It has been over a year since federally incorporated non-share capital corporations were required to continue under the Canada Not-for-profit Corporations Act (“CNCA”). The CNCA, which replaced the Canada Corporations Act, was an overhaul of the legislation governing federally incorporated non-share capital corporations. As previously reported, the new legislation introduced a number of substantive changes to the governance requirements of such corporations. Below is a list of considerations to ensure compliance with the CNCA.
It is important that corporations which have continued under the CNCA bear in mind that the date of their continuance becomes their new anniversary date. Importantly, federally incorporated non-share capital corporations are required to file their annual returns with Corporations Canada within 60 days of the date shown on their Certificate of Continuance. Corporations Canada’s annual return online filing centre can be accessed on their website. A corporation’s failure to file its annual return on time may result in the issuance of a default notice and, if unrectified, involuntary dissolution of the corporation.
Those corporations that are “soliciting corporations” are also required to submit a copy of their comparative financial statements to Corporations Canada not less than 21 days before each annual members’ meeting. Comparative financial statements are those statements that compare a corporation’s current financial condition to that of previous years.
Updating Corporate Changes
Changes regarding directors and the registered office address of the corporation must be filed within 15 days of the change. Further, immediately after members of a corporation adopt amendments relating to that corporation’s articles, the corporation is required to file Articles of Amendment with Corporations Canada. Amendments to a corporation’s articles include:
- the corporation’s name;
- the province or territory in which the corporation’s registered office is located;
- the fixed, minimum or maximum number of directors;
- the classes, or regional or other groups, of members;
- the restrictions on the activities the corporation may carry on;
- the statement of the purpose of the corporation;
- the statement regarding the distribution of property remaining on liquidation; and
- any other provision included in the corporation’s articles.
In general, corporations that maintain two or more classes of members are required to seek approval from each class of member in respect of amendments to the corporation’s articles that alter the membership structure of the corporation.
The forms required to make corporate amendments to federal non-share capital corporations have changed. Copies of the new forms may be found on the Government of Canada’s website. Service fees and turnaround times for non-share capital filings with Corporations Canada are also available on the website.
Charities must still provide notice to the Canada Revenue Agency (“CRA”) of certain corporate changes. These changes include:
- changing a charity’s legal name;
- changing a charity’s legal status (i.e., becoming incorporated (for example, where a charity was established originally by trust deed), ceasing to be incorporated, changing jurisdiction, becoming or ceasing to be an internal division);
- changing a charity’s purposes;
- changing a charity’s by-laws;
- changing a charity’s contact information (including contact person);
- changing a charity’s authorized representative information;
- changing a charity’s director, trustee, and like officials information; and
- amalgamations, mergers, and consolidations.
CRA’s reporting requirements with respect to each of these specific changes may be found here.
Financial Review and Disclosure
A soliciting corporation is a non-share capital corporation that receives $10,000 or more in public funds in the previous financial year. Once determined to be a soliciting corporation, the corporation retains this status for a period of three years. Under the CNCA, soliciting and non-soliciting corporations have different obligations and available elections when it comes to their level of financial review and disclosure. The CNCA states the various elections and levels of financial review based on the gross annual revenues of soliciting versus non-soliciting corporations.
- Under $50,000 – the corporation must conduct a review engagement unless the members of the corporation waive the review engagement or pass a resolution to conduct an audit.
- Between $50,000 and $250,000 – the corporation must conduct an audit unless the members of the corporation pass a special resolution to conduct a review engagement.
- Over $250,000 – the corporation must conduct an audit.
- Under $1M – the corporation must conduct a review engagement unless the members of the corporation waive the review engagement or pass a resolution to conduct an audit.
- Over $1M – the corporation must conduct an audit unless the members of the corporation pass a special resolution to conduct a review engagement.
Reviving a Corporation
Please note that if your corporation has already been dissolved for failure to continue under the CNCA it is possible to apply for a corporate revival. We have previously reported on the consequences of dissolution. If, however, your organization is a registered charity that has been dissolved for failure to continue under the CNCA, CRA may revoke your corporation’s charitable status. A revocation of charitable status results in the application of a revocation penalty equal to 100% of the charity’s assets that remain after all of the charity’s outstanding debts and liabilities have been paid.