Not-for-Profit Transitions

For those who may have forgotten, the relatively new Canada Not-for-Profit Corporations Act (CNCA) came into force in the fall of 2011. Among other things, the CNCA replaced Part II of the Canada Corporations Act (CCA), which previously provided corporate governance rules for federal not‑for‑profit organizations for close to a century.

Federal not-for-profit corporations incorporated under Part II of the CCA were given three years to transition to the CNCA to avoid dissolution. However, even if you missed the October 17, 2014 transition deadline, it may not be too late to complete the transition (as dissolution is not automatic, and there is a 120 day grace period in which to comply even after you receive a formal notification that Corporations Canada plans to dissolve your not-for-profit corporation).

As a reminder, there are generally 5 steps in the federal not-for-profit transition process:

1. Review the current Letters Patent and Bylaws, and decide whether to retain or remove any provisions that are no longer required.
2. Prepare Articles of Continuance (if the corporation is also a registered charity, the draft Articles of Continuance should be sent to the Canada Revenue Agency for pre-approval before filing them with Corporations Canada).
3. Amend the Bylaws in accordance with the new requirements, default provisions, and choices available under the CNCA.
4. Obtain member approval at a members’ meeting duly called under the corporation’s existing corporate governance rules (with approval by at least two-thirds of the members).
5. File the Articles of Continuance with Corporations Canada, along with the initial registered office address and first board of directors form, and the amended Bylaws (note that the Bylaws can be filed within 12 months of their confirmation by the members).

Although the Ontario Not-for-Profit Corporations Act (ONCA) passed third reading in the provincial legislature in 2010, it has not yet been proclaimed in force. In order to be proclaimed, additional legislation must be introduced to deal with technical amendments required to implement the ONCA. This bill (titled “Bill 85” in its most recent form) was in the midst of second reading in May of 2014 when the last provincial election was called, and thus “died on the order paper”. As a result, a new bill will have to be re‑introduced and the legislative process started all over again (beginning with first reading, followed by second reading, committee review and third reading, and finally Royal Assent).

The ONCA is thus unlikely to take effect before 2016, and existing Ontario not-for-profit corporations will still have a period of three years from the date it is proclaimed in force to implement the required changes.