The King is Dead, Long Live the King.
Adam Aptowitzer, July 09, 2009
After several attempts Parliament has finally passed a new law to replace the Canada Corporations Act (the “CCA”) which was originally passed in 1917. The new Canada Not For Profit Corporations Act (the “NFPCA”) was given Royal Assent on June 23rd, 2009. For those who have followed this legislation (and by now point most of us had probably given up) the passing into law of this bill came after it was introduced into Parliament for the third time having died on the order paper twice when new elections were called.
While many in the sector feel the legislation is flawed it at least has the merit of being designed in the current age rather than during World War I. That the NCPA is designed specifically for the charity and not-for-profit sector is of course an additional bonus rather than the CCA which was, at the time of its promulgation, the corporate law for all corporations. Nevertheless, the NCPA has the disadvantage of imposing upon federally incorporated corporations (or corporations continued under the federal act) requirements which are not currently an issue.
The initial requirement for corporations which have been incorporated under the CCA will be the necessity to apply for a clearance certificate in order to maintain its corporate existence under the new regime. Corporation which do not do so will be dissolved three years after the NFPCA takes effect. Corporations will also be required to comply with a whole new set of rules which apply specifically to corporations which solicit gifts and donations such as charities. Of course, the standard requirements of annual resolutions and corporate filings still exist but have been modified.
The NFPCA includes a variety of other provisions as well which will streamline new incorporations, strengthen the financial reporting requirements, and modernize the corporate governance requirements. As the date on which the new act comes into force is not yet known there is likely at least some time to digest these new requirements. Over the months to come we will continue to provide information which will illuminate this new act for our clients.