The deadline for any federal not-for-profit corporation to file
for continuance under the new Canada Not-for-Profit Corporations
Act (the "Act") is October 17, 2014. Any federally
incorporated not-for-profit corporation that has not yet received a
Certificate of Continuance from Corporations Canada (or is not
already involved in the process) should consider commencing the
process in the near future.
Failure by any not-for-profit corporation to continue under the
Act by October 17, 2014 will result in the dissolution of the
corporation by Corporations Canada. While dissolution would give
rise to problems for any not-for-profit corporation, registered
charities must be particularly careful as dissolution will lead to
the revocation of their charitable status by the Charities
Directorate of the Canada Revenue Agency. This revocation would
result in the charity owing a revocation tax equal to the value of
their remaining assets.
Although the abovementioned process will require input by the
not-for-profit corporation's board of directors, with proper
guidance, the process can be fairly simple and straightforward.
Namely, the process for any federal not-for-profit corporation to
continue under the new Act involves the following steps:
Conduct a Review of the Current Letters Patent and
By-Laws: During this initial phase, the existing by-laws
and letters patent must be reviewed to determine the current
operation of the organization in comparison to the requirements
established by the Act. In addition, a review of the corporate
information on file with Industry Canada should be undertaken to
determine whether any discrepancies exist between the information
on file and the current operating procedures of the corporation
which may require attention prior to continuance.
Draft Articles of Continuance and By-Laws: A
new set of by-laws should be drafted in accordance with the Act.
During this step, each provision in the current by-laws should be
examined and revised to fit the corporation's governance
structure and ensure compliance with the new Act. The new by-laws
must at a minimum, contain the required provisions concerning the
corporation's conditions of membership and the notice of a
meeting of the members to each member entitled to vote. In
addition, the Articles of Continuance and a resolution of the board
of directors to approve the new by-laws should be drafted. It is
recommended that any registered charities have any new purpose or
substantial changes pre-approved by the Charities Directorate prior
to submitting their Articles of Continuance to Corporations Canada.
The risk of not gaining preapproval is that the Charities
Directorate may revoke the corporation's registered charity
status if the purpose is no longer deemed to be charitable.
Meeting of the Members: Once in final form,
the corporation must present the Articles of Continuance and the
revised by-laws at the annual meeting of the members (or a special
meeting of the members called for this purpose). The meeting must
be held in accordance with the existing by-laws however, the Act
requires that approval of the Articles of Continuance be gained by
two-thirds of the votes cast by those members who are entitled to
Submit the Documents to Corporations Canada:
During this final step the corporation must file the Articles of
Continuance along with the Initial Registered Office Address and
First Board of Directors form with Corporations Canada. The
documents are then reviewed and a Certificate of Continuance should
follow shortly thereafter. Although the submission of by-laws is
not required for 12 months post member approval, we recommend that
the by-laws be submitted in conjunction with the aforementioned
documents to ensure a smooth and simple transition process.
At the time of writing, only a very small percentage of federal
not-for-profit corporations have received a Certificate of
Continuance by Corporations Canada. In other words, one can
anticipate that Corporations Canada and the Charities Directorate
will face a substantial backlog of applications prior to the
October 17, 2014 deadline. In order to avoid dissolution and
substantial wait times, this process should be commenced in the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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