Not-for-Profit legislative update from Alberta

Over the past year, there have been a number of significant legislative changes affecting the not-for-profit sector in Alberta. Some key updates to be aware of include:

1. Amendments to all incorporating legislation allowing organizations to hold virtual meetings;
2. Amendments to the Companies Act, impacting more than 4,500 Alberta not-for-profits that were incorporated under Part 9 of that Act; and
3. The coming into force of the Freedom to Care Act, which protects volunteers of not-for-profit organizations from liability, and allows not-for-profit organizations to apply for one-time, short-term exemptions from certain Alberta regulations.

Below we provide a brief summary of each of these updates.

1. Ongoing Authority for Virtual Meetings

The Alberta legislature passed Bill 53: the Service Alberta Statutes (Virtual Meetings) Amendment Act (“Bill 53”) on March 26, 2021.

In response to the COVID-19 Pandemic, Bill 53 amended several pieces of Alberta legislation, including the Societies Act, the Companies Act, and the Cooperatives Act, to allow for virtual meetings and voting, unless an organization’s governing documents explicitly prohibit it. Bill 53 also amended the Societies Act, the Companies Act, and the Cooperatives Act to allow notices and documents to be sent by electronic means in accordance with the Electronic Transactions Act. The changes implemented by Bill 53 are retroactive as of August 15, 2020.

2. Important Amendments to the Companies Act

Certain sections of the Red Tape Reduction Implementation Act, 2020, amending the Companies Act were proclaimed into force on March 29, 2021, and the remaining amendments were proclaimed into force on June 1, 2021.

Prior to 1982, the Companies Act was used to incorporate for-profit businesses. As such, many of the provisions of the Companies Act were not applicable to not-for-profit companies incorporated under Part 9 of that Act. Many of the amendments to the Companies Act introduced by the Red Tape Reduction Implementation Act, 2020, intended to eliminate these irrelevant provisions. Other amendments were made to make processes more efficient or effective.

Some important amendments to be aware of include:

• The addition of section 29.1 to the Companies Act, which requires all companies to appoint an “agent for service.” According to the Alberta Corporate Registry, the agent for service must be an individual resident of Alberta, with a physical/mailing address in Alberta, and their office must be accessible to the public during regular business hours. The intention of this new requirement is to ensure that there is a specific individual who may be served with documents or notices on behalf of a company, in addition to service upon a company’s registered office, or upon any director, manager or other officer of the company. There is no requirement that an agent for service be external to the company, or that they be a lawyer. Existing companies have until March 29, 2022, to appoint an agent for service. Failure to do so could result in the dissolution of a company. If a company wishes to use Miller Thomson as its agent for service, an individual Miller Thomson lawyer working in on of our  Alberta offices should be appointed as the company’s agent for service;
• Amendments to sections 136 and 162 of the Companies Act change the requirements for a company’s financial statements and annual returns. Previously, the requirements for financial statements did not align with generally accepted accounting principles. Now, financial statements must include a balance sheet, a statement of retained earnings, an income statement, and a statement of changes in financial position. Previously, private companies (which include non-profits with 50 members or less) were required to provide a full list of members and a full list directors with every annual report. Now, all non-profits governed by the Companies Act are only required to report on changes of directors in their annual return, and are only required to provided a list of shareholders (i.e. members to which no distributions can be made) if the company is limited by shares. Annual returns for public companies (which include non-profits with more than 50 members) must include copies of their most recent financial statements and auditor’s report; and
• Amendments to various sections of the Companies Act eliminate the requirement to obtain court approval for fundamental changes, such as making amendments to a company’s objects or amalgamating with another company.

3. The Implications of the new Freedom to Care Act

Alberta’s new Freedom to Care Act  came into force on September 1, 2021. The Freedom to Care Act applies to “non-profit organizations” (defined as entities organized and conducted for public benefit, incorporated under an Act of Alberta, and operating for a purpose other than for profit) and volunteers of such organizations. Volunteers are defined to include directors, officers and trustees of non-profit organizations.

The Freedom to Care Act has two main components: (1) protecting volunteers of non-profit organizations from liability; and (2) allowing non-profit organizations to apply for exemptions from the application of any Alberta regulation, other than regulations that apply solely to non-profit  organizations.

The liability protection provided by the Freedom to Care Act extends to volunteers acting within the scope of their responsibilities for a non-profit organization, who are properly licensed, certified, or authorized (if required by law) for the activities. The liability protection does not apply if the damage was caused by willful, reckless or criminal misconduct; if the damage was caused by the volunteer while operating an insured motor vehicle; or if the volunteer was impaired by alcohol or drugs at the time of the act or omission.

The Government of Alberta has developed a process for non-profit organizations seeking to apply for an exemption from a specific regulation. Since many regulations already exempt non-profit organizations, the Government has also developed a searchable inventory of existing exemptions that may benefit organizations.

Conclusion

Companies that are incorporated under Part 9 of the Companies Act of Alberta, should ensure that they are familiar with all the changes to the Companies Act, and all Alberta not-for-profit organizations should consider how the Freedom to Care Act may affect their operations. The Government of Alberta has developed a webpage that includes resources to help organizations and volunteers understand the implications of  the new legislation (scroll to the bottom of the webpage for links to resources).

The Social Impact group at Miller Thomson would be pleased to answer any questions you may have about the legislative changes outlined in this article, or to review your organization’s governing documents and policies for compliance.