All not-for-profit corporations (NFPs) incorporated under the
now-repealed Part II of the Canada Corporations Act must
apply to transition to the Canada Not-for-Profit Corporations
Act (the "CNCA") prior to October 17, 2014, failing
which they may be dissolved by Corporations Canada. Many
not-for-profit corporations (NFPs) have still yet to
While dissolution is not automatic (as Corporations Canada will
first give notice to the affected corporations), we strongly
recommend that all federally-incorporated NFPs start their
transition process without delay. This process includes preparing
Articles of Continuance and new by-laws which are compliant with
the CNCA and having them approved by the directors and members of
NFP (see below).
Furthermore, any registered charities wishing to change their
purposes as part of the transition process should obtain CRA's
prior approval of this change before filing their transition
documents. Be aware that this approval process is currently taking
between 2 weeks to 6 months, depending on the complexity of the
By way of background, the CNCA attempts to modernize the
corporate governance standards applicable to federal NFPs and to
make the not-for-profit sector more accountable to the public. It
makes significant changes to the way in which federal NFPs are
regulated. Some of the key elements of this new framework are:
Modernized Governance Tools.
Federally-incorporated NFPs will operate under a modernized
governance regime, such as having the ability to participate in
meetings by electronic means.
Soliciting Corporations. The CNCA classifies
federal NFPs as either "soliciting" or
"non-soliciting", depending on the amount and source of
funding they receive in a given financial year, with
"soliciting corporations" being subjected to more
Financial Review. The CNCA imposes more
stringent financial review requirements on federal NFPs, including
the appointment of an auditor and the need to conduct an annual
financial review. The actual requirements imposed (and whether an
NFP is exempted from any requirement) will vary depending on the
level of funds received and whether a corporation is
Member remedies. New remedies are available
for members of federal NFPs, including the right to file a
derivative action in the name of the NFP, to obtain compliance or
restraining orders against the NFP and to access the oppression
remedy under certain circumstance for actions that unfairly
prejudice or disregard a member's interests.
In order to comply with the CNCA, federal NFPs will likely need
to make a number of changes to their governing documents. In
connection with the transition to the CNCA, we anticipate that NFPs
will need to:
review their current governing documents to determine
amendments required to comply with the CNCA (and any other
amendments which they would like to make at this time);
prepare Articles of Continuance and new By-laws that conform
with the CNCA (the latter of which need to be filed with Industry
Canada within 12 months of filing the Articles of
obtain director and member approval of the transition
if a registered charity and changing its purposes, obtain
CRA's approval of such revised purpose; and
file the Articles of Continuance and related documents by
October 17, 2014.
here for more information on the CNCA and transition
requirements. Given the potential for complexity or delays in the
transition process, we recommend obtaining legal counsel as soon as
possible for assistance. Members of Davis'
Charities and Not-for-Profit Practice Group have extensive
experience in this area.
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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