Ontario’s Not-for-Profit Corporations Act
The Act has targeted on July 1, 2013 as the effective date to help make Ontario Not-For-Profit Corporations (NPO) more efficient and effective in their operations and governance.
NPOs can engage in profit-oriented activities if the revenue is clearly re-invested to advance one or more of the not-for-profit organization’s purposes.
Efficiencies with respect to annual fiscal year reporting
Certain exemptions from audit or review engagement requirement are available to Public Benefit Corporations defined as an charities receiving more than $10,000 in a fiscal year from donations and gifts from non-members, non-directors/officers/employees OR not-for-profit organizations that receive more than $10,000 from grants (either federal, provincial or municipal) in a fiscal year.
Conditions for audit and review exemptions for Public Benefit Corporations if:
• Annual revenue is less than or equal to 100K, the NFP can waive both audit/review with an extraordinary resolution
• Annual revenue is between 100K and 500K can waive audit and have a review engagement by extraordinary resolution
• Revenue in excess of 500K, an audit is still mandatory.
An extraordinary resolution is an approval from at least 80% of member votes.
Other not for profits (non-public benefit corporations) if:
• Annual revenue is greater than 500K, an audit can be waived and a review engagement by extraordinary resolution
• Annual revenue is less than 500K the association can waive both audit/review with an extraordinary resolution;
Enhanced Member rights:
Non-voting members will now have limited voting rights on a few issues including:
• Making certain changes that affect a class of member
• Joining or amalgamating corporations
• Selling, leasing or exchanging all or most of the corporation’s property
• Continuing to operate in another jurisdiction
There is a minimum of 3 directors that are required under the Ontario Not-For-Profit Corporations Act. For Public Benefit Corporations, 2/3 of the directors must not be employees of the corporation or any of its affiliates.