Ontario's Not-for-Profit Corporations Act (ONCA): What Changed

For decades, Ontario's incorporated nonprofits operated under legislation that dated back to the 1990s. When the Not-for-Profit Corporations Act (Ontario) — known as ONCA — came into force, it replaced that aging framework with a modern, principles-based law designed to reflect how nonprofits actually run today. If your organization is incorporated under Ontario law, ONCA almost certainly applies to you.

This article explains what ONCA changed, who is affected, how membership and governance rules work under the new framework, and what the bylaw transition means in practice.

Who Does ONCA Apply To?

ONCA governs nonprofit corporations incorporated in Ontario — charities, clubs, associations, community organizations, and similar bodies. It does not apply to federally incorporated nonprofits (those fall under the Canada Not-for-profit Corporations Act, or CNCA) or to unincorporated associations.

If your organization has an Ontario certificate of incorporation and operates on a not-for-profit basis, ONCA is your governing statute. Organizations that were previously incorporated under the Corporations Act (Ontario) automatically continued under ONCA when it came into force.

What ONCA Modernized

A Clearer Distinction Between Charities and Non-Charities

ONCA creates two formal categories:

• Public benefit corporations — organizations that serve a public purpose, including registered charities. These face higher accountability standards, such as mandatory audits above certain revenue thresholds and restrictions on who can sit on the board.
• Mutual benefit corporations — organizations that primarily serve their own members (think recreational clubs or professional associations). These have more flexibility in governance.

Understanding which category your organization falls into matters because the rules on financial oversight, director eligibility, and distribution of assets on wind-up differ between the two.

Member Rights Are Stronger

ONCA gives members more clearly defined rights than the old legislation did. Key member rights include:

• The right to vote on fundamental changes (amalgamation, dissolution, changes to the articles)
• The right to inspect certain corporate records
• The right to requisition a special meeting if enough members support it
• Minority members can apply to court for remedies if they are treated oppressively

For organizations with multiple membership classes — voting members, non-voting supporters, honorary members — ONCA requires that the classes and their rights be described clearly in the articles or bylaws.

Director and Officer Rules

ONCA modernized the rules around who can serve as a director. Directors must be individuals (not corporations), at least 18 years old, not bankrupt, and not found incapable by a court. Public benefit corporations have an additional restriction: no more than one-third of directors can be "interested persons" (roughly, people who receive remuneration from the organization).

Directors owe a duty of care and a duty of loyalty to the corporation — similar to for-profit company law. The Act provides a due-diligence defence: a director who relies in good faith on financial statements or professional advice is not liable for a resulting breach of duty.

Financial Disclosure Requirements

The financial oversight requirements depend on the corporation's revenue and whether it is a public benefit corporation:

• Small public benefit corporations (under a revenue threshold set in the regulations) may opt for a review engagement instead of a full audit, if members approve.
• Larger public benefit corporations must have an auditor appointed at each annual meeting.
• Mutual benefit corporations have more flexibility and can dispense with an audit or review if all members consent.

Always check current thresholds in the ONCA regulations, as they are set by regulation and may be updated.

Bylaws: The Transition Rules

This is where many Ontario nonprofits had practical work to do.

Existing Bylaws

Organizations that were operating before ONCA came into force did not need to repeal and replace their bylaws immediately. ONCA provided a transition period during which existing bylaws continued to operate, but organizations were expected to review and update them to bring them into compliance with the new Act.

If your organization has not reviewed its bylaws since before ONCA came into force, that review is overdue. Bylaws that conflict with ONCA are overridden by the Act — the Act prevails — but having outdated bylaws still creates confusion and risk.

What Bylaws Should Cover

Under ONCA, bylaws are the primary governance document. A well-drafted set of bylaws will address:

• Membership classes and the rights attached to each
• Conditions for membership — how members join, what dues apply, grounds for termination
• Meeting procedures — notice requirements, quorum, voting (including whether electronic or written meetings are permitted)
• Board composition — number of directors, term lengths, how vacancies are filled
• Officer roles — president, secretary, treasurer (titles can be customized)
• Conflict of interest procedures
• Borrowing powers
• How bylaws are amended

ONCA allows significant flexibility in how bylaws are drafted, but that flexibility means the defaults may not suit your organization's actual needs. Relying on defaults without reviewing them is a common governance gap.

Articles vs. Bylaws

ONCA distinguishes between what must go in the articles (the formal government filing) and what belongs in the bylaws (the internal governance document). Membership classes, any restrictions on the corporation's activities, and the number of directors are examples of things that typically go in the articles. Operational detail — meeting procedure, officer duties — belongs in the bylaws, which are easier to amend.

Common Compliance Gaps

Based on common issues that arise when organizations review their governance under ONCA:

1. No formal membership register — ONCA requires organizations to maintain a record of members with their contact information.
2. Outdated conflict-of-interest policy — The Act contemplates a process for declaring and managing conflicts; many older bylaws are silent on this.
3. Board size outside permitted range — ONCA sets a minimum of three directors for most corporations. Some small organizations operate with fewer without realizing it.
4. No formal process for member termination — Terminating a member without a fair process can expose the organization to legal challenge.
5. Missing annual return filings — ONCA requires annual returns to be filed with the Ontario government through the Ontario Business Registry. This is separate from CRA filings for charities.

Frequently asked questions