By Jacqueline M. Demczur and Esther S.J. Oh

A recent decision by the Court of Appeal for Ontario, Islamic Food and Nutrition Council of Canada v. Islamic Food and Nutrition Council of America, released on June 11, 2025, involved two not-for-profit corporations, the Islamic Food and Nutrition Council of Canada (the “Canadian Corporation”) and the Islamic Food and Nutrition Council of America (the “U.S. Corporation”), both of which provide Halal certification services.

The core dispute revolved around competing applications for declaratory relief concerning who are the members of the Canadian Corporation and what are the voting rights of the said members.

In this regard, the Canadian Corporation sought a declaration that it had one class of voting members (composed of two individuals and the U.S. Corporation) in accordance with a by-law amendment which was carried out in 2021, without any evidence that the sole member at the time (being the U.S. Corporation) had approved the by-law amendment in accordance with the provisions of the Canada Not-for-Profit Corporations Act (“CNCA”).

By contrast, the U.S. Corporation sought a declaration that a 2015 by-law remained in force, which had established two classes of members – specifically, non-voting “Director Members" and voting "Corporate Members" (with the U.S. Corporation becoming the sole Corporate Member with voting rights) (“2015 By-law”).  

The Canadian Corporation was originally incorporated in 2007 under the Ontario Corporations Act with one class of voting members, being composed of the incorporating directors as stipulated by section 125 of that Act. However, in 2015, when the 2015 By-law was passed at a meeting in Chicago, it introduced a two-tier membership structure: Corporate Members and Director Members, with voting rights exclusively granted to Corporate Members. The practical effect was that the U.S. Corporation became the sole voting member, while the other members of the Canadian Corporation lost their voting rights.

The application judge, whose findings were upheld on appeal, found that the signatories of the 2015 By-law were not "duped", as they asserted, and that the changes concerning membership and voting rights were "clear and not buried".

Subsequently, in 2021, the Canadian Corporation filed Articles of Continuance with Corporations Canada, in order to continue under the federal CNCA. The said Articles of Continuance purported to establish one class of members, with each member being entitled to vote, which was effectively intended to restore voting rights to individual members that had been earlier removed by the 2015 By-law. However, in this decision, the court noted there was no evidence that Mr. Chaudry, President of the U.S. Corporation, either saw or received notice of these Articles of Continuance on behalf of the sole Corporate Member of the Canadian Corporation.

As the 2021 amendments were not approved by a special resolution of the members in accordance with the CNCA, the application judge determined that the amendment in the Articles of Continuance was ultra vires – beyond the authority of the company or any director – and, therefore, invalid. Consequently, the application judge declared that the two classes of membership remained in force, with the U.S. Corporation as the sole voting member. 

The Court of Appeal for Ontario ultimately dismissed both the Canadian Corporation’s appeal of the decision and the U.S. Corporation’s cross-appeal for ancillary relief (which the court found to be unnecessary given the main declaratory relief decision). The Court of Appeal affirmed the application judge's key findings, confirming the valid approval of the 2015 By-law and agreeing that the amendments purported to have been made by the 2021 Articles of Continuance were ultra vires.  

This case underscores the importance of complying with the basic requirements of corporate legislation and the then operative by-laws of a not-for-profit corporation whenever taking steps to change corporate documents.  Failure to meet basic requirements to obtain membership approval in relation to a by-law amendment, in accordance with the definitions of membership reflected in the then current by-law, will leave the said by-law amendment vulnerable to a successful legal challenge if ever reviewed by a court. 

​Read the June 2025 Charity & NFP Law Update