Not-for-Profit Corporations Act

January 6, 2018 | Author: Anonymous | Category: Social Science, Political Science
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Ontario Not for Profit Corporations Act Presentation by Steven Indig

Sport Law & Strategy Group Providing strategic insight to the Canadian sport community through professional services in these areas: – Legal Solutions – Planning & Governance – Strategic Communications


NFP Acts • Canada NFP Act received Royal Assent in June 2009, Regulations published February 2011 and came into force October 17, 2011 – 3 years to transition • Ontario NFP Act received Royal Assent on October 25, 2010 and is expected to come into force no earlier than early 2015.

Rationale • Original version enacted in 1907 • Simplify the incorporation process (electronic) • Improve corporate governance and accountability by strict rules • Provide more rights for members – Required Audit Requirements – Non-voting members may have voting rights

Benefits under New Act • Can waive appointment of auditor and audit under certain circumstances • Default by-laws available* • Allows directors to pass resolutions in lieu of holding inperson meetings (i.e.: by written confirmation or conference call) • No immediate action needed – 3 year grace period*

Transition • Existing not-for-profit corporations: – Will have three years after the new Act comes into force to update articles and amend by-laws to conform – At the end of the three years, these documents will be deemed to be amended to conform with the requirements of the new Act – New Corporations subject to Default Bylaws •

If Corporation does not pass an organizational by-law within 60 days after the date of incorporation.

Types of Ontario NFP Corporations • Charitable Public Benefit Corporation, incl. religious (Charitable PBC)

• Non-Charitable Public Benefit Corporations (“NonCharitable PBC”) – receive >10k/year from public resources – Government grants (federal or provincial), and – Donations from non-members, directors, officers or employees)

• Non-Public Benefit Corporations (“Non-PBC”) – everyone else

Audit Requirements Type of Corporation

Amount of Revenue

Type of Financial Review

Public Benefit Corporation

$ 100,000 or less


More than $100,000 but Review engagement* less than $500,000

$500,000 or more Non-Public Benefit Corporation $500,000 or less

More than $500,000

Audit Waive*

Review engagement*

*Approval to waive an audit or to waive both an audit and review engagement requires an extraordinary resolution.

Membership Issues • •

One vote per member unless the bylaws state otherwise Power to discipline or terminate a member requires the directors, members or any committee of directors or member to discipline or terminate – –

• •

Minimum 15 days notice which must contain reasons and explain that the member has the right to be heard. A right to a hearing (orally or in writing)

Notice of AGM 10 – 50 Days Quorum is a majority of members unless stated otherwise in the Bylaws (Meeting may continue if quorum is not maintained) Members may requisition a meeting (10%)

Members’ Rights Expanded •

Vote by proxy (mandatory rule) unless mail in voting or alternate voting accepted (Proxy holders need not be members)

• Presentation of Financial Statements – Director must present before the members at every AGM • The Financial Statements approved by the Directors • The Report of the Auditor • Copies must be provided no less than 21 days before the AGM. • Non-voting Members may vote on ‘fundamental changes’ that affect their rights.

FUNDAMENTAL CHANGES A special resolution of the members and each class for the following: (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) (k)

change the corporation’s name; add, change or remove any restriction on the activities that the corporation may carry; create a new class or group of members; change a condition required for being a member; change the designation of any class or group of members or add, change or remove any rights or conditions of any such class or group; divide any class or group of members into two or more classes or groups; add, change or remove a provision respecting the transfer of a membership; increase or decrease the number of, or the minimum or maximum number of, directors; change the purposes of the corporation; change the manner of giving notice to members; change the method of voting by members not in attendance at a meeting

Membership Complexities • Consider whether the group in question really need to be members (or have the power to veto proposed changes!) • Consider making changes before the new Act comes into effect A corporation that wishes to maximize its future flexibility will best avoid creating more than one class of members

Corporate Records Corporate records to be kept: – – – – – – – – –

the articles and by-laws the minutes of meetings of the members and of any committee of members; the resolutions of the members and of any committee of members; the minutes of meetings of the directors and of any committee of directors; the resolutions of the directors and of any committee of directors; a register of directors; a register of officers; a register of members; and accounting records adequate to enable the directors to ascertain the financial position of the corporation with reasonable accuracy on a quarterly basis.

– Red means members access

Directors • The following will preclude a person from being a Director: – A person who is not an individual. – A person who is under 18 years old. – A person who has been found under the Substitute Decisions Act, 1992 or under the Mental Health Act to be incapable of managing property. – A person who has been found to be incapable by any court in Canada or elsewhere. – A person who has the status of bankrupt.

• Non-member directors – A director of a corporation is not required to be a member of the corporation unless the by-laws provide otherwise.

Directors • • • • •

All corporations must have minimum of 3 Maximum term is 4 years (if not stated term 1 – year) Corporation may set a range of Directors determined by Special Resolution PBC: no more than 1/3 may be employees Sets out a statutory duty of care (higher standard) and responsibilities of directors Better protected from personal liability - due diligence defence and statutory indemnification/insurance provisions Includes procedures for Conflict of Interest

Directors • Removal of directors – – – –

Ordinary Resolution of Members If elected by a Class or Group – removal by that Class/Group If ex-officio, removal from the position. Maximum term of 4 years and then subject to re-election.

• Liability to Wages – Six Months Wages – Vacation pay of not more than 12 months.

• Standard of Care – Act honestly and in good faith with a view of the best interests of the corporation. – Exercise the care, diligence and skill or a prudent person in similar circumstance

Draft Bylaws • Bylaws – If the Corporation does not pass bylaws within 60 days after the date of incorporation, the default bylaws apply. • Ex Officio - means by virtue of the office and not necessarily nonvoting; • Execution of Contracts – Requires either the president or vicepresident and the secretary; or two (2) directors at large or any other person by resolution. Upon signature, agreements are binding. (Signing authority not dictated by the Act). • Board Composition – Defined the minimum number required as three (3). • Term – Default period is one (1) year.

Draft Bylaws - Directors • Vacancy of Director – Upon a resolution passed by a majority of Members. • Filling a Vacancy – If because of member removal, the members will fill the vacancy by majority vote. If any other reason, the Board my fill the vacancy. • Remuneration of Directors – Directors will serve without remuneration. • Notice – 7 days prior to meeting unless all Directors consent. Act allows for flexibility on Notice requirements. • Quorum – Majority of Directors

Draft Bylaws - Directors • Vacancy of Director – Upon a resolution passed by a majority of Members. • Voting – Each Director has one vote and Chair will have a 2nd in the case of a tie (Contradicts Roberts Rules). • Telephone Participation – Legal if all Directors consent. • Written Resolutions – Upon 100% voting. • Auditor – Appointed by Members to conduct a review engagement. The Auditor may not be a Director, Officer or Employee and must be licensed. • Indemnity – Must comply with the Act and exercise the reasonable care required by the Act.

Draft Bylaws - Members • Members – Members are those approved by Board Resolution or named in the Articles. • Discipline – Required 30 days notice; Conduct to be determined by the Board; Notice to contain reasons for discipline; Member entitled to provide written submission (Act allows discretion as to discipline process but must be at least 15 days notice). • Annual Meeting – Requires not less than 10 and not more that 50 days written notice with a copy of the financial statements and auditors report. Notice of each meeting must remind the Member of the right to vote by proxy. • New Business – Requires to be provided to Secretary prior to the notice.

Draft Bylaws - Members • Special Meetings – Upon request of the Board or upon one-tenth of the Members. • Quorum – Majority of voting members whether present or by proxy. (Act allows flexibility with respect Quorum but should be a fixed number or percentage.) If a quorum is present at the opening, the members may proceed even if quorum is no longer present, unless the bylaws state otherwise. • Voting – Each member entitled to one (1) vote. • Notice - By telephone, delivered personally, or sent by prepaid mail, facsimile, email or other electronic means.

Recommendations • Compliance will require a careful plan of changes to membership and board structures, all of which require member engagement and approval. • 3 years seems like a long time but we think its important to start now. • Some orgs. may take advantage and also change their legal name (NUANS search) • Ensure by-laws do not conflict with the way your organization operates or the Act.

Preliminary Steps • • •

Gather and review current governance structure and practices; Review key features of ONCA, determine what type of corporation you are and what rules apply; Compare ONCA Rules with current governance structure to determine whether changes should be made prior to continuance; Consider changes affecting membership rights, timing needed for approval, and potential conflict with default by-laws


Registered Office Membership – Membership Categories – Qualifications of Membership – Admission of Members – Membership Fees – Withdrawal and Termination of Membership – Members in Good Standing Governance – Directors – Powers of the Board – Discipline of Members – Election and Appointment of Directors • Eligibility and Nomination • Decision • Terms – Resignation and Removal of Directors – Filling a Vacancy on the Board – Meetings of the Board • Notice • Quorum

• • • • •

• Voting • Electronic Meetings – Officers – Committees – Remuneration – Conflict of Interest Meetings of Members – Location and Date – Notice – New Business – Quorum – Voting and Proxies Finance and Management – Fiscal Year – Auditor – Books and Records – Signing Authority Amendment of Bylaws Notice Dissolution Indemnification Adoption

Current Board Composition GENERAL STRUCTURE. • The affairs of the Corporation shall be managed by a Board of twelve (12) Directors each of whom at the time of his election or appointment or within ten (10) days thereafter and throughout his term of office shall be registered as a Member of the Corporation

Proposed Board Composition The Board will consist of the following: a) Six (6) Regional Directors b) Five (5) Directors-at-Large c) One (1) Athlete Director

Current Member Composition GENERAL STRUCTURE. 1.17.2 There shall be nine (9) classes of Membership in the Corporation, namely: Charter Members (6); Registered Member (75)s; Associate Registered Members (12000); Registered Affiliate Members; Ontario Ringette Associate Registered Affiliate Members; Affiliate Members; Associate Members; Honorary Members; and Life Members.

Proposed Member Composition Registered Member – A ringette club association that is registered as a member of the Corporation and has agreed to abide by the Corporation’s By-laws, policies, procedures, rules and regulations.

For more information, visit: Profit.aspx Steven Indig 647-348-3080 [email protected]

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