The Canada Not-for-Profit Corporations Act (Bill
C-62) received first reading in the House of Commons on June
13, 2008. The proposed Act will significantly overhaul and
modernize the Canadian federal not-for-profit legislation,
which has not been substantially amended since 1917. The
proposed Act uses the governance framework of the Canada
Business Corporations Act (CBCA) and replaces the
Canada Corporations Act (CCA) — in particular,
Part II of the CCA, which currently governs about 19,000
Two features of the Part II CCA regime that have created
complexities and have been burdensome for companies are:
the procedure and documentation for incorporation of
not-for-profit corporations; and
the financial reporting requirements.
Under the proposed Act, the letters patent regime will be
removed, including the requirement for ministerial review and
approval of the letters patent and bylaws. A quicker and more
streamlined "as of right" system of incorporation
will be implemented. Incorporation documents, which can be
filed electronically, will be submitted to the Director
appointed under the proposed Act along with the requisite fees.
The incorporation documents will require information pertaining
to classes of members, voting rights of members and number of
Under Part II of the CCA, corporations are required to
appoint auditors and prepare audited financial statements. The
proposed Act recognizes that not all not-for-profit
corporations should be subject to the same financial
requirements. It divides organizations into "soliciting
corporations," which are corporations that solicit public
donations or receive government assistance, and
"non-soliciting" corporations. For soliciting
corporations, the size of the annual revenues of the
organization will determine the type of audit required, whether
a full audit, a review engagement completed by an auditor, or
(with the consent of members) no review. However, the proposed
Act contains a new requirement that financial statements for
all not-for-profit corporations be made available to their
members, directors and officers, as well as the Director under
the proposed Act. Additionally, soliciting corporations must
make their financial statements publicly available.
The proposed Act introduces a modern corporate regime for
directors, officers and members. There has been considerable
confusion regarding the liabilities of the directors under Part
II of the CCA, particularly director concerns with respect to
personal liabilities. This uncertainty may have resulted in
hesitation to take on the role as a director of a
not-for-profit corporation. Under the proposed Act, the rights,
duties on the part of individuals (including the standard for
the duty of care), and the liabilities of directors and
officers will be set out in a fashion similar to the CBCA
regime. The proposed Act will also set out defences that are
available to directors and officers.
The rights of members will be set out in detail. Previously,
some of these rights were not available to members of a
not-for-profit corporation because the regime and concepts of
the CCA were outdated. Under the proposed Act, the members will
additional voting rights;
rights to call special meetings;
better access to information about the corporation;
a more complete regime of remedies for members, as well
as for other interested parties such as creditors, in the
event of oppressive or unfairly prejudicial treatment by the
In the event that Bill C-62 and the proposed regulations
come into force, every not-for-profit corporation under Part II
of the CCA will have a three-year period in which to continue
under the new Act. Specific details of the transition
requirements will be available if and when Bill C-62 comes into
The proposed Act will require that some 12 share capital
business corporations created by Special Acts of Parliament and
governed under Part IV of the CCA be continued under the
McCarthy Tétrault Notes:
If Bill C-62 comes into force, federal not-for-profit
corporations will benefit from having a complete and modern
Existing not-for-profit corporations governed by the current
patchwork regime of the CCA will face considerable transitional
issues, but the proposed Act will facilitate the incorporation
of new not-for-profit corporations.
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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