Oct 2023 Charity & NFP Law Update
Amendments Made by Bill 91 in Force as of October 1, 2023
Our June 2023 Charity & NFP Law Update reported that Ontario’s omnibus Bill 91, Less Red Tape, Stronger Economy Act, 2023 received Royal Assent on June 8, 2023. Among other statutes, Bill 91 amends the Ontario Not-for-Profit Corporations Act, 2010 and the Corporations Act, the changes to which came into force on October 1, 2023.
The most notable changes impacting the not-for-profit sector are that the corporations governed by the two statutes can now hold virtual or hybrid meetings, and conduct votes virtually or in hybrid form, unless the corporation’s governing documents provide otherwise. The new amendments also facilitate the sending of notices or other documents by electronic means, and permit affected corporations, businesses, and partnerships to store records electronically, in addition to facilitating the electronic examination of records remotely.
New Bill Proposes to Amend Social Club Provisions of Corporations Act
A bill released by the Ontario government proposes to amend the Ontario Corporations Act to simplify voting requirements to authorize the continuance of share capital social clubs (“social clubs”). The August 2023 Charity and NFP Law Update explained the introduction of a draft bill in the summer of 2023 in this regard. The draft bill became Schedule 5 of Bill 139, Less Red Tape, More Common Sense Act, 2023 (“Bill 139”), introduced to the Legislative Assembly on October 19, 2023. Further discussion on Bill 139 and changes to the Charities Accounting Act is available in the Legislation Update, above.
Social clubs under the Ontario Corporations Act have until October 19, 2026 to continue out of the Ontario Corporations Act into the Ontario Not-for-Profit Corporations Act, 2010, the Co-operative Corporations Act, or the Business Corporations Act.
Currently, if a social club has more than one class of shareholders, approval for the continuance process requires special resolution approval by each class of shareholders voting separately by class. Depending on the shareholding class structure, the process to notify shareholders and facilitate voting for all classes may be complex and time-consuming. As well, a failed vote for continuance could lead to a forced dissolution of the club. In response to these concerns, the proposed amendments will remove the requirement that each class of shareholder vote separately as a class and clarify that only a social club’s shareholders entitled to vote may vote to authorize the continuance.
The intended outcome of these proposed changes is to diminish the risk of social clubs facing dissolution, thereby allowing them to continue their operations and serve their members and communities. Additionally, this streamlines the voting procedure, reducing the administrative burden on social clubs. These amendments would also bring the Corporations Act in line with the continuation provisions in other Ontario business legislation.
These provisions will come into effect on the day that Bill 139 receives Royal Assent, should it make it through the legislature in its current form.