Skip to content

Client Update: Time’s Ticking: Not-for-Profit Corporations

By October 17, 2014 existing not-for-profit corporations incorporated under Part II of the Canada Corporations Act (the “Old Act”) are required to be continued under the new Canada Not-for-Profit Corporations Act (the “New Act”) or face the possibility of automatic administrative dissolution. For those corporations that are also registered charities, dissolution could mean the revocation of their registration as a charity which could result in substantial tax penalties.

 

FEATURES OF THE NEW ACT

Generally the New Act has been modernized to conform with modern business corporation statutes. The New Act now provides a clear set of rules that govern the internal affairs of corporations under its jurisdiction including clear and coherent statements of member rights, rules regarding members and directors meetings, and provides specific rules regarding fundamental changes (amalgamation, continuance, liquidation and dissolution). The New Act also provides a benefit to those individuals who are acting as directors in that it sets out a due diligence defense for certain liability resulting from director negligence.

There is additional oversight under the New Act including the requirement to submit all bylaws and amendments thereto to Industry Canada. There are also financial reporting requirements under the New Act. For non-soliciting corporations with annual gross revenues in excess of $1,000,000 or for soliciting corporations with annual gross revenues in excess of $250,000, a full annual audit must be conducted. For those soliciting corporations with revenues between $50,000 and $250,000, an audit is required unless the members resolve that a review engagement is sufficient. For non-soliciting corporations with gross annual revenues under $1,000,000 or for soliciting corporations with revenues under $50,000, a review engagement is required unless the members resolve that one is not required. These records must be made available to members, directors and officers of the corporation and to Industry Canada. Soliciting corporations must make their financial records publically available.

 

PROCESS OF TRANSITION

Many of our clients may be involved as a director or in an advisory capacity for a not-for-profit corporation incorporated under the Old Act. We would strongly encourage corporations who have not started the continuance process under the New Act should act now to ensure the process is completed in time. For those corporations incorporated under the Old Act which are also registered charities, additional steps are required – particularly if the charity is looking to amend its purposes as part of the transition for which pre-approval from Canada Revenue Agency can take upwards of two to three months before the continuance process can be started under the New Act.

If your corporation has not yet transitioned, it is a fairly simplified process under the New Act. The corporation must replace its letters patent, supplementary letters patent (if any) and by laws with new charter documents which are in compliance with the New Act. The corporation must submit articles of continuance, forms confirming the initial registered office and first directors of the corporation and a name search confirmation. Bylaws which are in compliance with the New Act can either be submitted as part of the initial package or within twelve months of continuance following approval by the members.

Following successful transition under the New Act, all registered charities (including those who have not amended its purposes and even those who have obtained pre-approval from the Canada Revenue Agency) must submit the certificate of continuance, articles of continuance, various filing forms as well as a copy of the current bylaws and statement of current purposes to the Canada Revenue Agency.

The foregoing is intended for general information only and is not intended as legal advice. If you have any questions, contact one of our Business Lawyers.

SHARE

Archive

Search Archive


 
 

Client Update: Professional Partnerships Breathe Easier

May 22, 2014

This morning the Supreme Court of Canada released its much awaited decision in McCormick v. Fasken Martineau DuMoulin, holding that most legal (and other professional) partnerships are not subject to Human Rights obligations to partners,…

Read More

Client Update: PEI Auto Insurance Reforms: Change is Coming

May 20, 2014

No really. We mean it this time. During the Spring 2014 sitting of the legislature, the PEI government passed legislation that will result in significant changes to the standard automobile policy, effective October 1, 2014. Most…

Read More

Atlantic Employers’ Counsel – Spring 2014

May 8, 2014

The Editor’s Corner Clarence Bennett This edition focuses on employment and labour issues in Construction. From occupational health and safety legislation to what you need to know when the union organizer arrives at your workplace.…

Read More

Client Update: Changes to the Canada Labour Code

March 28, 2014

Federally regulated employers should be aware of changes to the Canada Labour Code (“the Code“) effective April 1, 2014, namely subsections 219 and 223-231 of the Jobs and Growth Act, 2012, chapter 31 of the Statutes of Canada (also…

Read More

Atlantic Insurance Counsel – Winter 2014

March 12, 2014

PEI Auto Accident Benefits – Behind the Times No More Nicole McKenna and Janet Clark Significant changes are coming to the standard automobile policy in Prince Edward Island (“PEI”), including increases to the accident benefits available under…

Read More

Doing Business in Atlantic Canada (Spring 2014)(Canadian Lawyer magazine supplement)

March 3, 2014

 IN THIS ISSUE: 10 Things employers need to know about employing temporary foreign workers by Andrea Baldwin, Michelle McCann and Sean Kelly. Landlords’ protection from mechanic’ (builders’) liens by Hugh Cameron and Lara MacDougall. The new Canada not-for-profit Corporations Act by Alanna Waberski, Sarah Almon and Kimberly Bungay. Download…

Read More

Client Update: Minor Injury Cap 2014

February 27, 2014

On January 31, 2014, The Office of the Superintendent of Insurance issued a bulletin in Nova Scotia. For 2014, the Minor Injury Cap for Nova Scotia is $8,213. This is a 1.4 per cent increase…

Read More

Client Update: The New Building Canada Fund

February 26, 2014

In the Federal Budget 2011, the Government of Canada stated that it would develop a new plan to support public infrastructure beyond the expiry of the 2007 Building Canada Plan in 2013-14. The Government has…

Read More

Get Ready for Anti-Spam

February 17, 2014

CASL is a new federal law aimed at eliminating unsolicited and malicious electronic communications. Originally introduced in December 2010, the majority of CASL’s provisions will come into force on July 1, 2014. Once in effect,…

Read More

Atlantic Employers Counsel – Winter 2014

February 13, 2014

The Termination Meeting: A time and a place for everything The decision has been made, but the ship hasn’t yet sailed. Somebody has to deliver the bad news and as difficult as this might be,…

Read More

Search Archive


Scroll To Top