Corporate Update
June 2020 Charity & NFP Law Update
Published on June 25, 2020

By Theresa L.M. Man

Ontario Releases Proposed Regulations for Corporate Legislation

In another step towards bringing the Ontario Not-For-Profit Corporations Act, 2010 (“ONCA”) into force, Ontario’s Ministry of Government and Consumer Services published Proposed regulations to support proclamation of the Not-for-Profit Corporations Act, 2010 (the “Draft ONCA Regulations”) on June 5, 2020.

Two draft regulations were released – a Draft General Regulation and a Draft Corporations Sole Regulation. The Draft General Regulation contains provisions related to technical matters under the ONCA, including setting out standards and requirements for financial statements, corporate registers, and proxy form; setting out what information that must be in writing (such as directors’ or auditors’ resignations, and members’ consent to the dissolution of a corporation).

The Draft Corporations Sole Regulation lists 55 provisions under the ONCA that apply to corporations sole, with applicable modifications. A corporation sole is a corporation constituted in a single person who, in right of some office or function, has corporate status. It is created by special legislation. Unlike other not-for-profit corporations, corporations sole do not have boards of directors, officers, or members. Examples of ONCA provisions proposed to apply to corporations sole include: section 5 regarding conflict with other law; section 15 regarding the corporation having the capacity, the rights, powers and privileges of a natural person); section 46(1), (6) and (7)(a) regarding indemnification of directors and officers, and ability to purchase and maintain directors’ and officers’ insurance, subject to meeting the requirements of the Ontario Charities Accounting Act by charitable corporations; and section 77 regarding requirements for annual financial reviews. The Draft Corporations Sole Regulation also defines the individual whose office is the corporation sole as being the “office holder”. Where certain sections of the ONCA refer to directors and officers, modifications have been made for those sections to instead apply to office holders in the case of corporations sole. Examples of these modified sections include section 40 liability to employees for wages; subsection 46(1) and (6) indemnification and insurance provisions; sections 70, 72, 75, 78 and 79 audit provisions; and remedy provisions under sections 182 and 191.

In addition to the Draft ONCA Regulations, the Ministry of Government and Consumer Services also released Proposed regulations to support proclamation of schedules, 6, 7 and 8 of the Cutting Unnecessary Red Tape Act, 2017 and the proclamation of the Not-For-Profit Corporations Act, 2010 (the “Draft Red Tape Regulations”) on June 5, 2020. The Draft Red Tape Regulations include 11 separate draft regulations under the ONCA, Business Corporations Act, Business Names Act, Corporations Act, Corporations Information Act, Extra-provincial Corporations Act, and Limited Partnerships Act. These draft regulations contain provisions to accommodate electronic filing; rules governing names and naming conventions; the content, form and filing of articles, applications, and other documents, both in paper format and electronically; required supporting documents for articles and applications filed under the respective legislation; and removing requirements for manual signatures.

British Columbia Introduces Benefit Companies as of June 30, 2020

As reported in the May 2019 Charity & NFP Law Update, British Columbia’s Bill M 209, Business Corporations Amendments Act (No. 2), 2019 (“Bill M 209”) received Royal Assent on May 16, 2019, which would include a new Part 2.3 in the BC Business Corporations Act introducing “benefit companies” as a new category of corporation. One year after its Assent, Bill M 209 was proclaimed to come into force on June 30, 2020.

As previously reviewed, benefit companies pursue social and environmental goals, rather than just profit, and must include a “benefit statement” in their articles identifying the company as a benefit company that is “committed to conducting its business in a responsible and sustainable manner and promoting one or more public benefits.”

While BC and Nova Scotia have permitted other forms of social enterprises, i.e. community contribution companies and community interest companies respectively, once Part 2.3 of the BC Business Corporations Act is brought into force on June 30, 2020, BC will be the first jurisdiction in Canada to provide a legal framework for benefit companies to pursue social and environmental goals, rather than just profit.

Read the June 2020 Charity & NFP Law Update