This article provides an update on new legislation affecting charities and not-for-profit corporations incorporated under the Federal Canada Corporations Act and the Ontario Corporations Act.
1. Corporations Incorporated under the Federal Canada Corporations Act
Corporations established under Part II of the federal
Canada Corporations Act ("CCA"), which includes many
charities and not-for-profit corporations, must take affirmative
steps to formally transition (i.e., continue) under the new
Canada Not-for-Profit Corporations Act
("CNCA") by October 17, 2014. A failure to continue by
this deadline will result in the automatic dissolution of the
The CNCA is a modern corporate statute with certain rules and restrictions that are very different from those contained in the CCA. Accordingly, and depending on the corporation's existing membership and governance structures, a continuance could potentially raise significant and complex issues that should be addressed well before the continuance deadline.
In this respect, it is reasonable to anticipate a significant increase in the coming months in the number of applications by corporations seeking to continue under the CNCA, which could strain governmental resources and delay the processing of applications. The government will soon begin sending reminder notices to affected corporations. All corporations that are required to continue under the CNCA are urged to initiate the continuance process as soon as possible.
The CNCA does not apply to unincorporated entities or to provincially-incorporated charities and not-for-profit corporations. While there is no requirement for such entities and corporations to continue under the CNCA, it may be beneficial in certain circumstances to do so.
2. Corporations Incorporated under the Ontario Corporations Act
Ontario has its own legislation that allows for the
incorporation of charities and not-for-profit corporations, the
Ontario Corporations Act ("OCA"), which is
currently undergoing a "modernization" process similar to
that described above in respect of the CCA and CNCA.
In this respect, Ontario has proposed replacing the OCA with a new statute, the Ontario Not-for-Profit Corporations Act ("ONCA"). It is anticipated that the new statute will have significant impact on the governance of such provincially-incorporated entities. At this stage, the ONCA in not anticipated to come into force prior to 2016 and there remains some measure of uncertainty regarding its final form. Once enacted, it is expected that charities and not-for-profit corporations incorporated under the OCA will have three years (subject to some exceptions) to make the necessary amendments to their constating documents and governance procedures to bring them into conformity with the ONCA. Such corporations should start considering in the near future the options that may be available in their particular circumstances, including alternatives for achieving compliance with the proposed ONCA as well as potentially continuing under the new federal CNCA.
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.