Rules for not-for-profit and charitable corporations
Learn about how the Not-for-Profit Corporations Act, 2010 (ONCA), which is now in force, modernizes the way not-for-profit corporations operate and determine if it will affect your corporation.
On this page Skip this page navigation
The Ontario Business Registry launched on October 19, 2021.
Not-for-profit corporations can use the new registry to complete transactions with the government simply and quickly. The launch of the new registry also brings into force the Not-for-Profit Corporations Act, 2010, a modern legislative framework for the not-for-profit sector.
Ontario has updated rules for not-for-profit corporations under the Not-for-Profit Corporations Act, 2010 (ONCA), that:
- simplifies the incorporation process, making it easier and more efficient
- clarifies rules for governing a corporation and increases accountability
- clarifies that not-for-profit corporations can earn a “profit” through commercial activities (for example, selling T-shirts) as long as it is reinvested to support the corporation’s not-for-profit purposes
- allows some corporations to use a "review engagement" in place of an audit
- enhances members’ rights and outline actions they can take if they believe directors and officers are not acting in the corporation’s best interest
- gives members greater access to financial records
Transition and timing
As of October 19, 2021, ONCA is in force.
The Act provides not-for-profit corporations with a three-year transition period from the date ONCA came into force to make any necessary changes to their governing documents.
It is recommended that all not-for-profit corporations, previously governed under the Corporations Act, should review and consider updating their documents by the end of the three-year transition period after ONCA comes into force, as appropriate.
The standard organizational by-law sets out the rules and procedures for how your corporation should manage day-to-day activities, such as board meetings and elections. It applies automatically to an Ontario not-for-profit corporation that does not pass an organizational by-law within 60 days after its incorporation.
How ONCA could affect your organization
ONCA generally applies automatically to every corporation that does not issue ownership shares (does not have “share capital”) that is incorporated under an act of the Ontario legislature, including not-for-profit corporations previously governed under the Corporations Act.
There are some cases where ONCA does not apply. For example, ONCA does not apply to:
- insurance corporations under Part V of the Corporations Act
- corporations without share capital that fall under the Co-operative Corporations Act
- when a statute clearly says otherwise
- companies with social purposes, like share-capital social clubs (for example, some golf, tennis or country clubs) – these companies will continue to be governed by the Corporations Act. If they were incorporated or continued under this Act, they will have a transition period of five years once ONCA comes into force. Within the 5-year transition period, they must continue as either a:
Special or private act corporations
With some exceptions, ONCA applies to not-for-profit corporations that are incorporated under special or private acts.
If there is a conflict between ONCA or one of its regulations and another act or its regulations that applies to a corporation without share capital, the other act prevails. We recommend you consult a lawyer to confirm which legislation applies.
New concepts and features
Public benefit corporations
ONCA makes a new distinction between public benefit corporations and other not-for-profit corporations.
A public benefit corporation is a charitable corporation or a non-charitable corporation that receives more than $10,000 per financial year in either:
- donations or gifts from people who are not members, directors, officers or employees of the corporation
- grants or similar financial assistance from federal, provincial or municipal governments or a government agency
The review engagement process
ONCA introduces a new process for reviewing a corporation’s financial records called the “review engagement.” This new process is less extensive than an audit and, as a result, generally less expensive.
Whether or not your corporation can use a review engagement instead of an audit or waive an audit and review engagement will depend on its revenue per financial year and whether or not it is a public benefit corporation. The following chart summarizes what type of financial review your corporation may need.
|Type of corporation||Amount of revenue per financial year||Type of financial review|
|Public benefit corporation||$100,000 or less||Waive*|
|Public benefit corporation||More than $100,000, but less than $500,000||Review engagement*|
|Public benefit corporation||$500,000 or more||Audit|
|Non-public benefit corporation||$500,000 or less||Waive*|
|Non-public benefit corporation||More than $500,000||Review engagement*|
*Approval to waive an audit or to waive both an audit and review engagement requires an extraordinary resolution, which is approval from at least 80 per cent of the votes cast at a special members' meeting where there are enough members to take a vote or if all voting members consent in writing.
Enhanced members' rights
ONCA improves the rights of voting and non-voting members of not-for-profit corporations.
A corporation must have at least one class of voting members (for example, a corporation can have two classes of members as long as at least one class has the right to vote). Each member has one vote at a member’s meeting, unless the organization’s articles say otherwise.
To ensure transparency, if a corporation has two or more classes or groups of members, it must set this out in its articles (some existing corporations may currently have this in their by-laws). Corporations must set out the conditions for memberships in their by-laws.
Where to get help
Here are some resources to help learn more about ONCA:
Plain-language guide to ONCA
A more detailed overview of the act.
A list of things you should keep in mind when transitioning to ONCA.
Law Society Referral Service
Lawyers and paralegals who provide up to a half hour of free legal consultation.
Not-for-Profit Incorporator’s Handbook
General information about not-for-profit corporations and guidelines on how to incorporate.
Office of the Public Guardian and Trustee
Information for Ontarians who use, run or donate to charities.
Charities – Canada Revenue Agency
How to register and operate as a charity in Canada.