Jan 2019 Charity & NFP Law Update
Ontario Announces Legislative Review of the Co-operative Corporations Act
The Ontario Ministry of Finance and Ministry of Government and Consumer Services announced in December 2018 that Ontario would be conducting a legislative review of the Co-operative Corporations Act (“Co-op Act”) on how to modernize the legislative framework and make it easier for co-operative corporations (“co-ops”) to do business in Ontario. A consultation paper, Helping Co-ops Thrive in Ontario: Modernizing the Legislative Framework for Co-operative Corporations in Ontario was also released. The public may provide written submissions by January 31, 2019.
Broadly speaking, co-ops are corporations owned by members who seek to meet common needs, and can be formed on a not-for-profit basis. The Consultation Paper states that co-ops face certain challenges that may impede their growth potential and long-term viability, such as being under an outdated legislative and regulatory framework that is not well aligned with other Ontario business and corporate legislation. The consultation seeks input from the public on the following areas: how to make it easier for co-ops to do business in Ontario; how to better enable co-ops to self-govern while reducing red tape in the sector; which government body should be responsible for administering the Co-op Act; as well as whether the “50 per cent rule” (i.e., co-ops cannot do more than 50 per cent of their business with non-members), audit requirements, and rules for raising capital for co-ops should be changed.
The government’s review of the Co-Op Act will be its first ever review of the Act since its introduction in 1974. While this may appear to some as overdue, it will be welcome news for co-ops in Ontario, including those formed on a not-for-profit basis, and it is hoped that this review will lead to a more competitive legislative framework for co-ops in Ontario. While the nature of changes to the Co-op Act remains to be seen, co-ops in Ontario will want to keep an eye open for future changes to their corporate legislation.