ONCA Compliance: Step-by-Step Implementation Guide for Ontario Nonprofits

If you're running a nonprofit or charity in Ontario, you've likely heard about the Ontario Not-for-Profit Corporations Act (ONCA). This legislation represents the biggest change to the nonprofit sector in decades, and navigating compliance can feel overwhelming. I've helped dozens of organizations through this transition, and I can tell you that with the right approach, it's entirely manageable.

In this comprehensive guide, I'll walk you through each step of ONCA compliance, from understanding the basic requirements to implementing specific changes to your governance structure. Whether you're just starting the process or trying to finish up your compliance efforts, this resource will help you navigate the path forward.

Understanding the Ontario Not-for-Profit Corporations Act (ONCA)

Before diving into compliance steps, it's essential to understand what ONCA is and why it matters.

Overview and Purpose of ONCA

The Ontario Not-for-Profit Corporations Act (ONCA) is modern legislation designed to:

• Replace the outdated Corporations Act (OCA) that previously governed Ontario nonprofits
• Provide more flexibility and simplicity for nonprofit operations
• Enhance corporate governance and accountability
• Increase membership rights and remedies
• Better protect directors and officers from liability
• Simplify the incorporation process

ONCA finally came into force on October 19, 2021, after nearly a decade of delays. It aims to create a more modern legal framework that addresses the unique needs of Ontario's diverse nonprofit sector.

Key Changes from Previous Legislation

ONCA introduces several significant changes from the previous Corporations Act:

• Enhanced member rights: Members gain more rights, including access to financial statements, proposal rights, and remedies for issues like oppression
• Simplified incorporation: The process requires only one incorporator rather than three and uses articles of incorporation instead of letters patent
• Public Benefit Corporation designation: Creates a special category for charities and organizations receiving more than $10,000 in public funding or donations
• Updated director and officer provisions: More clarity on duties, liabilities, and conflict of interest rules
• Modern voting and participation: Allows electronic meetings and voting in most cases
• Clearer corporate record requirements: Specific requirements for maintaining corporate records
• Default by-law provisions: If bylaws aren't filed within 60 days of incorporation or don't address required matters, default rules apply

These changes aim to bring nonprofit governance into the 21st century while creating more consistency and clarity.

Who Needs to Comply with ONCA

ONCA applies to:

• All nonprofit corporations incorporated under Ontario law
• Social clubs, professional associations, charities, service organizations, and more
• Both existing organizations and newly formed nonprofits

ONCA does NOT apply to:

• Federally incorporated nonprofits (governed by the Canada Not-for-profit Corporations Act)
• For-profit corporations (governed by the Ontario Business Corporations Act)
• Insurance corporations under Part V of the Corporations Act
• Nonprofits incorporated in other provinces or territories

If you're incorporated under Ontario law and operate as a nonprofit, ONCA compliance is mandatory.

Ontario Nonprofit ONCA Compliance Timeline

Understanding the compliance timeline helps you plan your transition process effectively.

Current Deadlines for Compliance

ONCA came into effect on October 19, 2021, with the following timeline:

• October 19, 2021: ONCA officially in force
• October 19, 2024: Deadline for existing nonprofits to transition and file Articles of Amendment
• Until transition: Existing organizations continue under OCA with their current letters patent and by-laws, except where specific ONCA provisions automatically apply

The three-year transition period gives organizations time to review their governing documents and make necessary changes.

Extension Possibilities

Currently, there are no announced plans to extend the October 19, 2024 deadline. However, based on past practice with similar legislation:

• The government might consider extensions if significant numbers of organizations are struggling to comply
• Individual extensions are unlikely to be granted
• Organizations should plan to meet the current deadline rather than counting on potential extensions

Monitor the Ontario government's announcements for any changes to compliance deadlines.

Consequences of Non-compliance

Failing to transition by the deadline has significant consequences:

• Your organization will not be dissolved automatically
• Your documents will be deemed to comply with ONCA, potentially creating internal governance conflicts
• The government may later require your organization to update documents
• You may face challenges when filing other changes with the government
• Banks, funders, and partners may question your compliance status
• Legal issues could arise from unclear governance provisions

It's far better to proactively comply than to deal with these potential complications.

If you're navigating ONCA compliance and need a quick refresher on the responsibilities of nonprofit officers in Ontario, check out ONCA 101: Rules for Officers of Ontario Nonprofits — a clear and concise video guide to help you stay compliant.

Step 1: Gathering Your Current Governance Documents for ONCA Review

The first practical step in ONCA compliance is collecting all your current governance documents.

Required Organizational Documents

You'll need to gather:

• Letters Patent (your incorporation document)
• Supplementary Letters Patent (if any)
• All current bylaws and amendments
• Governance policies
• Board structure documentation
• Membership rules and procedures
• Organizational chart
• Minutes documenting bylaw changes

These documents form the foundation of your current governance structure and will need to be assessed against ONCA requirements.

How to Locate Missing Documents

If you're missing key documents:

• Letters Patent: Request copies from the Ontario Ministry (Services Ontario)
• Bylaws: Check board minute books, past secretary records, lawyer files
• Board policies: Review past board minutes and policy manuals
• Membership records: Contact long-time members, check membership committee files

If documents truly cannot be found, you may need to create new ones as part of your ONCA compliance process.

Creating an Inventory of Existing Materials

Organize your documents by:

• Creating a spreadsheet listing all documents with dates of approval
• Noting any inconsistencies between documents
• Identifying the most current version of each document
• Flagging documents that will likely need updates
• Creating a central digital and physical repository
• Assigning someone to maintain this inventory throughout the compliance process

A comprehensive inventory prevents confusion and ensures no important provisions are overlooked.

Step 2: Review of Current Articles of Incorporation Under ONCA

Your core incorporation document needs careful review against ONCA requirements.

Identifying Elements Requiring Updates

Review your Letters Patent (soon to be Articles) for:

• Corporate name (check if still appropriate and available)
• Corporate purposes (assess for clarity and compliance)
• Special provisions (review for ONCA compatibility)
• Membership classes (evaluate if structure still serves your needs)
• Number of directors (check if range is appropriate)
• Head office location (confirm if still accurate)
• Dissolution provisions (ensure they meet current requirements)

Mark each element that appears outdated or non-compliant with ONCA.

Common Areas Needing ONCA Alignment

The most frequently updated areas include:

• Purposes: Often need modernizing or clarifying
• Special provisions: May contain outdated references to previous legislation
• Membership provisions: Often lack clarity about rights and responsibilities
• Director provisions: May not reflect ONCA's flexibility regarding term lengths and removal
• Dissolution clauses: May need updating, especially for public benefit corporations

These areas typically require careful attention during the review process.

Drafting Compliant Revisions

When revising your Articles:

• Use plain, clear language
• Ensure consistency with your planned bylaw revisions
• Consider future flexibility needs
• For registered charities, ensure CRA compliance (see our articles on charity registration and foundation types for more information)
• Verify that any special provisions are necessary and properly worded
• Draft using the government's required forms and formats
• Consider consulting with a nonprofit lawyer for complex revisions

Well-drafted revisions prevent future governance challenges and compliance issues.

Step 3: ONCA Bylaw Review and Amendments

Your bylaws likely need significant updates to align with ONCA requirements.

Mandatory Bylaw Provisions Under ONCA

ONCA requires bylaws to address:

• Conditions for membership
• Rights of members, including voting
• How membership transfers or terminates
• Notice requirements for member meetings
• Quorum for member meetings
• Proxy voting rules (if permitted)
• How directors are elected or appointed
• How officers are appointed
• Banking arrangements
• Financial year end

If your bylaws don't address these areas, ONCA's default provisions will apply.

Optional Provisions to Consider

Beyond mandatory elements, consider including:

• Detailed membership classes and qualifications
• Member discipline and termination procedures
• Electronic participation in meetings
• Absentee voting methods beyond proxies
• Director qualifications and disqualifications
• Director term limits
• Officer roles beyond those required
• Executive committee provisions
• Other committee structures
• Conflict of interest procedures
• Indemnification provisions
• Detailed notice requirements

These provisions help customize your governance to your organization's needs.

Process for Amending Bylaws

ONCA bylaws amendments typically follow this process:

1. Draft new or amended bylaws
2. Board approval of proposed bylaws
3. Member approval (usually by special resolution requiring ⅔ majority)
4. Filing with the Ministry (not mandatory but recommended)

For ONCA transition, bylaws should be updated alongside your Articles of Amendment and approved by members in a single process.

Step 4: Membership Structure Review for ONCA Compliance

Membership structures require careful review under ONCA's enhanced member rights framework.

Classes of Membership Under ONCA

ONCA allows for flexible membership structures:

• You can have single or multiple membership classes
• Each class must have conditions for membership clearly defined
• If you have multiple classes, Articles must outline voting rights for each class
• Non-voting members gain new rights under ONCA, including voting on changes affecting their class
• All members have rights to financial statements and certain corporate records

Review your current structure to determine if it still serves your organizational needs.

Voting Rights Considerations

ONCA introduces important voting rights changes:

• All members, including "non-voting" members, can vote on:
  
  • Changes affecting their class rights or conditions
  • Amalgamation
  • Sale of significant assets
  • Liquidation or dissolution
• Each member typically gets one vote (unless Articles specify otherwise)
• Organizations can permit proxy voting, voting by mail, or electronic voting
• Voting rights must be clearly documented in Articles or bylaws

Consider whether these enhanced voting rights affect your governance approach.

Transitioning Membership Structures

When updating membership structures:

• Consider simplifying overly complex structures
• Clearly define each class and its rights
• Ensure proper notice to all members about structural changes
• Plan for how existing members will transition to any new structure
• Prepare communication materials explaining changes
• Consider how changes align with your organizational mission and values
• Document the transition process for future reference

Member transitions require careful planning and communication to avoid confusion or resistance.

Step 5: ONCA-Compliant Board Structure and Governance

Your board structure and governance practices need alignment with ONCA's requirements.

Director Qualifications and Restrictions

ONCA establishes basic director requirements:

• Minimum age of 18
• Not declared incapable by court
• Not bankrupt
• Individual (not corporation)
• No requirement to be a member of the corporation (unless bylaws specify)
• No requirement to be a resident of Ontario or Canada (unless bylaws specify)

Your bylaws can add additional qualifications but cannot remove these basic requirements.

Officer Requirements

ONCA has flexible officer provisions:

• No specific officers are required by the Act
• Common officers include Chair/President, Secretary, and Treasurer
• One person can hold multiple offices (except for charities, which require separation)
• Officers don't have to be directors (unless bylaws require it)
• Officer duties should be clearly defined in bylaws
• Officers appointed by board resolution (unless Articles or bylaws specify otherwise)

Review your officer structure for clarity and compliance.

Meeting and Decision-making Procedures

ONCA modernizes meeting procedures:

• Electronic participation in meetings is permitted unless bylaws specify otherwise
• Notice requirements for board and member meetings are specified
• Written resolutions require unanimous consent of directors (no partial written resolutions)
• Proxy voting for director meetings is prohibited
• Detailed quorum requirements for member meetings
• Clear rules for calling special meetings

Update your procedures to take advantage of ONCA's flexibility while maintaining good governance.

Step 6: Filing ONCA Articles of Amendment

Once your documents are prepared, they must be properly filed with the Ontario government.

Required Documentation

To file Articles of Amendment, you'll need:

• Form 5271E (Articles of Amendment)
• Supporting documentation (board and member resolutions)
• Copy of your current Letters Patent
• NUANS name search report (if changing corporate name)
• Cover letter explaining the purpose of the filing

Ensure all documents are complete and accurate before submission.

Filing Process with the Ontario Government

The filing process typically involves:

1. Preparing all required documents
2. Filing through the new Ontario Business Registry online portal
3. Paying the required fee
4. Receiving confirmation of filing
5. Downloading your Certificate of Amendment and amended Articles

The online portal has streamlined the process compared to the previous paper-based system.

Fees and Processing Timelines

Current filing information:

• Filing fee: $130 (subject to change)
• Processing time: Usually 3-5 business days for electronic filings
• Expedited service: Generally not available for most nonprofit filings
• Additional fees may apply for name searches or other services

Budget for these costs and timelines in your compliance planning.

Step 7: ONCA Member and Board Approval Process

Proper approval is essential for valid ONCA transition.

Required Meetings and Notices

The approval process typically requires:

• Board meeting to approve proposed changes (with proper notice)
• Member meeting to approve Articles of Amendment and new/amended bylaws (with proper notice)
• Special resolution of members (typically ⅔ majority)
• Proper documentation of all meetings and decisions
• For multiple member classes, possible separate class votes

Follow notice periods specified in your current bylaws or ONCA's default provisions.

Voting Thresholds for Approval

ONCA requires specific approval levels:

• Articles of Amendment: Special resolution (⅔ of votes cast)
• Fundamental changes: Special resolution (⅔ of votes cast)
• Bylaw amendments: Ordinary resolution (simple majority) unless Articles, bylaws, or ONCA specify otherwise
• For multiple membership classes, separate class votes may be required

Verify quorum requirements to ensure valid meetings and votes.

Documentation of Decisions

Properly document all decisions:

• Detailed meeting minutes showing proper procedure
• Record of actual vote counts
• Copies of resolutions passed
• Evidence of proper notice
• Attendance records
• Copies of all approved documents in final form

This documentation may be required by the Ministry and provides important organizational history.

Ongoing ONCA Compliance Requirements

ONCA compliance doesn't end with the transition process.

Annual Filings and Reports

Ongoing requirements include:

• Annual corporate information return
• Financial statements prepared according to appropriate standards
• Reports to members at annual meetings
• Registered charity returns (if applicable)
• Other filings based on your specific organization type

Calendar these requirements to ensure timely compliance.

Record-keeping Obligations

ONCA requires maintaining:

• Articles, bylaws, and their amendments
• Minutes of member and board meetings
• All resolutions
• Membership register
• Director register
• Officer register
• Debt obligation register
• Financial records
• Proper accounting records

These records must be kept at your registered office or another location specified by the directors.

Financial Review Requirements

ONCA establishes tiered financial review requirements:

• Public Benefit Corporations:
  
  • Annual revenue up to $100,000: Members may waive audit/review by extraordinary resolution (80%)
  • Annual revenue $100,001 to $500,000: May waive audit but must have review engagement (extraordinary resolution)
  • Annual revenue over $500,000: Must have audit
• Other Corporations:
  
  • Annual revenue up to $500,000: Members may waive audit/review by extraordinary resolution (80%)
  • Annual revenue over $500,000: May waive audit but must have review engagement (extraordinary resolution)

Financial review planning should be incorporated into your annual budget and governance cycle.

Special ONCA Considerations for Ontario Charities

Registered charities face additional requirements when transitioning to ONCA.

Coordination with CRA Requirements

Ontario charities must balance ONCA and CRA requirements:

• Charitable purposes must meet both ONCA and CRA standards
• Any purpose changes require CRA approval
• Public Benefit Corporation provisions align with charity requirements
• Director remuneration restrictions are more stringent for charities
• Articles should include appropriate dissolution clauses for charities

Ensure your ONCA changes don't create CRA compliance issues. For more guidance, see our article on Canadian charity registration.

Additional Reporting Obligations

Charities have layered reporting requirements:

• ONCA corporate filings
• T3010 annual charity return
• Public disclosure requirements
• Fundraising reporting in some cases
• Grant reporting to funders
• Municipal reporting for property tax exemptions

Create a comprehensive compliance calendar to track all obligations.

Ensuring Dual Compliance

To maintain both ONCA and charity compliance:

• Review all documents from both ONCA and charity perspectives
• Consider having CRA review proposed purpose changes before filing
• Ensure bylaws address both corporate and charity requirements
• Maintain clear separation of duties for officers and directors
• Follow more stringent requirements when ONCA and CRA differ
• Keep detailed records of compliance with both regimes

When in doubt, the more restrictive requirement typically applies. For more on the distinction between charities and foundations, see our guide on private foundations vs. public charities.

Ready to bring your Ontario nonprofit into ONCA compliance? Work with B.I.G. Charity Law Group for expert guidance through every step of the transition process, ensuring your organization meets all requirements while maintaining effective governance.