- A for-profit business corporation is incorporated under the OBCA (or federally under the CBCA), exists to carry on business, and can distribute profit to its shareholders as dividends.
- Both types of incorporation involve filing articles of incorporation with the relevant government registry, paying a government filing fee (verify the current amount for your specific…
Both are still "incorporating," both go through a similar-looking government filing process, and both end with a certificate and a corporation number. But for-profit vs. not-for-profit incorporation in Ontario are built on entirely different statutes with different purposes — and that difference shapes the whole structure that comes out the other end.
Two Different Statutes, Two Different Purposes
A for-profit business corporation is incorporated under the OBCA (or federally under the CBCA), exists to carry on business, and can distribute profit to its shareholders as dividends. A not-for-profit corporation, by contrast, is incorporated under Ontario's Not-for-Profit Corporations Act, 2010 (ONCA) — which came into force on October 19, 2021, replacing the old Corporations Act's not-for-profit provisions. An ONCA corporation exists for purposes other than generating profit for its members, and generally cannot distribute profit or financial gain to its members, directors, or officers.
Ownership Structure: Shares vs. Members
| Factor | For-Profit (OBCA) | Not-for-Profit (ONCA) |
|---|---|---|
| Owners | Shareholders, who hold shares | Members, who generally don't hold shares |
| Can profit be distributed to owners? | Yes, as dividends | No — generally cannot benefit members personally |
| Governing statute | OBCA | ONCA |
| Directors' core duty | Fiduciary duty and duty of care to the corporation | Same duties, owed to the not-for-profit corporation |
| Meeting requirement | Annual shareholders' meeting (or written resolution in lieu) | Annual members' meeting generally required |
Where the Filing Process Overlaps
Both types of incorporation involve filing articles of incorporation with the relevant government registry, paying a government filing fee (verify the current amount for your specific type before filing, since the fee schedules for business and not-for-profit incorporation are maintained separately), choosing a name — or a numbered designation — that clears the applicable name-search requirements, and completing post-incorporation steps like appointing directors, adopting by-laws, and setting up corporate records.
Where It Diverges
- The purpose clause is different in kind. A not-for-profit's articles must set out its non-profit objects, rather than the open-ended "carry on any lawful business" language typical of a for-profit's articles.
- Governance rules differ. ONCA imposes its own rules around membership meetings, member rights, and how remaining assets are handled if the corporation is ever dissolved — generally distributed to another not-for-profit or charitable purpose, not to members personally.
- Charitable status is separate. Incorporating as a not-for-profit corporation does not, by itself, make the organization a registered charity. Charitable status — which allows issuing official donation tax receipts — is an additional process handled federally, on top of (and after) provincial or federal not-for-profit incorporation.
A Common Misconception to Avoid
"Not-for-profit" describes purpose and profit distribution, not size or informality. A not-for-profit corporation still carries full corporate governance obligations under ONCA — directors, corporate records, meetings, and filings — just as a for-profit corporation does under the OBCA. Incorporating as a not-for-profit is not a lighter-weight or less formal process; it's a differently structured one.
Choosing the Right Structure for Your Organization
Deciding between the two isn't really a choice at all once you know what the organization is actually for — the structures serve different purposes rather than competing for the same use case. Questions worth working through before you file either type of application:
- Will any individual ever receive a share of the organization's profit or surplus? If yes, that points toward a for-profit corporation.
- Does the organization exist to advance a charitable, social, cultural, religious, or community purpose with no personal financial benefit to its members? If yes, that points toward ONCA.
- Will you eventually want to apply for registered charity status to issue donation receipts? If so, plan for that as a distinct, additional step after incorporation, not a feature that comes bundled with it.
- How will the board and membership actually govern the organization day to day, and does that fit ONCA's member-meeting and governance framework?
A lawyer can help you work through these before you file, since choosing the wrong structure can mean unwinding and re-incorporating later.
Frequently asked questions
Is a not-for-profit corporation automatically a registered charity?
No. Incorporating under ONCA creates a not-for-profit corporation, but registered charity status — needed to issue official donation receipts — is a separate federal process applied for on top of incorporation.
Can a not-for-profit corporation pay its directors or staff?
A not-for-profit corporation can generally pay reasonable compensation for services actually provided, such as staff salaries, but it generally cannot distribute profit or financial gain to members, directors, or officers simply because of their role. The specifics depend on your organization's own by-laws and ONCA's rules — check with a lawyer before setting up any compensation arrangement.
Can I convert an existing for-profit corporation into a not-for-profit?
Not directly — they're incorporated under entirely different statutes with different purposes and structures. Moving from one to the other generally means incorporating a new entity under the appropriate statute rather than converting the existing one.
Does a not-for-profit corporation still need to hold an annual meeting?
Yes, generally. ONCA, like the OBCA, generally requires an annual members' meeting (or a valid alternative permitted under the Act), on top of maintaining corporate records and filing any required returns.
Do I need a lawyer to incorporate a not-for-profit organization?
It isn't a strict legal requirement, but ONCA's governance rules and purpose-clause drafting are easy to get wrong on a first attempt, and mistakes can be more costly to fix later than to prevent upfront — particularly if you also plan to apply for charitable status down the road.
This is a corporate question
Start a file online — flat, published fees, reviewed by a licensed Ontario lawyer before a dollar is owed.