On this date twenty-four years ago I was in England, working and living variously with a number of relatives and friends in the Midlands near Sherwood Forest, in Wimbledon, and down into Plymouth. The Plymouth connection arose because I was to meet a solo sailor who needed a crew to get her battered, Tilley Endurable sponsored forty-two foot sailboat from Plymouth down to the Canary Islands. After the Canaries she planned to pick up another crew, sail to the Americas and refit the boat to enter the BOC Challenge, a daunting solo round-the-world race. Good on her for trying, but after five days aboard the Endurable I feared the boat wouldn't make it out of Plymouth Harbour so I jumped ship and headed for my cousin's place in Wimbledon.
This month marks the two year anniversary of the coming into force of the Canada Not-for-profit Corporations Act. If your organization has not transitioned yet, you are not alone. Only 1,800 of the 19,000 federally incorporated not-for-profit corporations have transitioned to the new Act. Corporations that do not make the transition by the October 17, 2014 deadline will be dissolved. It is very important to note that dissolution will affect the status of a registered charity and may result in a revocation tax equal to the full value of the corporation's remaining assets. The steps to transition are not overly complex but do take some time and planning. Organizations are required to revise their By-laws and prepare Articles of Continuance. The revised By-laws and the Articles must be approved by the Members prior to being filed with Corporations Canada. Most organizations have obtained the approval at their Annual General Meetings of Members. Given meeting notice requirements and the potential time involved with revising By-laws, the process should start no later than four months before the next Annual General Meeting.
We recently came across an article announcing "Dell shareholders approve $25 billion buyout to go private". This headline likely attracted readers interested in Dell and what this transaction means for the company. It is also likely to attract readers interested in the dollar figure included in the headline. What we realized, however, is that some readers may be unaware of what it means when a corporation is referred to as a "private" company.
I had lunch on this infamous date with a good friend who runs the charitable giving arm of a particular national disability organization in Toronto. The charity had received a donation cheque for 20,000 GBP in the mail the other day and they were quite pleased and surprised by it.
It has been nearly a year and a half since the new Canada Not-for-profit Corporations Act (the "New Act") came into force on October 17, 2011. A significant number of federally incorporated not-for-profit corporations have not yet transitioned to the New Act.
The new Canada Not-for-Profit Corporations Act came into force on October 17, 2011. Not-for-profit corporations incorporated under Part II of the Canada Corporations Act are required to make the transition to the new legislation by October 17, 2014. BACKGROUND • Virtually all existing federal not-for-profit corporations are incorporated under Part II of the Canada Corporations Act. • This Act has not been significantly amended since 1917 and does not reflect modern standards regarding corporate operations and corporate governance. • The current Act governs more than 19,000 diverse not-for-profit organizations, including 7,800 registered charities. All of which will be impacted by the new Act. HIGHLIGHTS • The Canada Not-for-Profit Corporations Act benefits not-for-profit corporations by providing: - A clear set of procedural rules. - Less red tape since Corporations Canada will no longer review and approve by-laws. - More flexibility on making fundamental changes, such as amalgamations, which were not permitted under the old Act. - A more objective standard for directors in carrying out their duties and responsibilities and a due diligence defence, which will reassure individuals who decide to sit on a board of directors.
On May 12, 2010 the Ontario Ministry of Consumer Services introduced the Not-for-Profit Corporations Act, 2010. The new Act received Royal Assent on October 25, 2010. It is anticipated that it will be proclaimed into force in late 2012. The Canada Not-for-Profit Corporations Act received Royal Assent in June, 2009 and is expected to be proclaimed into force this Spring. These two Acts include definitions to categorize not-for-profit corporations. In Ontario, certain not-for-profit corporations will be defined as Public Benefit Corporations. Federally, there will be a distinction between Soliciting Corporations and Non-Soliciting Corporations. ONTARIO - Public Benefit Corporations The new Ontario Act defines a public benefit corporation as a charitable corporation or a non-charitable corporation that receives financial benefits from people who are not members, directors, officers or employees, including government grants or similar financial assistance, that exceed $10,000 in a financial year. Public benefit corporations will be held to a higher standard than non-public benefit corporations in terms of being accountable for their financial activities because they receive funding from non-members.
Bill 65, the Ontario Not-for-Profit Corporations Act, 2010 ("ONCA"), is an Act to revise the law in respect of not-for-profit corporations. It is a government Bill. It was given First Reading on May 12, 2010 and Second Reading on June 2, 2010. We do not know when the Bill will be given Third Reading and Royal Assent. ONCA is a stand-alone statute. The ONCA replaces Ontario's current Corporations Act which now regulates not-for-profit corporations in Ontario. The ONCA will bring Ontario not-for-profit laws into conformity with other comparable statutes across Canada. The intention is to give not-for-profit corporations "a modern legal framework to enhance governance and accountability... to give more rights to members and better protect directors and officers from personal liability" (Extract, Ministry of Consumer Services Press Release May 12, 2010).
We are often retained to assist clients incorporate not-for-profit corporations and apply for charitable status with Canada Revenue Agency (CRA). Registration as a charity with CRA is required to permit the organization to issue tax receipts to donors. These organizations frequently receive donations of cash or property (such as office equipment) prior to acquiring charitable status from CRA and we are asked whether a tax receipt can be issued for those early donations. The short answer is a qualified yes for cash donations and a clear no for donations of property.
A director or trustee of a not-for-profit corporation can make a valuable contribution to your community. However, directors should be aware of their obligations and liabilities. A Director must act in good faith and in the best interests of the corporation as a whole. This obligation is key. If you represent a constituent group within the corporation, you must still act in the best interests of the corporation as a whole.