be approximately $3,000 – $6,000 plus HST but can in some cases be more, depending on your current purposes and activities and CRA’s questions and requirements.
This rough estimate does not include costs when an Ontario corporation is part of an umbrella organization that has specific requirements around incorporation and operations.
If you want to understand more about the costs and complexities of giving estimates for ONCA changes, you can also see our blog on this topic.
Why it is difficult to provide an estimate for legal services relating to ONCA transition or CNCA continuance for an existing non-profit or charity or registered charity
The more assistance we get from clients, the less time we need to spend and consequently the costs are kept down.
We have placed numerous documents and articles on the internet relating to ONCA in our directory dealing with ONCA. Here is our ONCA directory with resources: https://cancharlaw.thewire.dev/blog/category/onca/
If you wish to retain our law firm, you can reach us through our contact us page.