A3 ontario not for-profit corporations act-lynn eakin_2011 ed forum

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  • Organized as a sector in 2007 to do “everybody’s” and “nobody’s” business. Specifically to contribute to the Ontario Nonprofit Corporations Act. Discovered ONN is a huge game changer with government and others. The sector is now a “somebody” and we have our own voice/voices.Inter-Sector collaboration has exceeded all expectations for rising to the challenge and backing our collective efforts.
  • Quick Wins for funding reform: evergreen contracts, budget flexibility; long term (Joint Task Force) AG: Negative value to continue focus on expenditures not outcomes
  • Quick Wins for funding reform: evergreen contracts, budget flexibility; long term (Joint Task Force) AG: Negative value to continue focus on expenditures not outcomes
  • A minority government – three times the work. Deficit reduction strategy – peril and opportunity. Needing to change in a woefully constraining regulatory regime. A government and public dangerously ignorant of the size, scope and role of the sector. A history of not investing in ourselves especially when times are tough.
  • A minority government – three times the work. Deficit reduction strategy – peril and opportunity. Needing to change in a woefully constraining regulatory regime. A government and public dangerously ignorant of the size, scope and role of the sector. A history of not investing in ourselves especially when times are tough.
  • A minority government – three times the work. Deficit reduction strategy – peril and opportunity. Needing to change in a woefully constraining regulatory regime. A government and public dangerously ignorant of the size, scope and role of the sector. A history of not investing in ourselves especially when times are tough.
  • A minority government – three times the work. Deficit reduction strategy – peril and opportunity. Needing to change in a woefully constraining regulatory regime. A government and public dangerously ignorant of the size, scope and role of the sector. A history of not investing in ourselves especially when times are tough.
  • A minority government – three times the work. Deficit reduction strategy – peril and opportunity. Needing to change in a woefully constraining regulatory regime. A government and public dangerously ignorant of the size, scope and role of the sector. A history of not investing in ourselves especially when times are tough.
  • A minority government – three times the work. Deficit reduction strategy – peril and opportunity. Needing to change in a woefully constraining regulatory regime. A government and public dangerously ignorant of the size, scope and role of the sector. A history of not investing in ourselves especially when times are tough.
  • A minority government – three times the work. Deficit reduction strategy – peril and opportunity. Needing to change in a woefully constraining regulatory regime. A government and public dangerously ignorant of the size, scope and role of the sector. A history of not investing in ourselves especially when times are tough.
  • A3 ontario not for-profit corporations act-lynn eakin_2011 ed forum

    1. 1. Presentation to OCASI Conference November 10 and 11, 2011The Ontario Not-For-Profit Corporations Act 1
    2. 2. Background On ONCA• Legislation dates from 1917 providing social clubs for veterans• Not revised for 50 years• During that time sector grew and evolved its nonprofit way of doing things• Viewed as last piece of corporate legislation to modernize, drafters goal was to have it similar to business corporate law and federal nonprofit corporate legislation. 2
    3. 3. Where We are Now• Consultation with sector in 2007, shifted ministries 3 times• Tabled in the Legislature on closure, Spring 2010• Ontario Not-for-Profit legislation passed in Fall of 2010• Government currently working on Guides and draft By-Laws• Scheduled to be proclaimed late 2012• Three year period after proclamation to comply otherwise deemed to have complied .• ONN is asking for amendments to ONCA prior to proclamation 3
    4. 4. Overview of Corporate Legislation• Provides the Organizational “bones” of corporate governance – members, Directors, corporate purposes, formation, dissolution, roles and responsibilities, meetings, borrowing etc.• Covers all not-for-profit corporations including - Charities (who are also nonprofits) (60%) - not-for-profit corporations providing public benefit (25%) - not-for-profit corporations serving their members ( 14%) - not-for-profit corporations with equity membership (-1%)
    5. 5. Basic features• Incorporation as a right, electronically• Corporation has rights, powers and privileges of a natural person• Statutory Duty of Care for Directors –reasonable care, honestly,in good faith and in the best interests of the corporation.•Review engagements rather than audits for small organizationsand under $100,000 can be waived altogether with member vote.•Allows for modern communications – email notice etc. 5
    6. 6. Basic features continued…•Maximum term for directors 4 years- no limit on renewals,•Directors need not be members, sliding number of directorspermitted• Corporations allowed to engage in commercial activities if profitsare reinvested in support of the organizations not-for-profitpurpose. **** (Not currently supported under federal legislation)• A draft By-law will be provided.•Other legislation e.g. Income Tax Act and CRA trumps this act. 6
    7. 7. Complicated feature #1 Public Benefit Corporation• Charities and not-for-profit corporations receiving $10,000 from a third party are “Public Benefit Corporations” (federally called soliciting corporations)• Charities are always and permanently Public Benefit organizations – minimum of three directors, and have a higher threshold of accountability and non-distribution constraint.• Non-charities receiving $10,000 become temporary Public Benefit corporation for the next three years. (yo-yo corporations)
    8. 8. ONN Amendment # 1• Provide an Opt-in option to a clear definition of Public Benefit corporation for nonprofits providing public benefit that are not charities.• Provide a permanent non-distribution constraint for nonprofit organizations opting to be public benefit corporations.• Eliminate the $10,000 trigger. Member benefit corporations would never be public benefit corporations. ( no yo-yo corporations)
    9. 9. Complicated Features # 2 Member Rights• Members have enhanced access to financial records and access to members and director lists.• Members can call a meeting of members with 10% of members• Members can pass binding resolutions on Boards of Directors. (Usually member resolutions are only advisory)• Members can take the Directors to court if they believe they are not acting in compliance with the act, regulations, articles and by-laws.
    10. 10. Complicated Features #2 Member Rights• All classes of members have votes on important corporate issues including non-voting members who are treated like minority shareholders.• Members have proxy rights to any person and/or the corporation must allow for electronic voting.• All members can receive articles of incorporation and by- laws free of charge.• Classes of members have to be in Articles (letters Patent). They are now in by-laws.• Changes to articles have to be reapproved by CRA who may review all articles *** amending articles is risky with CRA.
    11. 11. ONN Amendments• Restrict member voting to member business. Make member resolutions nonbinding.• Make non-voting members non-voting.• Make proxies optional and restrict proxy holders to members.
    12. 12. Complicated Features #3 Directors• Act provides for paying directors, and allowing up to one third of directors to be employees. *** (prohibited for CRA charities)• Strengthened conflict of interest guidelines.• Can purchase liability insurance and indemnify directors.• If Directors resign then senior staff acts in their stead. (implications yet to be fully understood.)
    13. 13. ONN Amendments• Restrict member voting to member business. Make member resolutions nonbinding.• Make nonvoting members non-voting.• Eliminate mandatory proxy or electronic voting.
    14. 14. Its your network. Sign upwww.ontariononprofitnetwork.ca 14
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