Corporations Canada is launching a program in July 2023 to start administrative dissolutions of not-for-profit (NFP) corporations that have not filed their annual return (AR) for 3 years. Since this is a program of Corporations Canada, this will only affect NFP corporations governed under the Canada Not-for-profit Corporations Act.
NFP corporations will receive a warning – Corporations Canada will send a Notice of Intent to Dissolve to NFP corporations in default of filing their Annual Returns. NFP corporations will have plenty of time to rectify their default – they will have 120 days from the date of the notice to file the required ARs. If an NFP corporation does not file their ARs by the deadline stated in the Notice of Intent to Dissolve, Corporations Canada will issue a Certificate of Dissolution to the NFP.
Be warned! A dissolved corporation can no longer legally conduct activities, bank loans may be refused, and charities registered under the Income Tax Act may lose their registration as a charity. Therefore, dissolution can have serious legal repercussions for which directors sitting on the NFP’s board can have liability.
All corporations and their directors are encouraged to understand their obligations and ensure the Annual Returns are filed to avoid dissolution. By using the Corporations Canada search tool, one can easily verify whether the NFP corporation is up to date with its Annual Return filings, and whether other information such as the registered office and the names of the directors is correct. An NFP corporation can file its annual return itself, or enlist the help of a professional such as a lawyer or accountant: File your annual return
The Annual Return requires that Corporations Canada be advised of the date of the last Annual Meeting. The Canada Not-for-profit Corporations Act requires NFP corporations to hold an annual meeting of members no later than six months after the end of the NFP corporation’s preceding financial year (See Section 160 of the Act). Therefore, NFP corporations must also hold a meeting and ought to prepare annual resolutions signed by directors and members or have written minutes of the annual meeting signed by the president and secretary of the NFP corporation.
Mills & Mills LLP can assist NFP corporations with the compliance and governance issues referenced in this blog post.
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