1. Ontario Not for Profit Corporations Act Presentation by Steven Indig
The Ontario transition guide isn’t out yet, so here are some suggestions.

2. Sport Law & Strategy Group
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3. SOME OF OUR CLIENTS

4. NFP Acts
Canada NFP Act received Royal Assent in June 2009, Regulations published February 2011 and came into force October 17, 2011 – 3 years to transition
Ontario NFP Act received Royal Assent on October 25, 2010 and is expected to come into force no earlier than mid 2014.

5. Rationale Original version enacted in 1907 Simplify the incorporation
process (electronic)
Improve corporate governance
and accountability by strict rules
Provide more rights for members
Greater access to financial records
Required Audit Requirements
Non-voting members may have voting rights

6. Benefits under New Act
Can waive appointment of auditor and audit under certain circumstances
Default by-laws available*
Allows directors to pass resolutions in lieu of holding in-person meetings (i.e.: by written confirmation or conference call)
No immediate action needed – 3 year grace period*
Bylaws need to be in compliance with the new legislation.
Default bylaws are available, but clubs should use discretion if adopting them.

7. Transition Existing not-for-profit corporations:
Will have three years after the new Act comes into force to update articles and amend by-laws to conform
At the end of the three years, these documents will be deemed to be amended to conform with the requirements of the new Act
New Corporations subject to Default Bylaws
If Corporation does not pass an organizational by-law within 60 days after the date of incorporation.
Grace period will end - January 2018.
We have until 2018 to become compliant.
However, if a new government comes into office, this may get shelved. It is best to go ahead with these changes regardless.
Federally – if not compliant, the organizations will be dissolved. Provincially, organizations won’t be dissolved if not compliant, but will be assumed compliant.

8. Types of Ontario NFP Corporations
Charitable Public Benefit Corporation, incl. religious (Charitable PBC)
Non-Charitable Public Benefit Corporations (“Non-Charitable PBC”) – receive >10k/year from public resources
Government grants (federal or provincial), and
Donations from non-members, directors, officers or employees)
Non-Public Benefit Corporations (“Non-PBC”) –everyone else

9. Audit Requirements Type of Corporation Amount of Revenue
Type of Financial Review
Public Benefit Corporation
$ 100,000 or less
Waive*
More than $100,000 but less than $500,000
Review engagement*
$500,000 or more
Audit
Non-Public Benefit Corporation
$500,000 or less
More than $500,000
*Approval to waive an audit or to waive both an audit and
review engagement requires an extraordinary resolution.

10. Membership Issues
One vote per member unless the bylaws state otherwise
Power to discipline or terminate a member requires the directors, members or any committee of directors or member to discipline or terminate
Minimum 15 days notice which must contain reasons and explain that the member has the right to be heard.
A right to a hearing (orally or in writing)
Notice of AGM 10 – 50 Days
Quorum is a majority of members unless stated otherwise in the Bylaws (Meeting may continue if quorum is not maintained)
Members may requisition a meeting (10%)
What clubs need to do: 1) Bylaws need to be compliant with new legislation, 2) Re-file Articles of Continuance, 3)Establish a Quorum (number of minimum participants) – will default to majority if not established, 4) reduce the number of membership classes.
Once the legislation comes into force, clubs will need to mail in their documents.

11. Members’ Rights Expanded
Vote by proxy (mandatory rule) unless mail in voting or alternate voting accepted (Proxy holders need not be members)
Presentation of Financial Statements
Director must present before the members at every AGM
The Financial Statements approved by the Directors
The Report of the Auditor
Copies must be provided no less than 21 days before the AGM.
Non-voting Members may vote on ‘fundamental changes’ that affect their rights.

12. FUNDAMENTAL CHANGES
A special resolution of the members and each class for the following:
change the corporation’s name;
add, change or remove any restriction on the activities that the corporation may carry;
create a new class or group of members;
change a condition required for being a member;
change the designation of any class or group of members or add, change or remove any rights or conditions of any such class or group;
divide any class or group of members into two or more classes or groups;
add, change or remove a provision respecting the transfer of a membership;
increase or decrease the number of, or the minimum or maximum number of, directors;
change the purposes of the corporation;
change the manner of giving notice to members;
change the method of voting by members not in attendance at a meeting
Every membership class needs to vote ‘yes’ for the above changes. It is recommended to decrease the number of membership classes. If different membership classes are grouped together, they may titled differently and given different membership rates, so long as their main membership title is the same. For example: Junior Members can be added to another membership category/class as Junior Participants. Honourary members – call them participants or registrants.

13. Membership Complexities
Consider whether the group in question really need to be members (or have the power to veto proposed changes!)
Consider making changes before the new Act comes into effect
A corporation that wishes to maximize its future flexibility will best avoid creating more than one class of members

14. Corporate Records Corporate records to be kept:
the articles and by-laws
the minutes of meetings of the members and of any committee of members;
the resolutions of the members and of any committee of members;
the minutes of meetings of the directors and of any committee of directors;
the resolutions of the directors and of any committee of directors;
a register of directors;
a register of officers;
a register of members; and
accounting records adequate to enable the directors to ascertain the financial position of the corporation with reasonable accuracy on a quarterly basis.
Red means members access
Red – Members have a right to see these records.
Black – Members do not need to see these records.
This should be indicated in your bylaws.

15. Directors The following will preclude a person from being a Director:
A person who is not an individual.
A person who is under 18 years old.
A person who has been found under the Substitute Decisions Act, 1992 or under the Mental Health Act to be incapable of managing property.
A person who has been found to be incapable by any court in Canada or elsewhere.
A person who has the status of bankrupt.
Non-member directors
A director of a corporation is not required to be a member of the corporation unless the by-laws provide otherwise.
Non-members can now be a director and directors can be appointed.

16. Directors All corporations must have minimum of 3
Maximum term is 4 years (if not stated term 1 – year)
Corporation may set a range of Directors determined by Special Resolution
PBC: no more than 1/3 may be employees
Sets out a statutory duty of care (higher standard) and responsibilities of directors
Better protected from personal liability - due diligence defence and statutory indemnification/insurance provisions
Includes procedures for Conflict of Interest
Conflict of interest – financial basis. Regular procedure would be removing the person from the discussion and voting.

17. Directors Removal of directors Liability to Wages Standard of Care
Ordinary Resolution of Members
If elected by a Class or Group – removal by that Class/Group
If ex-officio, removal from the position.
Maximum term of 4 years and then subject to re-election.
Liability to Wages
Six Months Wages
Vacation pay of not more than 12 months.
Standard of Care
Act honestly and in good faith with a view of the best interests of the corporation.
Exercise the care, diligence and skill or a prudent person in similar circumstance

18. Draft Bylaws
Bylaws – If the Corporation does not pass bylaws within 60 days after the date of incorporation, the default bylaws apply.
Execution of Contracts – Requires either the president or vice-president and the secretary; or two (2) directors at large or any other person by resolution. Upon signature, agreements are binding. (Signing authority not dictated by the Act).
Board Composition – Defined the minimum number required as three (3).
Term – Default period is one (1) year.
Always a good idea to look at your bylaws – see if your club is operating successfully.

19. Draft Bylaws - Directors
Filling a Vacancy – If because of member removal, the members will fill the vacancy by majority vote. If any other reason, the Board my fill the vacancy.
Remuneration of Directors – Directors will serve without remuneration.
Notice – 7 days prior to meeting unless all Directors consent. Act allows for flexibility on Notice requirements.
Quorum – Majority of Directors
Voting – Each Director has one vote and Chair will have a 2nd in the case of a tie (Contradicts Roberts Rules).
Auditor – Appointed by Members to conduct a review engagement. The Auditor may not be a Director, Officer or Employee and must be licensed.

20. Draft Bylaws - Members
Members – Members are those approved by Board Resolution or named in the Articles.
Discipline – Required 30 days notice; Conduct to be determined by the Board; Notice to contain reasons for discipline; Member entitled to provide written submission (Act allows discretion as to discipline process but must be at least 15 days notice).
Annual Meeting – Requires not less than 10 and not more that 50 days written notice with a copy of the financial statements and auditors report. Notice of each meeting must remind the Member of the right to vote by proxy.
New Business – Requires to be provided to Secretary prior to the notice.

21. Draft Bylaws - Members
Quorum – Majority of voting members whether present or by proxy. (Act allows flexibility with respect Quorum but should be a fixed number or percentage.) If a quorum is present at the opening, the members may proceed even if quorum is no longer present, unless the bylaws state otherwise.
Voting – Each member entitled to one (1) vote.

22. Recommendations
Compliance will require a careful plan of changes to membership and board structures, all of which require member engagement and approval.
3 years seems like a long time but we think its important to start now.
Some orgs. may take advantage and also change their legal name (NUANS search)
Ensure by-laws do not conflict with the way your organization operates or the Act.

23. BYLAW OVERVIEW Registered Office Membership Membership Categories
Qualifications of Membership
Admission of Members
Membership Fees
Withdrawal and Termination of Membership
Members in Good Standing
Governance
Directors
Powers of the Board
Discipline of Members
Election and Appointment of Directors
Eligibility and Nomination
Decision
Terms
Resignation and Removal of Directors
Filling a Vacancy on the Board
Meetings of the Board
Notice
Quorum
Voting
Electronic Meetings
Officers
Committees
Remuneration
Conflict of Interest
Meetings of Members
Location and Date
Notice
New Business
Quorum
Voting and Proxies
Finance and Management
Fiscal Year
Auditor
Books and Records
Signing Authority
Amendment of Bylaws
Dissolution
Indemnification
Adoption
Bylaws are governed by the membership – AGM approval.
Anything above and beyond the items listed above should be included in individual policies to which the board of directors governs. Ex. Code of Conduct, Discipline, etc. These items can be approved at the regular board meetings.

24. For more information, visit:
Steven Indig
There is a blog on the website with up-to-date items.