What happens under ONCA when a not-for-profit corporation looks to dissolve?

When a not-for-profit corporation in Ontario is looking to dissolve under the Ontario Not-for-Profit Corporations Act (ONCA), it is of utmost importance to meticulously follow specific steps regarding the handling of assets. This ensures that your organization remains compliant and responsible even during the dissolution process.

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If your organization is a Public Benefit Organization (but not a charity), you are required to distribute your assets to one or more of the following:

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1.        A public benefit organization that shares a similar purpose;

2.       Registered charity;

3.       Government agency or

4.       Municipality

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It's crucial to remember that you must adhere to this distribution process, even if your articles or bylaws suggest otherwise. This clear guidance ensures that your organization's assets are distributed in a secure and legal manner.

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The asset distribution process for charities is as follows: give your assets to a registered charity with a similar purpose. Alternatively, you can transfer them to a government agency or a municipality. Again, this applies regardless of any conflicting provisions in your articles or bylaws.

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If your organization does not fall under the public benefit category, it's important to follow the guidelines set out in your articles. In the absence of specific instructions, the assets should be distributed among your members in a manner that respects their rights and interests within the organization.

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If your nonprofit was incorporated before the ONCA came into effect (October 19, 2021), it's essential to review, update, and file your governing documents with the Ontario government by October 18, 2024. This proactive step ensures your organization's preparedness and compliance with the legal requirements during the transition period.

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In summary, this article guides the steps a not-for-profit corporation in Ontario must take when dissolving under the Ontario Not-for-Profit Corporations Act (ONCA). It emphasizes the importance of following specific asset distribution processes to remain compliant and responsible during the dissolution process.

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