How Can Members Remove Directors Under ONCA?

In Ontario, nonprofit organizations are governed by the Ontario Nonprofit Corporations Act (ONCA). Recently, ONCA introduced significant changes to how directors can be removed by members. This shift has important implications for how nonprofits operate in the province. Let’s explore these changes in detail and understand their significance.

The Change: Simpler Majority to Remove Directors

Old Rule: Previously, under ONCA, if members of a nonprofit wanted to remove a sitting director, they often needed a two-thirds majority vote. This high threshold was set by the organization's bylaws or articles of incorporation.

New Rule: Now, under ONCA, members can remove a director with just a simple majority (51 percent) vote during a members’ meeting. This change means that it’s easier for members to hold directors accountable and make changes to the board.

Why This Change Matters

Accountability to Members: Directors of a nonprofit are accountable to the members. They make crucial decisions that affect the direction and success of the organization. By lowering the voting threshold to a simple majority, members now have a stronger voice in who represents them on the board.

Updating Governing Documents: Nonprofits must ensure their governing documents, such as bylaws and articles of incorporation, reflect this change. If these documents still require a two-thirds majority to remove a director, they are outdated and could wrongly prevent members from exercising their rights.

Empowering Stakeholders: This shift empowers stakeholders, giving them more control and ensuring that the board represents the current will of the members. It also encourages directors to remain accountable and responsive to the needs and concerns of the membership.

Steps Nonprofits Should Take

1. Review and Update Governing Documents: Nonprofits should immediately review their bylaws and articles of incorporation. Any provisions requiring more than a simple majority to remove a director should be updated to comply with the new rule under ONCA.

2. Educate Members: It’s essential to inform members about their rights and the new process for removing directors. Clear communication ensures that all members understand how they can participate in governance.

3. Regularly Schedule Member Meetings: Frequent and regular member meetings provide opportunities for members to discuss and vote on important issues, including the removal of directors if necessary.

4. Encourage Active Participation: Nonprofits should encourage active participation from their members. When members are engaged and informed, they can better exercise their rights and contribute to the organization’s success.

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The ability to remove directors with a 51 percent vote is a significant change in nonprofit governance under ONCA. It simplifies the process, enhances accountability, and ensures that the board remains responsive to the members' needs. Nonprofits must update their governing documents and educate their members to align with this new rule. By doing so, they can strengthen their governance practices and ensure that their organization operates effectively and democratically.

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