Ontario’s Not-for-Profit Corporations Act, 2010 has been in force since 19 October 2021, and the three-year transition period for governing documents closed on 18 October 2024. Most boards we speak to in Ottawa, Cornwall and across Eastern Ontario have dealt with the bylaw side. Rather fewer have worked through what ONCA actually requires of their financial statements each year, or realised that the exemption they passed once has quietly expired.
Step one: are you a public benefit corporation?
Everything else follows from this, and it is not intuitive.
A public benefit corporation is either:
- a charitable corporation; or
- a non-charitable corporation that received more than $10,000 in a financial year in the form of donations or gifts from people who are not members, directors, officers or employees, or grants or similar financial assistance from a federal, provincial or municipal government or government agency.
The timing has a lag. A non-charitable corporation becomes a public benefit corporation in the financial year following the year in which it received that money. A community association that takes a $12,000 municipal grant this year becomes a public benefit corporation next year, with materially different obligations, and frequently nobody notices.
Ten thousand dollars is a low bar. A single grant, a legacy, or a well-supported fundraising campaign can cross it.
The thresholds
Public benefit corporations
| Annual revenue | Default requirement | Can members step down? |
|---|---|---|
| $500,000 or more | Audit | No. No step-down available |
| More than $100,000, less than $500,000 | Audit | Yes, to a review engagement, by extraordinary resolution |
| $100,000 or less | Audit | Yes, to neither, by extraordinary resolution |
Non-public benefit corporations
| Annual revenue | Default requirement | Can members step down? |
|---|---|---|
| More than $500,000 | Audit | Yes, to a review engagement, by extraordinary resolution |
| $500,000 or less | Audit | Yes, to neither, by extraordinary resolution |
If your corporation sits exactly on $500,000, check section 76 directly. The boundary wording repays careful reading rather than reliance on a summary table, including this one.
The resolution most boards get wrong
Two different resolutions are in play and they are not interchangeable.
An ordinary resolution, a simple majority of votes cast, is used at each annual meeting to appoint the auditor or the person performing the review engagement. This is the routine, default obligation.
An extraordinary resolution is required for any step-down. It needs at least 80% of the votes cast at a members’ meeting duly called for that purpose, or written consent from every member entitled to vote. That is a high bar by design.
Here is the part that catches people: a step-down resolution is valid only until the next annual meeting. It is not a one-time election. It must be renewed annually. We regularly meet organisations that passed a resolution in 2022, filed it, and have not revisited it since, in the sincere belief that they are exempt. They are not. They have been in default of their audit or review obligation for several years, and it usually comes to light when a funder asks.
If an audit is required and no auditor is appointed, any member can apply to the court to have one appointed.
ONCA is the floor, not the ceiling
This is the point most worth internalising. ONCA sets a statutory minimum. It says nothing about what your funders require.
Transfer payment agreements, United Way and foundation grant conditions, municipal service agreements, and lending covenants routinely require audited statements regardless of revenue or corporate status. A $200,000 public benefit corporation may be perfectly entitled under ONCA to step down to a review, and still be contractually obliged to produce an audit because of a single funding agreement.
Read the agreements before you take the resolution to the members. Passing an 80% resolution and then reversing it three months later is not a good look in front of a membership.
Where a review engagement genuinely helps
For organisations that have the room to use it, a review engagement under CSRE 2400 is a sensible middle position. It is a real assurance engagement with a defined scope, inquiry and analytical procedures, specific requirements around related parties, estimates, going concern and fraud, and formal communication with those charged with governance. It costs materially less than an audit.
For a small charity or community organisation in Eastern Ontario, that difference can be the cost of a part-time program worker. It is a legitimate saving to pursue, provided the decision is taken deliberately, renewed annually, and checked against every funding agreement first.
A short annual checklist
- Confirm whether you were a public benefit corporation in the year just ended, including the one-year lag on grants and donations.
- Determine the revenue band.
- Read every funding agreement and loan covenant for an assurance requirement.
- If stepping down, calendar the extraordinary resolution for renewal at each annual meeting.
- Appoint the auditor or reviewer by ordinary resolution at the annual meeting, and record it in the minutes.
Boards that run this checklist once a year rarely have a problem. Boards that treat it as a one-off decision taken in 2022 tend to find out the hard way.