The New Canada Not-for-profit Corporations Act - questions for directors to ask

Introduction

The new Canada Not-for-profit Corporations Act2 (the “CNCA”) provides for the phased in repeal of the Canada Corporations Act3 (the “CCA”) and, specifically, will replace Part II of the CCA, the section which governs federal corporations without share capital (commonly referred to as not-for-profit corporations).  The CNCA received Royal Assent on June 23, 2009 and was proclaimed in force effective October 17, 2011.

\Every not-for-profit corporation (including charities) currently governed by Part II of the CCA will have three years to formally make the transition to the CNCA.  In order to be governed by the CNCA, a corporation will have to apply for a certificate of continuance by October 17, 2014 or face dissolution.  There will be no government fee for the filing of articles of continuance if they are filed within the prescribed three years.  If a corporation does not complete the transition by October 17, 2014, the corporation may be dissolved.  If a corporation is dissolved for failure to file the transition articles, it will be eligible for revival under the CNCA, subject to a prescribed fee. 

Members and Membership Rights

The CNCA changes some of the rules regarding members and memberships rights.  For example, the new legislation grants voting rights to non-voting members.  Specifically, the CNCA provides that where a proposed amendment to articles or bylaws will affect a particular class of members, the amendment must be approved by that class by way of a separate class vote.  This voting right is granted to both voting and non-voting members and a corporation may not opt out except in limited circumstances.

In addition, the CNCA changes the requirements regarding the placement of membership provisions in a corporation’s governance documents. Some provisions must be contained in the articles and others in the by-laws: 

CPA NPO Director Alert - Dec 2011