Associations across the province will undergo a major change in the coming years when the provincial government starts enforcing new legislation governing non-profits.
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Lawyers and organizations that have studied the Ontario Not-for-Profit Corporations Act say it’s still too early for associations to begin making major revisions to how they do business because the specific details of the legislation are still not clear.
But significant changes are on the horizon, the biggest of which affects organizations with different membership classes.
The new act enables non-voting members to have a formal say on major issues such as selling the organization’s assets.
That has created concern with some associations, said Kimberley Cunnington-Taylor, an Ottawa-based lawyer with Nelligan O’Brien Payne, since an organization will have to obtain separate approvals from members of all classes when undergoing such changes.
By way of example, the Canadian Bar Association would have to get approval from its non-voting class of students if it wanted to do something like disband, Ms. Cunnington-Taylor pointed out.
“All of these people who are nominally members may in fact have rights under the new act to vote in certain circumstances,” added Adam Aptowitzer, an Ottawa-based lawyer with Drache Aptowitzer LLP.
That’s created unintended consequences, according to Brian Iler of Iler Campbell LLP. Many of the non-profits with whom he’s spoken have decided to eliminate that class of members entirely so they don’t have to deal with the issue in the future.
It’s still unclear if those and other provisions will see the light of day, though. Tracy MacCharles, the province’s minister of consumer services, announced at the end of March she would be reviewing the role of non-voting members and other provisions of the legislation.
“I intend to undertake a thorough consultation across the sector to assess how this issue should be addressed to serve the interests of corporations, their boards and their members,” she wrote in a March letter to the Ontario Nonprofit Network industry group.
The letter said she would be reviewing other components of the legislation as well.
The act, as it stands now, also calls for a number of changes with regards to how members can vote without being physically present, said Ms. Cunnington-Taylor.
Associations will now be able to hold a vote even when members can’t attend in person, using methods such as as telephone or e-mail.
The legislation will come into force no earlier than January of next year. Associations will have three years after that to become compliant.
Most associations have to revise letters patent and bylaws by then to comply with the new legislation. It provides a perfect excuse to update long-out-of-date paperwork, noted Harold Feder of BrazeauSeller.LLP.
“It’s a good opportunity for a little housecleaning and taking a look at the governance documents.”