Time is ticking for federal not-for-profit organizations: Failure to continue into the new Canada not-for-profit act may result in dissolution 

publication 

February 2013

Corporate Bulletin

The new Canada Not-for-profit Corporations Act (the "Act") came into force on October 17, 2011. The Act completely overhauls the governance of federally incorporated not-for-profit ("NFP") corporations. NFP corporations have until October 17, 2014 to complete their continuance to the Act. If not completed by that date, they can be administratively dissolved.

Under the Act, NFP corporations have articles of continuance rather than letters patent. As well, in almost all cases, changes will need to be made to the NFP corporation's by-laws to conform to the Act. There are new provisions regarding members, including the provision of limited voting rights to non-voting members. Certain rules in the Act distinguish between soliciting and non-soliciting corporations. There are various options for giving notice of and holding meetings of members. NFP corporations should be aware that continuance must be approved by not less than 2/3rds of the votes cast at a meeting of the members. For those NFP corporations that are registered charities or other "qualified donees" under the Income Tax Act, time should be allowed for pre-approval of the statement of purpose in their articles by the Charities Directorate of Canada Revenue Agency. The October 17, 2014 deadline does not leave much time for NFP corporations whose members meet only once a year at an annual meeting.

McMillan LLP acts for a wide variety of large and small NFP corporations, including academic institutions, cultural organizations, community foundations, professional and trade associations, recreational associations, churches, hospitals and their related foundations and private foundations. We have already assisted many NFP corporations with their transition to the Act.

by Barbara Sinclair, Wayne Gray and Philip Plante-Ajah

a cautionary note

The foregoing provides only an overview. Readers are cautioned against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© McMillan LLP 2013