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ONCA Update and Outtakes September 2020

The Ontario Government introduced a motion #89 to the Legislature to prevent the repealing of the Ontario Not-for-Profit Corporations Act, 2010, S.O. 2010, c. 15 (the “ONCA”) which otherwise would have occurred at the end of this year for an additional year. The Legislation Act, 2006, S.O. 2006, c. 21, Sched. F provides that the Attorney General must table a report to the Legislature regarding unproclaimed Acts on one of the first five days on which the Legislative Assembly sits in each calendar year. In that report the Attorney General is required to list every Act or provision of an Act that is to come into force on a day to be named by proclamation of the Lieutenant Governor, was enacted nine years or more before December 31 of the preceding calendar year and was not in force on December 31 of the preceding calendar year. Every Act or provision listed in the annual report is repealed on December 31 of the calendar year in which the report is tabled unless it comes into force on or before December 31 of that calendar year or during that calendar year, the Assembly adopts a resolution that the Act or provision listed in the report not be repealed. In other words, Acts not proclaimed within 10 years, or provisions of them, die. The ONCA, passed in 2010, falls into that category.

The Ontario government appears to be intent upon proclaiming the ONCA, but continues to be delayed in the completion of the regulations and the online business registry.

Interestingly, the motion was more than a simple matter of housekeeping to keep the ONCA alive. The government has received much feedback about concerns raised in regarding to class voting rights and voting rights granted to non-voting members, some of the more notable changes introduced in the ONCA. Various sections of the ONCA were omitted in the motion that was tendered to extend the ONCA into 2021. This means that the sections not included in the motion will disappear from ONCA on December 31, 2020 while the balance of the ONCA will survive until December 31, 2021. The government effectively not only extended the date of the proclamation of the ONCA, but it also circuitously altered it significantly.

The full Motion read “That, pursuant to clause 10.1(2)(b) of the Legislation Act, 2006, S.O. 2006, c. 21, Sched. F, the Assembly resolve that the provisions of the Act listed below, which have not come into force in the period since their adoption, not be repealed:

            1. Not-for-Profit Corporations Act, 2010, S.O. 2010, c. 15:

            • Sections 1 to 104, sections 106 to 110, subsections 111(1), (2) , (5) and (6), sections 112 to 115,  subsections 116(1), (2), (4), (5), (6), (7), (8), (9) and (10), section 117, subsections 118(1), (2), (3), (6) and (7), sections 119 to 210, 213, 218, 221, 223, 224, 225, 227, 228, 229, 230, subsections 231(1), (3) and (4), sections 232, 233, 235, 236, 237, 238, 239, 240, 241, 242, 244, 245, 246, 247, subsections 248(2) and (3).

The sections omitted from the Motion were intended to grant members of a corporation (including non-voting members) the right to vote (including, in some instances, separately as a class) in connection with certain fundamental changes to the corporation, such as changes to the conditions, rights or privileges attaching to the membership of the corporation, the amalgamation of the corporation with one or more other corporations, the continuance of the corporation under the laws of another jurisdiction or the sale, lease or exchange of all or substantially all of the property of the corporation other than in the ordinary course of its activities.

The removal of these provisions means that unless the ONCA is declared before year end, which obviously is not likely to occur (have you heard that before?), non-voting members will not have a vote and different classes of members will not have veto over key corporate decisions when the ONCA is actually proclaimed. Those are fairly significant alterations that the not for profit sector has been agitating against for the 10 plus years that the ONCA has existed. How intriguing it is that the government quietly slipped in these omissions in the motion to extend, as opposed to directly altering ONCA, as has occurred in the past decade, or when altering the beleaguered Corporations Act, R.S.O. 1990, c. C.38 (the “OCA”) under pressure to adopt certain provisions of the ONCA that the OCA lacked but were so delayed by the tardy proclamation of the ONCA.
David van der Woerd
David van der Woerd
P: 905.572.5803
dvanderwoerd@rossmcbride.com