The Ontario Not-for-Profit Corporations Act, 2010 (“ONCA”) came into force on October 19, 2021. Ontario not-for-profit corporations have three years to transition their governing documents to conform with the ONCA. Our ONCA Fast Facts series explores what is new and different in the ONCA. This week we are discussing limits on Board delegation.
Directors may appoint from their number a managing Director or a committee of Directors and may delegate to the managing Director or committee any of the powers of the Directors subject to certain specified limits.
New in the ONCA is section 36(2) which provides limitations to what Directors may delegate to a managing Director or committee of Directors. The Board may not delegate:
- submitting to the Members any question or matter requiring the approval of the Members;
- filling a vacancy among the Directors or in the position of Auditor or of a person appointed to conduct a review engagement of the corporation;
- appointing additional Directors;
- issuing debt obligations except as authorized by the Directors;
- approving any financial statement under section 83 of ONCA;
- adopting, amending or repealing by-laws; or
- establishing contributions to be made, or dues to be paid, by Members under section 86 of the ONCA.
Boards commonly have one or more standing and/or special committees to support the work of the Board. One such committee is the Executive Committee, which is often established to act in circumstances of urgency where the Board cannot be convened. Executive Committees have generally been conferred with all of the powers of the Board, however under ONCA this will no longer be permitted. Corporations are advised to review their Committee Terms of Reference and make appropriate amendments to reflect the new rules on Board delegation.
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