Canada: Have You Transitioned To The Canada Not-For-Profit Corporations Act?

On October 17, 2011, Canadian not-for-profit corporations (NFPs) formed under Part II of the Canada Corporations Act (CCA) were required to transition to the newly created Canada Not-for-Profit Corporations Act (CNCA) by October 17, 2014. If the transition is not completed in time, the NFP could be deemed inactive and dissolved, resulting in serious repercussions on operations. Although it sounds intimidating, once you understand the background of this change, the transition to CNCA will appear easy and beneficial to both management and members.

To understand this change, what is useful is to first draw a comparison between the old CCA regime and the new CNCA. Since 1917, the CCA has covered the formation of NFP corporations. While the old act provides very clear rules for profit-oriented companies, its rules were less clear with respect to NFPs. The CCA has clearly defined rules regarding items such as governance and incorporation, which also had to be addressed by NFPs in their by-laws. This meant that NFP by-laws could be quite lengthy, detailed and substantially different from one NFP to the next. NFP by-laws had to contain information such as: procedures for member meetings, the manner of electing and appointing directors, and the procedures for making, amending and repealing by-laws.1 These by-laws were then submitted to Corporations Canada for review and approval before they could be adopted, making the process tedious and highly bureaucratic.

Under the old regime, member's rights had to be defined in the corporate by-laws. Under the CNCA, default rights are included in the legislation. These default rights include enhanced voting rights, the right to requisition meetings for specific purposes, and access to corporate records.2

Furthermore, with the old process, the challenge was that as the NFP evolved, if it was considering making changes to its incorporation documents, it became very complicated and time consuming. CNCA's goal is to simplify the incorporating process as well as to standardize corporate governance by providing a clear set of rules.

The CNCA reduces the need for complex and lengthy articles or corporate by-laws, since many of its rules are standardized in the act. NFPs can choose to include as much detail as is necessary in their by-laws. Like for-profit organizations, a standard set of by-laws are now adoptable, and can be modified to meet the specific needs of the NFP. These by-laws can then be filed with Corporations Canada without the need for government review and approval. The required yearly corporate obligations, such as holding an annual meeting of the board of directors, providing annual financial statements for approval at the meeting, and filing an annual information return, remain unchanged.

In order to transition to the CNCA, you must do the following:

  1. Review your existing letters patent and by-laws. As mentioned, because CNCA has standardized its governance, the articles and by-laws may now be significantly shortened as many of the rules are folded into the new act.
  2. Prepare your articles of continuance, which are to be prepared using Form 4031 – Articles of Continuance (transition). This can be found on the Corporations Canada website.3
  3. Revise your by-laws. Under the CNCA, all by-laws must have the following two mandatory provisions:
    • Conditions required for membership
    • Notice of meetings to members who are entitled to vote
     If there are no other provisions in your by-laws, the default rules in the CNCA will apply.
  4. Call a meeting of members to review and approve the articles of continuance and submit them to Corporations Canada.
  5. Prepare and submit Form 4002 – Initial Registered Office Address and First Board of Directors, and a copy of the revised by-laws. If the NFP intends to change its name on transition, it must also file a copy of a NUANS Name Search Report with Corporations Canada.

After you have completed the above steps, you will be in compliance with the new act, and no longer run the risk of being deemed inactive and dissolved.

Lastly, in going through this process, the NFP Corporation should consider whether it is a soliciting or non-soliciting corporation. This classification is defined in the CNCA and affects the financial reporting requirements of the corporation.

For more information on transitioning, or questions on the differences between the new and old acts and your financial reporting requirements, do not hesitate to contact one of the advisors at Crowe Soberman LLP.

References:

1. Corporations Canada Transition Guide: http://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs04960.html
2. Five Steps to Transition: http://www.charitycentral.ca/docs/transitioning-en.pdf
3. http://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs04961.html

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions