5 Steps To Transition: The Canada Not-For-Profit Corporations Act

 
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Introduction

This article is a follow up to our October 2011 article regarding the Canada Not-for-Profit Corporations Act ("CNCA"), which had just entered into force. In that earlier article, we advised you of the key provisions of the Act, and the requirement to continue your not-for-profit corporation under the CNCA on or before October 17, 2014, failing which the corporation will be dissolved.

In this Focus, we are repeating much of the information contained in our October 2011 Focus, but we are also providing you with additional information based on our experience to date. For federal not-for-profit corporations which have not yet continued, we are now one year away from the dissolution date. It is definitely timely to start the transition process, as sufficient time will be needed to prepare the necessary materials for Board review and member approval.

Background

The CNCA came into force on October 17, 2011, bringing with it a new framework for the governance and incorporation of associations, charities and other federal not-for-profit organizations. The CNCA replaces Part II of the Canada Corporations Act ("CCA"), which has set the rules for not-for-profit organizations since 1917.

The new legislation is long and detailed, for a reason. It is intended to provide a comprehensive "rule book" that, among other things, replaces a great deal of the detail that was previously required in bylaws, and allows latitude for a corporation to either accept the default requirements in the legislation, or set rules to fit its own circumstances and practices. Overall, the CNCA creates a more streamlined framework for Canadian not-for-profit corporations, which should be well worth the initial transition process.

As under the previous legislative regime, the rules respecting corporate governance and the rules respecting registered charities are kept separate. The CNCA does not grant registered charity status under the Income Tax Act, nor does it directly address any other tax-related issues.

Bylaws

Industry Canada will no longer review and approve bylaws. Corporations are required, however, to file bylaws and amendments with Industry Canada within twelve months of member approval. The CNCA gives corporations significant latitude to adopt bylaws that suit their specific needs.

Because the CNCA sets broadly applicable default rules, a corporation's bylaws can be minimal, containing as little as the conditions for membership and notice of members' meetings.

It will therefore be up to...

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