Mar

19

Ontario Not-For-Profit Corporations – What Members Should Know…

Michael CarabashPlease note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to Ontario Not-For-Profit Corporations, you should seek professional assistance (e.g. make a post on Dynamic Legal Forms). We have Toronto business lawyers registered on the website who can answer your questions, represent you in litigation, or help resolve a dispute.

In the following blog, I’ll be discussing some basic features of an Ontario Not-For-Profit Corporation as it relates to members. Recall that Ontario Not-For-Profit Corporations are corporations without share capital. This means that instead of shareholders, they have members. Also, unlike for-profit corporations, Ontario Not-For-Profit Corporations are not allowed to distribute profits to its membership in the form of dividends.

Ontario Not-For-Profit Corporations are governed by the Ontario Corporations Act. That Act provides that members are not liable for the corporation’s obligations or liabilities or for any thing related to or connected with the corporation (s. 122). Members can, during normal business hours, request to inspect and make extracts of certain documents from the Ontario Not-For-Profit Corporation, including (ss. 300 and 305(1)):

  • Minute book of all the proceedings at meetings of the members and of the directors and of any executive committee;
  • A copy of the letters patent establishing the Not-For-Profit Corporation;
  • All by-laws and special resolutions of the Not-For-Profit Corporation;
  • A register of the members;
  • A register of the directors;

If a member is also on the board of directors of the Ontario Not-For-Profit Corporation, then they may inspect the following (ss. 302 and 304(1)):

  • Sums of money received and disbursed by the corporation;
  • Sales and purchases of the corporation;
  • Assets and liabilities of the corporation;
  • Other transactions affecting the financial position of the corporation;

A member can also request a list of any or all of the members of the Ontario Not-For-Profit Corporation, but must first file with the corporation an affidavit in the form set out in s. 306(1).

It is worth mentioning that, apart from the Act, the roles and responsibilities of the members includes the following:

  • Approving Corporate By-Laws (which are corporation power-making documents; i.e. it gives authority to certain corporate actions, such as notices for meetings, conduct at meetings, having an electing, etc.);
  • Voting in the directors of the Ontario Not-For-Profit Corporation; and
  • Appointing an Auditor.

Assuming the board has acted legally (e.g. with respect to corporate by-laws, the letters patent, torts, contracts, and statutes), but the members are unhappy with their conduct or decisions, then the members’ normal recourse is to cause an early vote to occur and to vote in a new board of directors. Similarly, if the members are not happy with members of the executive team (typically comprised of a President or CEO, Vice-President, Secretary, Treasurer, etc.), the members will once again be able to cause an early vote to replace the directors and have the new directors appoint a new executive team. The board of directors are accountable to the members, and the executive team (who operate the corporation on a day-to-day basis) is accountable to the board of directors who appointed them.

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