New Legislation Impacts Not-for-Profits

New Canada Not-For-Profit Corporations Act requires all Federal not-for-profit corporations to amend by-law by October, 2014.

On October 17, 2011, the Canada Not-for-profit Corporations Act ( the “CNCA”) finally came into force after receiving Royal Assent on June 23, 2009. The CNCA replaces Part II of the Canada Corporations Act and provides a simplified process, more flexibility and a clearly defined set of rules to govern the internal affairs of Federal not-for-profit corporations.

What you need to know:

• The new legislation does not automaticallyapply to existing not-for-profit corporations.  A three year transition period is in place to allow not-for-profit corporations time to amend their by-laws
• Not-for-profit organization must take active steps to become compliant under the new Act
• Once these steps are taken, the new charter documents must be filed with Corporations Canada
• Corporations Canada will not charge a fee to file the charter documents to continue under the new Act
• The deadline to file the charter documents is October 17, 2014
• If the charter documents are not filed by the deadline, the corporation will be dissolved

What is different:

• The CNCA now classifies corporations as either "soliciting" or "non-soliciting" corporations depending on the amount and source of funding they receive in a given year. "Soliciting" corporations are subject to stiffer requirements;
• The CNCA now addresses many operational issues that were once only covered in a corporation's set of by-laws which means that each not-for-profit corporation's by-laws will now be simpler and less detailed

What needs to be done:
The following are the steps to transition to the CNCA:

1. Review the current letters patent and existing bylaws. The new Act does not require the same level of detail in the by-laws such as procedures for members meeting, how directors are to be appointed and the procedure for amending by-laws. The two mandatory by-laws that must be included are a) conditions required for membership and b) notice of meetings to members who are entitled to vote at the meeting
2. Draft the Articles of Continuance
3. Create a new set of bylaws or revise the current ones
4. Get Members to approve the Articles of Continuance and new set of bylaws
5. Submit the Articles of Continuance and bylaws to Corporations Canada.

Once approved, a Certificate of Continuance will be issued.

What if you are a Registered Charity:

If the corporation is or intends to become a “registered charity,” it is highly recommended that the Charities Directorate of the Canada Revenue Agency be consulted on a case-to-case basis in order to ensure that the corporation maintains its registered charity status.

Please contact us to discuss your not-for-profit corporation and how the CNCA applies in your situation. Kelly Santini LLP would be pleased to answer any questions you may have and to assist in the transition of your corporation to the new Act.

For more information, you can visit Industry Canada’s ‘Transition Guide for Federal Not-for-Profit Corporations’.