Effective October 18, 2014, the Director of Corporations Canada, Canada Corporations Act for failure to transition to the Not-for-profit Corporations Act (NFP Act). The good news is that corporations have not transitioned as of October 17, 2014. Rather, steps will be taken by Corporations Canada which are intended to lead to dissolution. A Notice of Intent to Dissolve to be served on such corporations. Such notice will be necessary for the transition, failing which dissolution will occur. Any corporation that fails to respond to the Notice of Intent to be dissolved and will be dissolved.
A NFP Act will have the ability to be legally revived. The process will involve both a revival process and the transition to the NFP Act. October 17, 2014, which presents a Certificate of Continuance issued by Corporations Canada, for which there will be a fee for the revival and transition process.
If a corporation is dissolved in law, there are serious and negative ramifications. Any and all assets of the corporation are lost. Any loan agreements and other banking agreements are effectively breached by the corporation. Any monies and bank accounts would effectively be lost, as again, the result of dissolution is effectively a legal elimination of the entity.
As we have suggested in the course of the past years of our LAB seminars, the steps required to realize a Certificate of Continuance in a timely manner, before October 17th, of this year are both simple and inexpensive. They consist of the completion of two or three forms which are to be sent to Corporations Canada. Within 7 to 10 business days afterwards, a Certificate of Continuance is issued.
Many corporations avoid this process of complying with the new act. This is not true. More importantly, the timeframe for the filing of the revised bylaws is 12 months following the date of the issuance of the Certificate of Continuance. Therefore, all of this should be avoided and, where appropriate, should not be allowed to enter into the future. We strongly suggest that you take the necessary steps towards the completion of the documents and the filing of same with Corporations Canada as soon as possible and well before the termination date of October 17, 2014. Our offices would be pleased to assist you with filing and filing with Corporations Canada in a timely manner. This will help your corporation to avoid the risk of corporate liability.
David A. Stout
Partner, Nelligan O’Brien Payne LLP
David Stout is a partner at Nelligan O’Brien Payne LLP, and leader of the Business Law Group.