There's a new law in town: the impact for sport organizations.

• Author: Findlay, Hilary A.
• Position: Feature: Charity Law

[ILLUSTRATION OMITTED]

As they would have said in the Wild West: there's a new law in town--sport organizations take note!

The new federal Canada Not-for-Profit Corporations Act (SC 2009 c.23) came into effect October 17, 2011. There are about 19,500 federally incorporated not-for-profit agencies across Canada, all of which are affected by the legislation to a greater or lesser degree. There are more than 100 sport organizations--virtually every national sport organization (NSO) and multi-sport/multi-service organization (MSO), in addition to others--that are likely to be dramatically affected by this legislation. However, the legislation has a much broader effect than just that on NSOs and MSOs. Many provincial or regional organizations hold representative positions on the boards of these national organizations. Their status will also be directly affected. People who are members of a NSO or MSO may also see their membership status affected.

This is a very broad-based legislative change, that has been in development for many years. Organizations will have three years, or until October 2014, to transition from the current Canada Corporations Act to bring themselves into compliance with the new law. After that date, the Canada Corporations Act WAX cease to have effect and organizations that have not taken action to move to the new Act will find themselves without any legal status, and unable to function.

Act Now ...

Sport organizations need to carefully consider the implications of this legislation. This may involve a steep learning curve, but a necessary one. There are a number of steps that need to be taken to create the membership and board models that will comply with the new law, and it will also be necessary to obtain Canada Revenue Agency approval if the sport organization has charitable status (which most NSOs and many MSOs do). These changes will require approval of members, and for many national organizations, members only meet once per year. Depending on an organization's calendar for annual general meetings, there may be only two or at most three opportunities available between now and the deadline date for achieving compliance.

In other words, although 2014 sounds like a long time off, the changes to be made are significant and the process of change should start now.

Changes for Sport Organizations Under the Legislation

There are three significant requirements that directly affect a number of national sport organizations. Based...