On May 12, 2010 the Ontario government introduced Bill 65, the Not-for-Profit Corporations Act, 2010 (the Act). Bill 65 is the result of consultations that have been taking place between the government and non-profit organizations across Ontario since 2008. As of October, the Not-for-Profit Corporations Act has entered third reading debate in the House.

How it will affect non-profits

The purpose of Bill 65 is to modernize the existing Ontario Corporations Act, which deals with non-profit corporations. Last updated in 1953, the proposed new Act accounts for new technologies and permits the use of electronic notifications instead of requiring newspaper announcements to alert board members of upcoming meetings.

Bill 65 will apply to any non-profit housing corporation incorporated under the Ontario Corporations Act. It will not affect co-operatives or local housing corporations that are incorporated under different acts.

What non-profits will need to do

Non-profit housing corporations will need to be aware that when it comes into effect, Bill 65 will make it necessary for current letters patent, by-laws, and supplementary letters patent to be amended within a three year period. If a non-profit corporation does not amend these documents within three years, Bill 65 states that they will be deemed to be amended to the extent necessary to conform with the new Act.

This may create some confusion if a non-profit hasn’t actually amended their documents. It is in a non-profit’s best interest to amend their current letters patent and by-laws to conform to the Act in order to avoid confusion. To assist with this, the government will be making available information guides and standard organizational by-laws to help non-profits comply with the new Act.

Benefits of Bill 65

While Bill 65 will mean changes for non-profits, it contains many positive safe guards that will benefit not-for-profit organizations across Ontario, such as:

• Clarifying the liability of directors by replacing common law duties of care with an explicit statutory standard of care, introducing due diligence and good faith reliance defences, expanding the rights of directors to indemnification and allowing unrestricted liability insurance coverage;
• Allowing not-for-profit corporations to engage in commercial activities where the revenues are reinvested in the corporation’s not-for-profit purposes; and
• Enhancing corporate governance and accountability in that persons who enter into contract with a not-for-profit corporation will generally be entitled to presume that the contract has been properly authorized.

For more information on the many ways Bill 65 will affect not-for-profit corporations, as well as information on upcoming consultations and submissions check out the Ontario Non-profit Network’s website .

You can also view the Bill, its current status and review background information on the website of the Ontario Legislative Assembly.