By: C. Yvonne Chenier
In typical majority government style (at least in Alberta) the PC Government brought in surprise and fast changes that will affect the non-profit sector in Alberta and even elsewhere in Canada. Bill 12 the Statutes Amendment Act, 2014, was introduced in the waning moments of the 2014 spring session of the legislature. In less than 2 days the time the Bill was introduced and then passed. In what has been dubbed Harper-esque style, Bill 12 made amendments to numerous statutes in Alberta including the Charitable Fund-raising Act and the Societies Act.
In the same bill where the Free Hold Mineral Rights Tax Act was amended along with other noteworthy changes such as amendments to the Vital Statistics Act to allow changes to be made to a person’s sex on birth, marriage, and other kinds of certificates and changing the words “husband and wife” to “spouse” and “mother and father” to “parents” in much of Alberta’s legislation, the Societies Act gets amended to allow non-profit organizations to continue ( move their legal jurisdiction ) in and out of Alberta if the other jurisdiction permits. Apparently this latter amendment was requested by the Muttart Foundation and was supported by the Alberta Law Reform Institute, which is in the middle of a reform project of its own regarding the non-profit legislation in the province.
It does appear that the PC Government has heard the cry from many in the non-profit sector that they do not feel the need to pay for expensive audits. The amendment to the Charitable Fund-raising Act gets rid of any mention of the requirement to file audited financial statements for those who do fundraising in the province. The amendments to the Societies Act will allow those organizations who are incorporated, say under the old Canada Corporations Act Part II, who are being pushed into continuing under the new Canada Not-for-profit Corporations Act, to consider another choice that does not require an audit by a professional accountant. The new Canada Not-for-profit Corporations Act has been widely written about and one of the main complaints is that it potentially forces some organizations into getting audited financial statements, even though they do not want them and might be the most private of foundations.
Some will be happy that this amendment will allow societies to continue out of Alberta. For those of us who are struggling to explain the Canada Not-for-profit Corporations Act to our clients and having to discuss matters like voting rights for non-voting members and the aforementioned audit requirements, we consider that it is really a bonus for those organizations who actually want to continue into Alberta. As an aside, it should be noted that this amendment will not assist the other type of non-profit organization that exists in Alberta; one incorporated under Part 9 of the Companies Act. As it stands now these entities have nowhere to go if they do not like the constraints of that legislation.
So what does this mean? It means that Alberta is open for business for those in the non-profit sector if they choose to place themselves under the regime of the Alberta government. There is no residency requirement under the Alberta Societies Act; one simply needs five people to sign an application. All they will have to do to move to Alberta under the amended legislation is apply for a certificate of continuance by filing an application for continuance in the (yet to be) prescribed form and include a copy of the bylaws of the proposed society (that must comply with the requirements of the Societies Act), pay the (yet to be) prescribed fee, and provide any other information requested by the Registrar. It should be noted that the legislation provides that the Registrar may impose terms and conditions on the continuance and may even refuse to issue a certificate of continuance. This should be interesting and may create some drama for some organizations.
However, those who have active boards for their organization should be warned that unlike the Canada Not-for-profit Corporations Act which codifies directors’ and officers’ duties and gives them the reasonable diligence defence, the Societies Act is silent. Even though the director’s obligations may be codified as law reform progresses in Alberta, in the meantime directors and officers would be subject to the common law duty of care. Organizations who hope to continue into Alberta under the Societies Act should get legal advice as to the common law duties of directors and officers of organizations. They might find the defences sorely lacking compared to the federal statute.
For the right organization, this amendment could be a positive development and an option that could be explored. These amendments are not proclaimed in force yet until done so by an Alberta order in council. It is hoped that they will be proclaimed before October 17, 2014, which is the drop dead date under the Canada Not-for-profit Corporations Act for those who have not yet continued out of the Canada Corporations Act Part II.