While the Not-for-Profit Corporations Act, 2010 (“ONCA”) was passed in 2010, it has yet to be proclaimed into force. Bill 154, Cutting Unnecessary Red Tape, introduced on September 14 by the Ontario government, includes the necessary enabling legislation which will bring the ONCA one step closer to proclamation (as of October 3, 2017 the bill has been carried at second reading and referred to a Standing Committee). Bill 154 proposes a few key changes for not-for-profit and charity organizations that are worth highlighting:
Consistency with the Business Corporations Act (Ontario)
First, the amendments to the ONCA will make the ONCA more consistent with the Business Corporations Act (Ontario) thereby facilitating the continuation of corporations under the ONCA. The Minister to whom the administration of the ONCA is ultimately assigned will also be given much more robust powers to make regulations under the ONCA.
Focus on Technology
The Act further supports the use of technology by allowing, for example:
- the use of electronic signatures;
- ONCA notice requirements to be fulfilled by electronic means and/or by telephone;
- directors to participate in board meetings by telephone or electronic means (provided the by-laws do not prohibit such participation and all directors consent); and
- any person entitled to attend a meeting of members to participate by electronic or telephonic means if the corporation makes such facilities available.
Proxy Rules Refined
The rule regarding proxies will be clarified under the proposed amendments. As the ONCA currently reads, every member of an organization is entitled to vote at a meeting through a proxyholder, who need not be a member. Under Bill 154, a member may appoint a proxyholder only if the articles or by-laws so permit. This proxyholder does not need to be a member of the corporation unless the articles or by-laws of the corporation require it.
Delegation of Director Duties
Another proposed change under Bill 154 will allow a director to delegate any or all of the her duties and powers under the ONCA to any person, not just to any public servant employed under Part III of the Public Service of Ontario Act 2006 as the Act currently provides.
No Deemed Amendments
Finally, Bill 154 removes the deemed amendment provisions of the ONCA and will therefore require letters patent, supplementary letters patent, by-laws or special resolutions to be formally amended to remove or replace provisions that are inconsistent with the ONCA rather than deeming them to be amended under the Act.
We will continue to update you on the status of Bill 154 as progress is made to cut the ONCA’s red tape.