The new Canada Not-for-profit Corporations Act ("CNCA") received Royal Assent on June 23, 2009 and was proclaimed in force effective October 17, 2011. The Act replaces Part II of the Canada Corporations Act ("CCA") and modernizes the regime governing federal not-for-profit corporations (NFPs). Federal NFPs need to be proactive and take certain steps to ensure they are in compliance with the requirements of the CNCA.
Filing Articles of Continuance to Continue Under CNCA
Federal NFPs currently existing under Part II of the CCA will have a three (3) year period from October 17, 2011 to apply for a continuance under the new CNCA. If a federal NFP existing under Part II of the CCA is not continued under the CNCA before October 17, 2014, Corporations Canada will, upon first giving notice to the corporation, dissolve that corporation.
In order for a federal NFP to continue under the CNCA, that corporation must file Articles of Continuance using the form provided by Corporations Canada. Applying for a continuance in this manner is mandatory for NFPs, and therefore no fee is associated with the application. The following information must be included in the Articles of Continuance:
- the name of the NFP;
- the province where the NFP's registered office is to be situated;
- the classes, or regional or other groups, of members that the NFP is authorized to establish and, if there are two or more classes or groups, any voting rights attaching to those classes or groups;
- the number of directors or the minimum and maximum number of directors of the NFP;
- any restriction on the activities that the NFP may carry on;
- a statement of the purpose of the NFP; and
- a statement concerning the distribution of the NFP's property remaining on liquidation.
The Articles of Continuance must be approved by the NFP's members prior to such Articles being submitted to Corporations Canada. As part of the continuance process, an existing NFP incorporated under Part II of the CCA will no longer have letters patent or stated objects. Rather, the Articles will contain a statement of the NFP’s purposes.
At the same time that a NFP corporation is preparing the Articles of Continuance, it should also be preparing new by-laws that conform to the CNCA. The CNCA contains some mandatory provisions that are to be included in the by-laws. Once drafted, by-laws will need to be deposited with Industry Canada within twelve (12) months of approval by the members, but the by-laws do not need to be approved by Industry Canada.
The CNCA brings many changes to the requirements regarding the manner in which federal NFP's are governed. For example, each NFP will have the power to enact and amend by-laws without having to obtain ministerial approval. Furthermore, all directors must be elected by the members under the CNCA and ex-officiodirectors are no longer permitted.
Nelligan O'Brien Payne LLP has significant experience in working with federal not-for-profit organizations and welcomes the opportunity to assist them in transitioning to the CNCA.