After one of the wettest springs in history, Ontario was blessed with a hot, dry summer, allowing many to participate in various activities. One of the questions raised as Ontarians returned to their favourite social activities was “how will the new Not-for-Profit Corporations Act, 2010 (the New Act) affect my favourite sports or social club?”
Once in force, the New Act will replace the Corporations Act (Ontario) (the Existing Act), which currently regulates Ontario’s not-for-profit corporations, including those with share capital having objects of a social nature (Social Club).
The Exiting Act will continue to apply to Social Clubs for up to five years after the New Act comes into force. Social Clubs will have five years to apply, by way of special resolution of the shareholders, to be continued under the New Act as a corporation without share capital, as a corporation under the Business Corporations Act (Ontario), or as a co-operative corporation under the Co-operative Corporations Act (Ontario) (collectively, the Continuing Acts). If a Social Club fails to continue under one of the Continuing Acts by the fifth anniversary of the coming into force of the New Act, it will be dissolved, subject to saving provisions contained in the Existing Act.
While Social Clubs will have five years to make the decision faced by other organizations within three years, they will have to consider the advantages and disadvantages of each of the Continuing Acts. We will explore this further in future updates.