What conflict of interest rules apply to directors of an Ontario not-for-profit corporation?

ONCA requires a director (or officer) who has a material interest in a contract or transaction the corporation is considering to disclose that interest to the board, and, in most cases, to refrain from voting on the matter. The point is to make sure decisions are made in the corporation's best interests rather than a director's personal or business interest, without automatically forbidding every transaction where a director has some connection to the other side.

Disclosure has to happen at the time the matter first comes before the board, or as soon as the director becomes aware of the interest, and it should be recorded in the minutes. A properly disclosed and approved transaction, where the interested director did not vote, is generally protected from being challenged later purely on conflict-of-interest grounds — but a transaction pushed through without proper disclosure is vulnerable to being set aside, and the director involved can face personal liability.

This comes up constantly on volunteer boards, where directors often have real ties to vendors, tenants, or grant recipients the organization deals with. Building a habit of routine, documented disclosure — even for interests that seem minor — protects both the director and the organization.