Corporations governed by the Canada Corporations Act
have until October 17, 2014 to continue under the Canada
Not-for-profit Corporations Act ("CNCA"). At
this point, thousands of corporations have completed the transition
process; many more thousands need to determine if they will
continue under the CNCA. To assist those corporations still
working on the process, it is helpful to consider some of the
common mistakes that have been made in continuance documents filed
Corporations Canada has published a list of common deficiencies
that are found in the Articles of Continuance (transition) (Form
4031), noting that over 40% of continuance applications are
returned to the applicant due to these deficiencies. Many of
these deficiencies are easily avoided, and amount to technical or
procedural errors, including:
provisions of the articles not being included – each
provision on Form 4031 must be completed except for the provisions
for change of name (if there is none), restrictions on the
activities that the corporation may carry out and additional
Full legal name
not being set out;
search report if a new name is requested;
territory set out not matching the province or territory in Form
directors indicated on Form 4031 not matching the number of
directors set out in Form 4002.
The provision in the Articles of Continuance (transition) that
appears to cause the most problems is the provision setting out the
classes of members of the corporation. This section cannot be
blank and must set out a clear description of at least one class or
group of members. In addition, the voting rights of the
members must be specified. If there is only one class of
members, the members must be voting members. If there is more
than one class of members, the articles must give the right to vote
to at least one class or group.
Finally, the corporation's by-laws should not be attached to
the Articles of Continuance (transition) – this might cause
the by-laws to become part of the articles, which would mean that
the by-laws could be changed only by amending the articles.
Corporations Canada has also clarified that the by-laws should not
be referenced in the articles – if they are referenced,
Corporations Canada will be required to review the by-laws.
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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