As of 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 registration as
a charity which could result in substantial tax penalties, and thus
there are serious implications for the failure to continue under
the New Act.
FEATURES OF THE NEW ACT In general, the New Act
has been modernized to conform with modern business corporation
statutes. The New Act 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
There is additional oversight provided for under the New Act
including the requirement to submit all bylaws and amendments
thereto to Corporations Canada. There are also financial reporting
requirements under the New Act. For non-soliciting corporations
with annual gross revenues in excess of $1 million 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 million or for soliciting
corporations with revenues under $50,000, and 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 Corporations Canada. Soliciting
corporations must make their financial records publicly
PROCESS OF TRANSITION Corporations incorporated
under the Old Act which have not started the continuance process
under the New Act should act now to ensure the process is completed
before the October 17, 2014 deadline. 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, as
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.
Transitioning is a fairly simple process under the New Act,
although some time will be needed, as member approval is required.
The corporation must replace its letters patent, supplementary
letters patent (if any) and bylaws with new charter documents which
comply 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 be submitted
either as part of the initial package, or within 12 months of
continuance following approval by the members.
Following a successful transition under the New Act, all
registered charities (including those who have not amended their
purposes and even those who have obtained pre-approval from the
Canada Revenue Agency) must submit the certificate of continuance,
articles of continuance, various fi ling forms as well as a copy of
the current bylaws and statement of purposes to the Canada Revenue
As we're down to a matter of months before the transition
deadline of October 17, 2014, any corporation incorporated under
the Old Act should turn their attention to their continuance under
the New Act, so as to avoid an involuntary dissolution.
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.
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.
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).