CNCA vs. ONCA: What's the Difference and How Does It Affect Charities and Not-for-Profits?

Are you involved in a charity or not-for-profit organization? Have you heard about the new laws that will govern these organizations in Ontario? It's important to understand the differences between the Canada Not-for-profit Corporations Act (CNCA) and the Ontario Not-for-Profit Corporations Act, 2010 (ONCA). Let's explore what you need to know!

Before we dive into the details, let's understand why these changes are happening. The ONCA will replace the current Ontario Corporations Act (OCA) and (mostly) align Ontario's laws with the CNCA. This means Ontario will follow similar rules as the federal government when it comes to governing charities and not-for-profits.

What You Need to Know:

1. Incorporation:

Both the CNCA and ONCA allow individuals or corporations to form not-for-profit (NFP) corporations. However, there are differences in where the corporation must have its registered office. Under the ONCA, it must be in Ontario, while under the CNCA, it must be in a Canadian province specified in the corporation's articles.

2. Types of Organizations:

Under the CNCA, organizations are categorized as soliciting or non-soliciting corporations based on their revenue sources. ONCA, on the other hand, categorizes NFPs as public benefit corporations (PBCs) or non-PBCs, with further divisions for charitable and non-charitable corporations. This classification affects governance structures, board composition, and financial reporting requirements.

3. Number of Directors:

While both acts require a minimum number of directors, the ONCA sets specific requirements for the composition of the board, especially for PBCs. This ensures a balance of expertise and independence in decision-making.

4. Type of Directors:

The ONCA allows for ex-officio directors, unlike the CNCA, which disallows them. Ex-officio directors are appointed based on their position rather than being elected. This can influence the diversity and expertise of the board.

5. Voting Rights for non-voting members:

The CNCA grants voting rights to non-voting members, while the ONCA does not. This impacts the level of member involvement in decision-making processes.

6. Audit Exemption:

The requirements for audits vary between the CNCA and ONCA based on revenue thresholds and the type of corporation. This affects financial reporting obligations and compliance costs for NFPs.

7. Dissolution:

When a corporation dissolves, the CNCA and ONCA have different rules regarding the distribution of assets. Understanding these rules is crucial for ensuring compliance and proper handling of assets.

Understanding the differences between the CNCA and ONCA is crucial for charities and not-for-profits in Ontario. These laws affect how organizations are structured, governed, and regulated. If you need help navigating these changes, reach out to lawyers who focus on charity and not-for-profit law.

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