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Ontario Not-for-Profit Corporations Act update

So, the Ontario government is taking another step toward implementing the Ontario Not-for-Profit Corporations Act. It has introduced, Bill 85, An Act to amend various companies statutes and to amend other statutes consequential to the Not-for-Profit Corporations Act, 2010, which would make amendments to several existing laws that are necessary before the Not-for-Profit Corporations Act can come into force. Bill 85 received its first reading in the legislature in June.

If passed, the Companies Statute Law Amendment Act, 2013 (short title of Bill 85) will make significant amendments to the Ontario Not-for-Profit Corporations Act (ONCA) itself, as well as the following laws:

  • Business Corporations Act
  • Business Names Act
  • Corporations Act
  • Corporations Information Act
  • Extra-Provincial Corporations Act
  • Limited Partnerships Act

It will also make minor amendments to 79 other acts consequential to the ONCA.

The amendments to the Not-for-Profit Corporations Act are perhaps the most important, as they change the way that Act functions, in particular giving more power to the director appointed to administer the Act. For instance, at the moment, the ONCA classifies non-charitable corporations that receive more than $10,000 in a financial year from certain public sources as “public benefit corporations,” which are subject to the same rules as charitable corporations. The amendments would allow the director to prescribe another amount (e.g., by regulation) that would qualify a non-charitable corporation as a public benefit corporation. A number of these changes would allow the government to modify the rules without having to amend the Act itself.

The government says the ONCA, along with its proposed amendments, will “increase accountability and transparency for not-for-profit corporations and…make it easier for them to operate and do business in today’s marketplace.”

We’ll keep you informed on the status of Bill 85, and we look forward to seeing the eventual regulations to implement the Ontario Not-for-Profit Corporations Act.

Adam Gorley
First Reference Editor

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Adam Gorley

Editor at First Reference
Adam Gorley, B.A. (Phil.), is a researcher, content provider and editor. He contributes regularly to First Reference Talks and Internal Control blogs, HRinfodesk and other First Reference publications. His areas of focus include broad human resources issues, corporate social responsibility, corporate governance and government policies, information technology and labour market trends.Read more
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One thought on “Ontario Not-for-Profit Corporations Act update
  • peter currie says:

    In Bill 85, as proposed by the Ministry of Consumer Services, there are certain amendments (Tab 1) designed to restrict the method of access to ONBIS that have been described as mere housekeeping. That description is disingenuous. Restricting access to information regarding businesses in Ontario militates against justice and the rule of law.

    It is the Ministry of Consumer Services’ mandate to ensure consumers are protected from unscrupulous business persons. Under the cover of improving the Not-for-Profit Corporations Act the Ministry of Government Services (MGS) slid these amendments into Bill 85. These amendments have nothing whatsoever to do with not-for-profit corporations.

    Our poorly administered corporate registry system is easily taken advantage of by the unscrupulous. The existing statutes governing public access and searching of ONBIS allow for unfettered public access in keeping with good public policy. Recommendations made in a leading report on this issue called “The Puppet Masters: How the Corrupt Use Legal Structures to Hide Stolen Assets and What to Do About It”, published by the World Bank, which describes how corporate registry records should be maintained and how that information should be made generally available clearly call for enhanced access.

    Freedom of Information (FOI) requests have been made due to the Ministry of Government Services’ (MGS) refusal to grant unfettered access to ONBIS. Lists of businesses associated with certain identified individuals or municipal addresses have been sought. The MGS refused all such requests stating that the release of such information would amount to an invasion of personal privacy. According to the Freedom of Information and Protection of Privacy Act, RSO 1990, c F.31 (FIPPA) sections 2(3) and 2(4) individuals who are engaged in a business activity are not entitled to privacy considerations regarding information that identifies them in a business capacity. Furthermore, ONBIS is a Public Database and therefore exempt from any privacy considerations.

    The ability to search ONBIS by individual names or by municipal addresses make it possible to find assets and real (registered) names of businesses that might otherwise go unidentified. The amendments referred to in Tab 1 will stop the method of searching recommended by the World Bank report to facilitate the recovery of stolen assets.

    Fraud is reaching epidemic proportions in Ontario. The ability to engage in fraudulent business activities behind a smokescreen of corporations is a root cause. Freedom to access ONBIS could assist in deciding whether it is safe to do business with an individual or business.

    Police will rarely pursue a fraud as they claim it is a civil matter and/or that the injured party did not do proper due diligence. It then falls to the victim to conduct his own investigation. Current practices make that investigation impossible.

    These amendments come on the heels of a decision PO-3142 that determined there is no personal information in the ONBIS database. That matter is currently under review by the Divisional Court, an appeal brought by a serial judgment debtor the Ministry of Government Services improperly put on notice due to a defect in the process at the MGS as well as at the IPC. The irony is the IPC made the correct order but for the wrong reasons. The issue of personal information was a red herring as the real issues fell under FIPPA , s 21 (1)(c) and s 21(1)(d) of the Act which render the issue of whether or not personal information is contained within the record moot.

    Personal privacy
    21. (1) A head shall refuse to disclose personal information to any person other than the individual to whom the information relates except,

    (c) personal information collected and maintained specifically for the purpose of creating a record available to the general public;

    (d) under an Act of Ontario or Canada that expressly authorizes the disclosure;

    Having said that the appeal has little merit and almost no chance of success, the appellant is the poster boy for why ONBIS exists, inter alia, as a public database for investigative purposes. A serial judgment debtor who owes over 4 million in judgments and knows the system doesn’t work and uses a corporate labyrinth to hide misappropriated assets. The MGS is notifying those investigated, implicitly asking if that person objects to someone looking at a Public Record. The subject of an investigation can, once notified, bring the investigation to a halt.

    Enhanced access to ONBIS is a necessity from a public policy perspective and poses no privacy concerns. Our legal system is in need of repair. These provisions, if included in this Bill, will go a long way to ensure Ontario lags behind in providing fair and equitable access to public records.

    Most other jurisdictions are taking steps to expand public access to business registry databases while, apparently, Ontario seeks to restrict it. The Federal Corporate registry routinely allows access in this manner.

    That the MGS now with legal cover under IPC order PO-3142 has a chance to provide Ontarians with a powerful tool to allow them to perform due diligence or if they find themselves in legal difficulties have the ability to recover assets has chosen to shut down access. The Divisional court appeal should be complete in 2014 and these amendments wish to give totalitarian control over access to ONBIS.

    Sadly the Liberals last year in Bill 55 (schedules 6, 7 & 13) tried similar amendments (just 2 months after reading submissions to the IPC that pointed out their statutory duties under the existing legislation). Those attempts failed when the disastrous effect these amendments would have on access to justice was brought to the attention of the opposition.

    There is no small irony that Bill 85 is sponsored by the Minister of Consumer Services, Tracey MacCharles who is charged with the duty of ensuring Consumer Protection. She had these ‘housekeeping measures” brought to her attention months ago and to date she has been silent.

    These changes are not housekeeping, they are far reaching and are worthy of public debate. Free unfettered access to Public Records is an essential ingredient in having a just society.

    I have been a law clerk for 35 years and the discussion about access to justice goes on and on. Justice is filing a Satisfaction Piece, not a judgment to put in one’s drawer. Judgment debtors at JD examination lie and when they have lied they win. Access to ONBIS in a meaningful way will bring real access to justice to thousands. Why the Ontario government is so focused on stopping meaningful access is anyone’s guess. I have a couple pretty good ones but guesses are unhelpful, all that matters is theses proposed amendments are bad public policy.

    Proposed administrative changes

    Acts as currently written

    Business Corporations Act

    270. (1) A person who has paid the required fee is entitled during usual business hours to examine and to make copies of or extracts from any document required by this Act or the regulations to be sent to the Director or the Commission, except a report sent to the Director under subsection 162 (2) that the court has ordered not to be made available to the public. R.S.O. 1990, c. B.16, s. 270 (1); 1998, c. 18, Sched. E, s. 29.

    Business Names Act
    Available to the public
    3 (4) Any person is entitled to examine, during normal business hours, the records maintained by the Registrar.

    Corporations Information Act

    Examination by public
    10. (1) On payment of the required fee, any person is entitled to examine the record of any document filed under section 2, 3, 3.1, 4, 6 or 7 or any predecessor of those sections, and to make extracts from it. 1998, c. 18, Sched. E, s. 83.

    Extra-Provincial Corporations Act

    This section did not previously exist.

    Limited Partnerships Act

    This section did not previously exist.
    Proposed Amendments Bill 85

    Schedule 1
    Business corporations Act

    35. (1) Subsection 270 (1) of the Act is repealed and the following substituted:
    Examination, etc., of documents
    (1) A person who has paid the required fee is entitled during usual business hours to examine and to make copies of or extracts from any document required by this Act or the regulations to be sent to the Commission.
    (2) Section 270 of the Act is amended by adding the following subsection:
    Search
    (1.1) A person who has paid the required fee is entitled, using any search method approved by the Director (which may include an electronic method), to examine and obtain copies of any document required by this Act, the regulations or the Director to be sent to the Director, or, if the person does not obtain a copy of an entire such document in electronic format, copies of an extract from any document required by this Act, the regulations or the Director to be sent to the Director.
    37. Section 271.2 of the Act is repealed and the following substituted:
    Requirements established by Director
    271.2 (1) The Director may establish requirements,
    (j) governing search methods of records for the purpose of subsection 270 (1.1).
    Schedule 2
    Business Names Act
    2. Registrar
    (4) Subsection 3 (4) of the Act is repealed and the following substituted:
    Available to the public
    (4) Any person is entitled, using any search method approved by the Registrar (which may include an electronic method), to examine and obtain copies of the records maintained by the Registrar under this Act or the Limited Partnerships Act.
    SCHEDULE 4
    Corporations Information Act
    7. Subsection 10 (1) of the Act is repealed and the following substituted:
    Examination, etc., of records
    (1) A person who has paid the required fee is entitled, using any search method approved by the Director (which may include an electronic method), to examine and obtain copies of the record of any document filed under section 2, 3, 3.1, 4, 6 or 7 or any predecessor of those sections, or, if the person does not obtain a copy of an entire such record in electronic format, copies of an extract from a record of any document filed under section 2, 3, 3.1, 4, 6 or 7 or any predecessor of those sections.
    14. The Act is amended by adding the following section:
    Requirements established by Director
    21.4 (1) The Director may establish requirements,
    (j) governing search methods of records for the purposes of subsection 10 (1).
    SCHEDULE 5
    Extra-Provincial Corporations Act
    18. The Act is amended by adding the following section:
    Requirements established by Director
    24.4 (1) The Director may establish requirements,
    (j) governing search methods of records required by this Act to be prepared and maintained by the Director as described in section 16.1.
    SCHEDULE 6
    Limited Partnerships Act
    16. The Act is amended by adding the following section:
    Requirements established by Registrar
    35.3 (1) The Registrar may establish requirements,
    (j) governing search methods of records that are maintained by the Registrar for the purposes of this Act, pursuant to subsection 3 (3) of the Business Names Act.