Bill C-21 (Historical)

Canada Not-for-profit Corporations Act

An Act respecting not-for-profit corporations and other corporations without share capital

This enactment establishes a framework for the governance of not-for-profit corporations and other corporations without share capital. The enactment replaces Parts II and III of the Canada Corporations Act and is mainly based on the Canada Business Corporations Act.
The enactment replaces the “letters patent” system of incorporation by an “as of right” system of incorporation. The current requirement for Ministerial review of letters patent and by-laws prior to incorporation is replaced by the granting of incorporation upon the sending of required information and payment of a fee.
The enactment provides for modern corporate governance standards, including the rights, powers, duties and liabilities of directors and officers, along with related defences, and financial accountability and disclosure requirements.
The enactment sets out the capacity and powers of a corporation as a natural person, including its right to buy and sell property, make investments, borrow funds and issue debt obligations.
The enactment sets out the rights of members, including the right to vote at a meeting of members, call a special meeting of members, advance proposals for consideration at meetings of members and access corporate records.
The enactment provides requirements for financial review by a public accountant and financial disclosure based on whether a corporation has solicited funds and its level of annual revenue.
The enactment gives the Director powers of administration, including the power to make inquiries related to compliance and to access key corporate documents such as financial statements and membership lists.
The enactment includes remedies for members and other interested persons to address the conduct of a corporation that is oppressive or unfairly prejudicial to or unfairly disregards the interests of any creditor, director, officer or member.
The enactment provides procedures for the amalgamation, continuance, liquidation and dissolution of a corporation and other fundamental corporate changes. The continuance provisions govern the continuance of bodies incorporated under other Acts and provide a power for the Governor in Council to require a federal body corporate without share capital to apply for continuance under the enactment or be dissolved.
The enactment modernizes the legal regime that applies to corporations without share capital created by Special Acts of Parliament by providing that those corporations are natural persons, requiring the holding of an annual meeting and the sending of an annual return, and regulating a change of a corporation’s name and its dissolution.
The enactment make a number of consequential amendments to other federal Acts.

Canada Not-for-profit Corporations Act

[Nicolas Dufour, Bloc, Repentigny, QC]

Mr. Speaker, the Bloc Québécois has repeatedly said that it supports Bill C-4, given that the present Canada Corporations Act has become outdated.

Modernization of the act is certainly a step in the right direction, as has been said several times. The new act would take into account the financial resources and size of the organization in establishing its management mechanisms. It offers a flexible framework for the presentation of financial statements and for the internal rules of the organizations subject to it.

As well, we see a significant increase in efficiency and transparency in the process of incorporating not-for-profit organizations. Replacing the letters patent system by an as of right system of incorporation facilitates the creation of NPOs considerably. Elimination of the minister’s discretion in this regard is essential. All of this will enhance public confidence in NPOs and enhance their credibility in the public’s eyes.

I would like to give a little background to the enactment of the not-for-profit corporations act. The Canadian Corporations Act provides the framework for the incorporation and governance of federal not-for-profit corporations. The kinds of corporations governed under Part II of the Canada Corporations Act (CCA) include religious, charitable, political, mutual-benefit and general not-for-profit organizations.

In recent years some concerns have been raised that the act is outdated and that its provisions no longer meet the requirements of the modern not-for-profit sector. There have been public calls for its reform and in 1999 the federal government’s Voluntary Sector Task Force called for improvements to the regulatory structure that governs the sector. Industry Canada’s proposal to modernize the CCA was part of the task force’s plan.

In July 2000, Industry Canada issued a consultation paper, “Reform of the Canada Corporations Act: The Federal Nonprofit Framework Law”. Subsequently, the department held a series of roundtable discussions in cities across the country to consider the ideas presented in the document, and the various legislative options open to it. Following the suggestions made at the roundtables, the government decided to make concrete proposals for reforming the not-for-profit law.

On November 15, 2004, the Liberal government introduced Bill C-21, which never reached second reading. On June 13, 2008, during the second session of the 39^th Parliament, the Conservative government adopted substantially the same direction as the Liberals and introduced Bill C-62. With the hasty election call last September, it died on the order paper, as did a number of other good bills, including the one presented by my hon. colleague to provide a tax credit for young people from the regions who go outside their region to study. This was an excellent bill, which had reached the end of the process and unfortunately, because of the Conservatives’ stubborn desire to trigger an election, died on the order paper. I find this regrettable because at last we had a concrete private member’s bill that could really have helped young people, students, to stay in their region. Because of the hasty election call, it died on the order paper. We will recall that what was uppermost in the Conservatives’ minds was to save their jobs, rather than to save the jobs of workers and young people.

This morning I read in the newspaper that scientists—if I can change the subject for a moment—are starting to leave Canada because of cuts to science and research. We have to set the tone.

I want to get back to Bill C-4. On September 3, 2008, a similar bill was introduced at first reading by the Minister of State (Small Business and Tourism).

Once again, it died on the order paper when Parliament was prorogued last September 4. This was another bill that died on the order paper because of Conservative ideology. The Conservatives wanted to prorogue the House because they were afraid they would be defeated. Twice in six months they tried to save their jobs.

The minister finally re-introduced the same bill on January 28, 2009. This was Bill C-4, which we have been debating all day. The purpose is to propose new Canadian legislation on not-for-profit organizations that will establish a more modern, transparent framework for them to operate within. To this end, the system for not-for-profit organizations will be similar to the system for companies that fall under the Canada Business Corporations Act. The new bill will gradually repeal the Canada Corporations Act and replace its parts II, III and IV.

According to the minister, Bill C-4 will reduce the administrative costs of not-for-profit organizations and strengthen and clarify the rules governing them. More specifically, the bill will simplify the process for incorporating not-for-profit organizations, clarify the duties and responsibilities of their directors, set forth defences that their directors and officers can advance in case they are held responsible for something, increase the rights of the members of these organizations and allow the members to participate in the governance of their organization, and establish a better mechanism for overseeing the accounting of these organizations.

Bill C-4 is very complex. It imposes a whole new framework on not-for-profit organizations. Here is a brief summary of each of its 20 parts.

Part 1 identifies the purpose of the bill and allows for the incorporation of organizations without share capital so that they can carry out their lawful activities. It defines what a soliciting corporation is, namely any organization that solicits funds from the public or a government or any other organization that receives donations from the public or government grants.

Part 2 replaces the current letters patent system with an as of right system of incorporation. After receiving and examining the required documents, the director immediately issues the certificate of incorporation. This will help not-for-profit organizations establish themselves much faster and start providing direct assistance to our fellow citizens.

Part 3 stipulates that these organizations have the capacity of a natural person.

Part 4 states that these organizations must keep accounting records and a list of their members and directors and must make this information available to their members. My colleagues just asked the hon. member for Berthier—Maskinongé and his answer with quite clear. Having accounting records and a list of members will greatly improve the transparency and governance of these organizations. There really will be transparency and not just the impression of it. Part 4 also provides measures to protect the privacy of the members of these organizations. We were discussing this point just a little while ago. It is also very important to keep the membership list private. My colleague from Longueuil—Pierre-Boucher said that with the advanced technologies of today, people need transparency but also their privacy. Bill C-4 covers that part too.

Part 5 gives corporations the authority to borrow, issue debt obligations and invest as they see fit. It also stipulates that corporations are prohibited from distributing their assets to their members, except in furtherance of their activities or as otherwise permitted by the act.

Part 6 deals with the technical aspects of debt obligations and Part 7 deals with the technical aspects of trust indentures.

Part 8 describes the authority and role of receivers, receiver-managers and sequestrators.

Part 9 stipulates that corporations must have a minimum of one director and that soliciting corporations are required to have at least three directors. It also clearly sets out the obligations of directors and corporations as well as the due diligence defence.

Part 10 stipulates that the by-laws set out the conditions of membership, whereas articles set out the various classes of membership and associated voting rights, which makes a clear distinction between the two.

Part 10 also establishes the voting procedure, including electronic absentee voting. It sets out the rules governing the way in which members can submit proposals at meetings, establishes the procedure for calling meetings of the members, including the obligation to give members advance notice of the meeting, and defines what constitutes a quorum.

Part 11 states that a corporation shall place before its members its financial statements and any report submitted to it by its public accountant. As was said earlier, the bill's purpose is to increase transparency and efficiency, and that aim is furthered directly in this part of the bill.

Part 11 makes it mandatory for soliciting corporations to table a copy of their financial statements and of the report of their public accountant with the director, who will then make these available to the public. Thus, donors to these non-profit organizations will know precisely where the money goes.

As members, we are giving a hand up to the corporations in our ridings. In this way it will be possible to see clearly where the money of our very important organizations is going, especially in more difficult times such as the ones we are experiencing currently. We can see how important this is. I attend numerous activities in my riding, which gives me an opportunity to take the pulse of these organizations and see how they operate. This will allow people to concretely see the expenditures and investments these organizations make to give back to the community, which is, to my mind, extremely important.

In Part 12 we see that the level of financial audit that is required is determined by the level of gross annual revenues of the corporation, and depends on whether or not the organization concerned is a soliciting corporation or not. This part states that the public accountant must be qualified to conduct the financial audit while being independent of the organization. The purpose, as you will have understood, is here again to promote transparency. The bill institutes the obligation of placing financial statements at the disposal of members, directors and officers when the organization is a soliciting corporation which solicits funds from the public, and these documents must of course also be made available to the public.

Part 13 establishes the procedure to be followed when the corporation undergoes fundamental changes, including amendments to the articles or by-laws of the corporation, amalgamation, continuance, reorganization or arrangements.

Part 14 describes the procedure for liquidation and dissolution of a corporation incorporated pursuant to the act. It establishes that in cases of dissolution of soliciting corporations or charitable organizations, any property remaining shall be distributed to one or more qualified donees within the meaning of the Income Tax Act, and not to its members.

Part 15 lists the various powers which a court may confer upon an inspector to conduct an investigation, through an order, to follow up on complaints submitted by an interested party.

Part 16 contains provisions regarding the remedies that a complainant can exercise, specifically, the derivative action, the oppression remedy and injunctions. It establishes a defence against the above-mentioned actions and remedies that is based on tenets of faith. A religious corporation can use this defence when it can prove that the act leading to the action was reasonably based on the beliefs of its members. In this type of case, no order is made under the act against the corporation in question.

Part 16 also sets out the offences and punishments for violations of the Act, mainly, with respect to false and misleading statements, and improperly using information taken from a corporation's register of members or other directories.

Part 17 allows for the use of electronic communications between the corporation and its members. We have been talking about this a lot in the Bloc Québécois, and, in light of technological advancements, we believe that this possibility will become extremely important, crucial, actually—emphasis on “crucial”—to corporations' survival. We are now in the Internet age, and it is becoming more and more complicated to reach certain groups, such as young people, who are big Internet users. Electronic communications such as emails would make it easier for organizations to reach and attract them.

Keep in mind that, as the population ages, it will become important over the next few years to attract young people to community and non-profit organizations. Without new blood, these organizations could cease to exist because of a lack of new members to ensure their survival and continued dedication to causes such as protecting the poor. In my riding of Repentigny, Maison La Trace de l'Assomption helps those most in need. It has an incredible team of five directors who do wonderful work for the town of L'Assomption and its most needy residents.

I do not mean that this organization would not be able to find new volunteers, but sometimes the idea that it might experience difficulties recruiting new volunteers touches me personally. Since I am young myself, I understand that ways must be found to go and find new blood, just as political parties must do. The Bloc Québécois does this and has been encouraging young people for years, contrary to the big federal parties who find it somewhat more difficult to do so. My colleague is nodding his head, showing that he agrees with my position. Honestly, we have to help young people to join these organizations and encourage them to volunteer. As someone who has done a lot of volunteering, I know that this work is extremely gratifying, and helps people to mature. It increases a person's self-esteem immeasurably.

To get back to Bill C-4, part 18 sets out the general administrative provisions needed for the application of the act.

Part 19 identifies the passages of the legislation which apply to bodies corporate without share capital incorporated pursuant to a special act of Parliament. It also provides a procedure to revoke organizations incorporated pursuant to a special act of Parliament and associated with a body corporate that was later dissolved.

To conclude, part 20 provides for a three-year transition, for organizations incorporated under part 2 of the act governing community organizations. It also repeals parts II and III of the CCA.

The main issues are subdivided into four categories concerning four different aspects of the changes created by the adoption of this bill. The first classification concerns flexibility and permissiveness. There is no non-profit organization classification system in the Canada Corporations Act. There is no such provision in Bill C-4 either.

I must conclude but I could talk for hours. You can see that I am very interested in this file and very knowledgeable about it, because of the lengthy discussions that took place with my Bloc Québécois colleagues.

We would have liked to see this in Bill C-4.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Madam Speaker, as the Liberal critic for industry, science and technology, it is an honour for me to say a few words about BillC-4, An Act respecting not-for-profit corporations and certain other corporations. Let us recall that this bill originated with the Liberal Party about a decade ago. Its object was to revise the regulations and the governance rules of not-for-profit corporations.

As we know, this bill deals specifically with not-for-profit corporations; it would replace part II of the Canada Corporations Act and it would apply to some entities presently covered by part III of that act.

The bill would also provide for continuance of corporations established by special acts of Parliament under the Canadian Business Corporations Act. Lastly, it would repeal the Canada Corporations Act.

Bill C-4 was developed as a result of the previous Liberal government's commitment to the voluntary sector task force initiated in 1999 to modernize the governance of the non-profit sector. It proposes substantial changes to regulations going back to 1917.

Many of the corporate governance provisions, as well as many other provisions found in the bill, are modelled on the corporate governance provisions contained in the Canada Business Corporations Act, the statute that regulates federally incorporated for-profit corporations, for example, business corporations.

In general terms, this legislation seeks to provide a modern governance framework to regulate some 19,000 federally incorporated not-for-profit organizations, including community organizations, cultural organizations, national charitable organizations, religious organizations and many others.

First in July 2000, and again in March 2002, Industry Canada released consultation reports and organized new consultation meetings across the country to discuss various reform options.

Following the second round of consultations, Industry Canada released a paper entitled “Reform of the Canada Corporations Act”, the federal, not-for-profit framework law. Two years later, the Liberal Party introduced the first version of the non-profit corporations act as Bill C-21. The bill passed second reading, underwent three committee meetings but did not reach a final vote before the election call of 2005.

Under the Conservative government, the bill was reintroduced as Bill C-62, but only passed first reading before being lost in the September 2008 election call.

Bills C-62 and C-4 certainly contain amendments to Bill C-21, including the definition of what is meant by “a soliciting corporation”.

As we know, soliciting corporations are those that receive any or all of their funding from public sources, by fundraising, for example, or by other means.

It can be seen that Bill C-4 is sufficiently flexible to effectively meet the needs of not-for-profit corporations of all sizes by providing clearer rules, as well as accountability and transparency in the entire not-for-profit sector.

All in all, the bill makes significant changes to the area of financial responsibility, to the rights and responsibilities of officers and administrators, and to the rights of members.

If passed, Bill C-4 will implement new rules on financial reporting based on the organization's annual revenues and sources of funding; new rules on standard of care for directors and new rules for director liability; new rules that permit written resolutions in place of meetings and allow corporations to avail themselves of technological advances; new rules permitting members access to certain information to monitor director activities and enforce their rights within the organization; and a streamlining of the incorporation process and a reduction in the regulatory burden for the not-for-profit sector.

In other words, with this new bill, the sometimes endless and often complicated incorporation process will be streamlined and simplified. Organizations will be able to fill out electronic forms and pay fees on line, and the current requirement that applications for incorporation are subject to a departmental review will be eliminated. This will make the incorporation process easier and faster.

A new office of director of corporations would replace the current system of ministerial review and discretion. This director would have administrative and regulatory functions and would be able to issue incorporation, amalgamation or dissolution certificates; investigate and make enquiries about compliance; and access key corporate documents, such as membership lists and financial statements.

As stated, the new bill would also make significant changes in terms of financial accountability; the rights and responsibilities of directors and officers and members' rights.

Improving transparency and accountability is a major objective of the new legislation through new rules on financial reviews and disclosure. All non-profits would need to make their financial statements available to their members, directors and officers, in addition to the director appointed under the act.

Directors of soliciting organizations will have to make their records available to the public. This legislation will also improve financial accountability with new accounting audit rules. These rules recognize that not-for-profit organizations have different levels of revenue and different funding sources.

All soliciting and non-soliciting organizations classified under the new legislation as having “significant” revenue will be subject to an accounting audit. I want to point out that the stakeholders targeted by this new legislation supported the proposed changes during initial consultations, as did the witnesses who testified during the earlier committee meetings.

In the original consultations, strong support was given for the proposed reforms dealing with standard of care, due diligence, defence, indemnification in insurance and limited liability of directors and officers.

Some of the areas where there was less unanimity between those consulted originally included clarification of the rules governing not-for-profit corporations versus registered charities, whether there should be classifications under the bill that would stipulate different requirements based on the type of not-for-profit organization, whether or not it should be necessary to file bylaws, and, as well, the level of auditing required.

The committee certainly examined these points in detail. In the meantime, speaking as a person who has been involved in not-for-profit organizations, I must say that I support this legislation wholeheartedly. I want to emphasize that my Liberal colleagues and I are eager to work with our colleagues on the government side to pass this important legislation, which has been a long time coming.

As a new member, I have really enjoyed my first committee task, which was to make a constructive study of Bill C-4, and I believe that we succeeded.

On a personal note, I enjoyed the committee process surrounding Bill C-4. This was my first experience in committee work and I was certainly conscious that I was participating in an important undertaking on behalf of the people of Canada. I was also conscious that Bill C-4 had been on the books for a very long time and that there was urgency in moving it forward.

During the course of the past three months or so, the industry committee heard from a variety of witnesses, some of whom had appeared before the committee in earlier days. The committee also had the opportunity to interact with officials from the government. I would like to take a moment to commend them for their professionalism. They certainly helped me understand some of the very complex aspects of Bill C-4, being one of the few non-lawyers in this House.

During the witness hearing period, we had the pleasure of hearing from the following groups, among others: the Canadian Society of Association Executives; the Canadian Bar Association; the Certified General Accountants Association of Canada; the Canadian Institute of Chartered Accountants; United Way of Canada; Imagine Canada; the General Synod of the Anglican Church of Canada,

During all the consultations with the witnesses before the committee, it became clear that all stakeholders had the best interests of the bill at heart and had monitored its progress closely for many years. The fact that they had taken the time to prepare their submissions and to travel to Ottawa to speak to us is evidence of the importance they assign to Bill C-4. Their goal, above all else, was to clarify and simplify by making constructive suggestions.

As I said, we also consulted with a team of government experts. I will, if I may, summarize briefly what they had to say about the improvements proposed by Bill C-4.

This bill greatly simplifies the incorporation of not-for-profit corporations by replacing the discretionary approval process of the minister to issue letters patent with one that is closer to a legal procedure.

It simplifies the administrative formalities and related costs for small corporations, by allowing them to dispense with the financial review, subject to membership consent.

It provides the not-for-profit corporations with all necessary flexibility to organize their activities via their by-laws.

It permits members to receive information via electronic means, including the holding of meetings by electronic means, if members so desire.

It provides an unequivocal defence for board members and directors against unjustified civil proceedings.

It provides members with a new set of rights, including the right to financial information, the right to propose items for discussion in preparation for annual meetings, and the right to recourse if there is abuse and a dispute arises with the corporation.

It provides a great deal more transparency to corporations funded by public donations or government grants. It sets out clear rules and procedures for a broad range of potential situations, including funding though borrowing or trust indentures.

We are well aware that a number of these provisions will never be used by the bulk of these corporations, but the new legislation will eliminate ambiguities which can, in some cases, cost thousands, if not hundreds of thousands, of dollars in legal fees before any settlement is reached.

I believe that the latest version of Bill C-4, although no one would ever claim perfection, is a very sensible document. It modernizes the law dealing with Canadian not-for-profit corporations. Needless to say, it has been a long time coming. I hope we can take it expeditiously through the remaining steps of its journey.

Some clarifications, particularly with respect to soliciting corporations, were added as a result of the witness consultations. On the issue of simplifying the bill by removing certain parts that apply to only a very limited number of corporations, the decision was taken to keep them in the bill for the sake of completeness.

While the bill may be a relatively thick document, it is thick so that it can cover all aspects of the law dealing with not-for-profit corporations. Most corporations will be dealing with a much smaller part of the law in their daily operations.

In summary, I believe Bill C-4 is a good bill. It is the product of constructive work between all committee members, and I look forward to seeing it become law.

[Susan Manwaring]

I don't recall the Canadian Bar Association submission suggesting a classification system. I don't believe that's a fundamental aspect. I'm not sure which part of the brief.... There are comments on the soliciting corporation, and there are comments on the definition and how it doesn't work.

The Canadian Bar Association concluded, having had their discussions, that rather than completely removing that, the suggestion would be to make amendments. They thought that the bar discussions would be a more effective submission.

The background on the Canadian Bar, whom I know you will be hearing from on Thursday.... Originally, if you have copies of the submission on Bill C-21, it came from the charities and not-for-profit section, the section that talks about the voluntary sector. That submission suggested that the soliciting corporation not be included in the statute.

The discussions this time were with both the for-profit and not-for-profit groups together. It was felt, because changes had not been made to the legislation over the course of time, that our objective would be to make some concrete suggested legislative changes that we were hoping could be implemented before the bill was passed, which would make it more effective, rather than repeating the same submissions that have not been accepted or adopted in the past.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Thank you, Mr. Chair.

I thank the honourable member for her introductory remarks on Bill C-4. I certainly echo her comment that this bill is long overdue.

As the member knows, the bill actually traces its origin back a number of years to the Liberal Party and Bill C-21. As such, our party supports its intent, for sure.

I would have one question for the honourable member. Is she satisfied that this bill does not conflict with any provincial or territorial laws dealing with not-for-profit corporations?

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Speaker, I have the honour to speak on Bill C-4. I will begin by saying that the Bloc Québécois is in favour of this bill in principle—until there is evidence to the contrary, let me assure you.

The Canada Not-for-profit Corporations Act, as it stood before, was what you might call a bit behind the times. The time had come to modernize it. Introduction of this bill is a step in the right direction.

The new legislation will, of course, take into consideration the financial means and the size of the organization with respect to the implementation of its administrative mechanisms. The intent is to provide the organization with a more flexible framework for presentation of its financial statements, and also for setting up its bylaws. The intent also is to considerably improve the efficiency and transparency of the process of incorporation of not-for-profit corporations.

The system of letters patent will be replaced by an as-of-right system of incorporation, thus greatly facilitating the process. As well, the credibility of not-for-profit corporations in the public eye will be enhanced.

This bill will be referred to a committee. It will, however, perhaps become necessary to hold broader consultations, above and beyond the simple parliamentary committee framework with experts attending. We may also have to involve community organizations.

Let us examine the context per se of the creation of the Canada Not-for-profit Corporations Act. The present act comes under the Canada Corporations Act. The types of corporations governed by part II of the Canada Corporations Act include—as we know—corporations that are not-for-profit, but religious, charitable, political or mutualist in character, as well as others.

In recent years, many people have voiced concerns about the obsolete nature of the Canada Corporations Act, and the fact that its provisions no longer meet the requirements of the not-for-profit sector, the not-for-profit sector of today. A number of stakeholders therefore called for the act to be reformed and improvements made to the framework that regulates that sector.

Around July 2000, Industry Canada produced a consultation paper entitled “Reform of the Canada Corporations Act: The Federal Not-for-Profit Framework Law”. This led to the introduction of a bill that was first known as Bill C-21, which was introduced on November 14, 2004, by the Liberal government, but never made it past second reading.

On June 13, 2008, during the 39th Parliament, it was the Conservative government that introduced Bill C-62, but as we all know, an election was called, an election that I would describe as not only hasty, but even premature. When Parliament resumed on December 3, 2008, a similar bill was introduced by the Minister of State (Small Business and Tourism). Once again, because the House was prorogued, it was put off indefinitely.

Finally, in January 2009, Bill C-4 was introduced.

This bill has very clear objectives. It proposes a new Canada not-for-profit corporations act that would establish a more modern and transparent framework for such organizations. The operational framework for not-for-profit corporations would be much more similar to corporate governance under the Canada Business Corporations Act.

In more concrete terms, this bill will simplify the incorporation of not-for-profit corporations. It will also clarify the rights and responsibilities of boards and establish defences for officers and directors in the event of liability. It will also provide members with increased rights to participate in the governance of their corporation. Furthermore, it will establish a better mechanism for oversight of the corporation's accounts.

This bill seems to be relatively complex for some. It is divided into 20 parts in order to establish a new framework for not-for-profit organizations. The first thing, of course, is to identify the purpose of the bill, which is to incorporate corporations without share capital so that they may exercise their activities.

There is a definition of soliciting corporation. This term, of course, means any corporation that solicits public funding as well as any corporation that receives public donations or government grants.

The second part points out that the current letters patent system is being replaced with an as-of-right system.The director, after receiving and reviewing the required documents, can immediately issue a certificate of incorporation.

It also sets out the capacity of a corporation as a natural person. This section will have to be further developed because surely the related legal aspects and responsibilities are implied. Madam Speaker, we are both responsible for our actions. And so an organization will obviously be responsible for its actions, which will simultaneously protect the director, the board, the president and directors.

Of course, this would require that organizations keep accounting ledgers as well as a list of members and directors and make these documents available to members while still protecting privacy.

Allow me to digress for a moment. I am not going to go into detail about each of the 20 parts of this bill, but I must tell you that I was an accountant in another life. If I was not auditing, I was examining accounting ledgers, and if I was not doing that, I was preparing financial statements.

Unfortunately, I often found that certain organizations were led and controlled and that basically only one person participated in the organization. One person could solicit funds, collect them, use them and, unfortunately, sometimes use them for activities other than those that appeared in the charter at the time.

That needs to be mentioned.

We have to modernize the act so that similar situations do not arise again. Naturally, it gives them permission to borrow, to issue debt obligations and to invest as they wish. There are several technical aspects with respect to issuing debt obligations and the use of trust indentures. It outlines the role of the trustee if an organization were to be placed in receivership.

This bill also requires organizations to have at least one director or at least three in the case of a corporation that solicits funds. I am wondering about the element of responsibility. Sometimes I wonder how the act can state that there will be at least one director. That means that some organizations will have only one director. Does that also mean that there will be only one member? As I was explaining earlier, I am familiar with such cases. At least with this bill, if soliciting is involved, there must be three directors. Thus, public money donated by individuals has at least a chance of being used appropriately.

There is also a set of bylaws. The members must fulfill certain conditions. Thus, the bylaws set out the type of voting and the related voting rights. The voting procedure, the bylaws governing how members are to hold meetings, the calling of a meeting and quorum are all set out in the bill.

Another part talks about financial statements. It states that the organization must make available to its members the financial statements and any report submitted by its public accountant. It requires soliciting corporations to file a copy of their financial statements and public accountant's report with the director, who in turn makes them available to the public.

A multitude of non-profit organizations never submitted their financial statements, not even to members. With this bill, at least, the financial statements prepared by the public accountants will be forwarded to the corporation's director, who in turn will make them available to the public. That is a very important element.

The level of financial review required will be determined by the organization's revenues. For low-revenue organizations, a public accountant will conduct a review and submit a report. For medium-revenue organizations, if the board of directors so authorizes, the public accountant will review and report once again. For high-revenue organizations, the financial statements will have to be accompanied by an audit report. Here again, the reports will have to be submitted to the director of corporations, as I said earlier, and made available to the public.

The bill also refers to fundamental changes to what I will not call the charter, because that will no longer exist, but the organization of the not-for-profit corporation.

The bill includes provisions pertaining to proceedings to liquidate or dissolve a corporation. It also lists the powers a court can confer on an inspector who investigates a complaint filed by an interested person.

The bill contains provisions on offences. It also brings things up to date by allowing not-for-profit organizations to communicate with their members electronically. This bill therefore modernizes the legislation and allows for electronic equipment. That is something I wanted to mention.

Of course, there will be a three-year transition period for organizations to which part II of the Canada Corporations Act applies, which will now be recognized as corporations under the new legislation. There are some very important issues concerning this new bill, such as the fact that there is no classification system for NPOs in the Canada Corporations Act. Bill C-4 also does not include a classification system.

In the government's view, the new act does not need a classification system because the framework is permissive and flexible. Permissive can sometimes have a negative connotation. Nevertheless, this is a situation that exists within the new legislation because it is permissive and flexible and of course allows organizations to choose how to implement the relevant provisions. The accent is instead on the adoption of a set of rules intended to guide them in the conduct of their business, rather than imposing a system of rules they would be required to adhere to.

The fundamental concept underlying a classification system is that the corporations would be treated differently. Some would find themselves with more rules imposed on them by the State than others. As proposed here, most corporations would be treated in the same way and could enact various levels of regulation according to their requirements and the specific wishes of their members.

However, the opposite is true, according to the national charities and not-for-profit law section of the Canadian Bar Association. They feel that not including a general classification system is a major flaw in this bill. There is indeed a considerable difference between, for example, a charitable or benevolent organization and a mutualist one, which I will explain.

I am being told that I have two minutes left, so I will move along rapidly. Let us take the mutualist organizations. The resources of these organizations are directed toward the membership, whereas the resources of charitable organizations are directed toward an object, which may be very specific individuals other than the members. The act has provision for this. In these organizations, the money is not supposed to be used for the membership, but in some it may be, depending on the characteristics of the members and the object and vocation of the organization.

I am getting the sign that my time is very nearly up, but I would like to caution my colleagues with respect to one important aspect of this bill.

As far as respecting the jurisdiction of Quebec is concerned, at the present time section 154 of the Canada Corporations Act stipulates that the federal minister may grant a charter to a corporation if it carries on objects of a national, patriotic, religious, philanthropic, charitable, scientific, artistic, social, professional or sporting character, or the like.

It would appear, however, that clause 4 of the proposed legislation would not oblige the not-for-profit corporations to stipulate in their by-laws the object they intend to pursue.

It could happen that the objects chosen and determined by the corporation encroach on Quebec's areas of jurisdiction. There therefore needs to be provision for that situation in the act so that federal corporations do not encroach upon provincial areas of jurisdiction.

Let us therefore return this bill to the committee and carry out a thorough study of all the—

CANADA NOT-FOR-PROFIT CORPORATIONS ACT

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Madam Speaker, it is my pleasure to speak to Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

I am surprised. Earlier, I was listening to the Liberal member answer a question from the Conservative member. Each was accusing the other. The Liberal member said that the Conservatives move at a slow, glacial pace. The Conservatives said that, in their day, the Liberals moved even more slowly, more glacially. Now that they are in bed together, I can only speculate as to whether things are still slow and glacial, but it always makes me smile.

People have been asking for new not-for-profit corporation legislation since 1999. I will go into detail later on. We will support the bill. Nevertheless, we want our House of Commons colleagues to respect provincial areas of jurisdiction. Under section 92 of the Constitution, the provinces are responsible for management of the social economy, volunteering and community activities. All matters of a “merely local or private nature” fall under the exclusive purview of Quebec and the provinces.

As proud defenders of the Quebec nation, we must ensure that this bill does not encroach on Quebec's areas of jurisdiction. Not-for-profit organizations operating exclusively in Quebec are already governed by Part III of Quebec's Companies Act. We just want to make sure that this bill will not prevent not-for-profit organizations from operating.

It is important to note that the federal Parliament has jurisdiction only over organizations that do not have provincial objects. Subsection 11 of section 92 of the Constitution Act, 1867, specifically gives the provinces jurisdiction over “the incorporation of companies with provincial objects”. Currently, section 154 of the Canada Corporations Act states that the federal minister may grant an organization the right to incorporate if it is carrying on “objects, to which the legislative authority of the Parliament of Canada extends, of a national, patriotic, religious, philanthropic, charitable, scientific, artistic, social, professional or sporting character, or the like objects”.

This is important, because not-for-profit organizations are currently governed by the Canada Corporations Act, which is why we are amending that act. This section pertains to organizations that come under the legislative authority of Parliament. It appears that clause 4 of the new bill would not require a not-for-profit organization to state its purpose in its articles of incorporation. Clearly, it could be confusing if the organization's purpose is not stated. Inevitably, the result could be interference in the provinces' exclusive jurisdictions.

It will therefore come as no surprise that, even though we support this bill, we would like to see it go to committee so that our colleagues understand the situation and we make sure that the bill as introduced does not conflict with section 92 of the Constitution Act, 1867. We believe that the bill should be amended to limit its scope to not-for-profit organizations that operate or have offices in more than one province or whose purpose comes under federal jurisdiction, in order to respect the spirit of part II of the current Canada Corporations Act, which pertains to not-for-profit organizations.

That is our goal, as worthy representatives of the Quebec nation, in order to protect the interests of Quebeckers and especially not-for-profit organizations operating in Quebec.

Earlier, someone mentioned the slow movement of legislation. If we look back at the history of this bill, we can see how we have come to this point in 2009. The Canada Business Corporations Act creates the frame of reference, as I said earlier. In recent years, stakeholders have expressed concern that this act is out of date and no longer meets the needs of today's not-for-profit sector.

The stakeholders publicly asked for reforms to the legislation and in 1999, the task force on the voluntary sector, created by the federal government, asked that improvements be made to the regulatory framework governing the sector. Industry Canada's proposal aimed at updating the Canada Business Corporations Act is part of the task force's plan.

As far back as July 2000, Industry Canada produced a document entitled Reform of the Canada Corporations Act: The Federal Not-for-Profit Framework Law. After that document was published, the department organized a series of round table discussions in various cities across the country in order to examine the ideas presented in the document. Following the round tables, the government thought it would be a good idea to make concrete proposals. Thus, we can see that some questioning began in 1999 and discussions began in 2000. On November 15, 2004, the Liberal government introduced Bill C-21. Of course, since the Liberal government's reign was so short lived, the legislation was never passed.

On June 13, 2008, during the second session of the 39th Parliament, the Conservatives took essentially the same bill and reinstated it as Bill C-62. In the end, the bill did not pass because the Conservatives, who had promised fixed election dates, decided to force an election. Unfortunately for all those waiting for this act to be modernized, the bill lapsed. On December 3, a similar bill was introduced at first reading by the Minister of State (Small Business and Tourism), a Conservative minister. Then the government decided to prorogue the House and the bill died. Finally, on January 28, Bill C-4 was introduced and will be studied against that backdrop.

I can understand that the Liberals and Conservatives accuse one another of moving at a slow, glacial pace. However, for all those waiting for changes to this law, I hope we will act as quickly as possible and move forward. The Bloc's only request is that the Constitution be respected so that not-for-profit organizations falling under Quebec jurisdiction can truly be viable and not be jeopardized by this bill.

That is what we will do and we will be pleased to participate in all the debates.

Canada Not-for-profit Corporations Act

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, since this the first time I have risen to speak since the session began, I would like to begin by thanking the people of Shefford for trusting in me for the third time to defend their interests in Ottawa.

For several years, a number of representatives of not-for-profit corporations have been pressing to have the Canada Corporations Act modernized. In the past decade, numerous people have taken part in consultations, while others have made written submissions to Industry Canada calling for rapid amendments to the Canada Corporations Act. In recent years, some people have expressed concern that the Canada Corporations Act is out of date and no longer meets the needs of the not-for-profit sector. Stakeholders have publicly called for reform of the act and, in 1999, the task force on the voluntary sector, which was created by the federal government, called for improvements to the regulatory framework governing this sector. Industry Canada's proposal to modernize the Canada Corporations Act forms part of the task force's plan.

In July 2000, Industry Canada released a consultation paper entitled Reform of the Canada Corporations Act: The Federal Not-for-Profit Framework Law. After releasing this document, the department held a series of round tables in cities across the country to look at the ideas in the document and consider various legislative options. The government then made concrete proposals to reform the not-for-profit corporations legislation.

On November 15, 2004, the Liberal government introduced Bill C-21, which never reached second reading. On June 13, 2008, during the second session of the 39th Parliament, the Conservative government introduced Bill C-62, which was similar to what the Liberals had tabled. With the hasty election call last September, this bill died on the order paper. On December 3, 2008, a similar bill was introduced for first reading by the Minister of State (Small Business and Tourism). Once again, it died on the order paper when Parliament was prorogued on December 4. Finally, the Conservative minister introduced the same legislation on January 28 as Bill C-4.

Since 2004, both Liberal and Conservative governments introduced various bills that all died on the order paper. In spite of everything, it is quite clear that there is a common desire on both sides of the House to modernize the Canada Corporations Act, especially since the bills introduced by previous governments have all been very similar.

To briefly summarize Bill C-4, its primary aim is to propose new legislation on not-for-profit corporations that would establish a more modern and transparent framework for such organizations. The operational framework for not-for-profit corporations would be similar to corporate governance under the Canada Business Corporations Act. The new act would gradually repeal the Canada Corporations Act and would replace parts II, III and IV of that act.

According to the minister herself, Bill C-4 will cut administrative costs facing not-for-profit corporations and will strengthen and clarify the governance rules that apply to these corporations. In more concrete terms, this bill will simplify the incorporation of not-for-profit corporations; clarify the rights and responsibilities of directors; establish defences for directors and officers in the event of liability; provide members with increased rights to contribute to the governance of their corporation; and establish a better mechanism to oversee the corporations' accounts.

Although the bill is complex, the new framework that will govern not-for-profit corporations should considerably simplify and clarify the role of these corporations in our society, both for their members and directors and for the general public.

It is exceedingly clear that extensive changes must be made to the Canada Corporations Act. For that reason, the Bloc Québécois is in favour of the principle underlying the bill. However, it is evident that some aspects of the bill must be examined in committee.

The Bloc Québécois supports this bill for a number of reasons. First of all, the process for establishing a not-for-profit will be considerably streamlined and much more transparent.

The act currently requires not-for-profit corporations to keep detailed accounts of their activities but does not require disclosure of these accounts. Bill C-4 requires not-for-profits to make their financial records available to their members, directors and officers, as well as to the Director. This will permit directors and officers to better manage and supervise the corporation, to monitor the financial situation of the organization between annual meetings and to ensure that funds are used only in the pursuit of the stated goals and objectives.

The bill also includes a provision to ensure a fair balance between transparency and accountability on one hand and privacy on the other. An organization can apply to the Director for an exemption from disclosing its accounts to its members.

The Canada Corporations Act currently allows anyone to obtain the membership list of a not-for-profit organization. The act sets out the possible uses of such a list. Bill C-4, Canada Not-for-profit Corporations Act, will give this right only to the organization's members, creditors and directors.

This provision will facilitate communication among members and enable them to better coordinate their activities; it will require administrators to maintain an up-to-date membership list, thereby further facilitating logistics and administration; and it will protect the members of certain types of not-for-profit organizations from the unauthorized use of such lists. The same provisions were included in the Canada Corporations Act to punish such offences. The problem would be resolved at the source by not making such lists public. Any person wishing to consult the list would have to sign a statutory declaration limiting the ways in which the list is to be used. The bill also calls for a fine of up to $25,000 or up to six months in prison or both for anyone using a list for unauthorized purposes. This reminds us of the CRTC's do not call list. We know that such lists have been sold for about $50 for 6,000 names. People wanted their names on the CRTC list because they did not want to be bothered by telemarketers. This provision would compensate for the cost of updating the lists by removing the requirement to make them available to the general public.

Directors and officers of not-for-profit organizations are currently exposed to numerous liabilities under the provisions of certain pieces of legislation including liability for environmental damages, liability for unpaid salaries, fiduciary duty, and liability for their own negligent actions. They should be relieved of those liabilities. Thus, the new legislation addresses the liabilities of not-for-profit directors.

Incorporation creates a legal entity that can be held liable. The organization will protect these people from personal liability when acting according to their responsibilities as defined in the legislation.

That is covered in subsection 37(1).

The bill includes a clear definition of the standards for diligence that do not hold a director liable if he or she has acted honestly and in good faith with a view to the best interests of the corporation.

That is covered in subsection 149(1)

Directors may use the defence of reasonable diligence, which gives them a remedy against unfounded complaints.

This is found in clause 150.1.

There are new provisions to indemnify directors against costs, charges and expenses incurred in respect of an unfounded proceeding or of incidents where the corporation believes the director's actions warrant indemnification.

These provisions are found in clauses 151.1 and 151.5.

The problem with this sort of provision is that highly qualified officers who know the system well might exonerate themselves by invoking the due diligence defence and thus make the members of the organization pay collectively for their errors.

With regard to efficiency, replacing the letters patent system, involving a sort of order signed by the minister, with an as of right system of incorporation makes it much easier to set up not-for-profit organizations. First, the discretionary approval process would disappear and the incorporation process would be simplified, giving corporations greater flexibility. This process would also be more efficient and less expensive, both for corporations and for the government.

Second, eliminating the obligation to have by-laws approved gives corporations the flexibility to create by-laws to meet their particular needs. It is high time the minister's discretionary authority in this area was abolished. This will increase not only the credibility of not-for-profit organizations, but public confidence in them.

I would also like to take this opportunity to point out the main issues the Bloc Québécois and many representatives of not-for-profit organizations have with Bill C-4 and the Canada Corporations Act. The Canada Corporations Act currently includes a classification system for not-for-profit organizations. The bill still does not include any mechanisms to correct this situation.

For the government, the new act does not need a classification system because the framework is permissive and flexible, allowing organizations to choose how to apply many provisions.

However, according to the national charities and not-for-profit law section of the Canadian Bar Association, not including a general classification system is a major flaw in this bill. It then becomes important to specify if the not-for-profit organization is charitable, mutualist, political or even religious, because they would be different. I am only trying to highlight various distinctions, but we believe that the committee should tackle this issue.

As well, section 154 of the Canada Corporations Act currently stipulates that the federal minister may grant a charter of incorporation if the corporation thereby created pursues objects “to which the legislative authority of the Parliament of Canada extends, of a national, patriotic, religious, philanthropic, charitable, scientific, artistic, social, professional or sporting character, or the like objects.”

But it appears that the proposed new legislation would not require a not-for-profit organization to include in its statutes the objects it intends to pursue, thus sidestepping the whole notion of specifying what action an organization can take in accordance with its goals.

Since we know that the federal Parliament only has jurisdiction over organizations that do not have provincial goals, this raises the following question: Why does the bill not include some provision to oversee what falls under federal jurisdiction? The Bloc Québécois feels that this question should be studied in committee.

These are legitimate issues that the Bloc Québécois is trying to defend.

Under section 92 of the Constitution, managing the social economy, volunteering and community activities falls within provincial jurisdiction. As set out in that section, all matters of a merely local or private nature fall under Quebec's exclusive jurisdiction.

I repeat; it is important to note that the federal Parliament has jurisdiction over only those organizations that do not pursue provincial objects. Section 92, subsection 11 of the Constitution Act, 1867 grants the incorporation of companies with provincial objects specifically to the provinces.

Accordingly, there seems to be a serious flaw in the bill and it must be carefully examined to avoid any potential conflict between the provinces and the federal government. The bill must be amended to limit its application to not-for-profit corporations that operate in several provinces, that have offices in several provinces or whose object comes under federal jurisdiction.

Adding these limitations is not mandatory per se. Constitutionally, the federal government does not have the authority to legislate in areas of Quebec jurisdiction. However, to avoid any confusion that could arise from the new wording of the legislation, it would be wise to include provisions limiting the scope of its application.

At the beginning of my speech, I said that, for some time now, representatives of not-for-profit corporations have been calling for amendments to bring the Canada Corporations Act up to date. For reasons of transparency, efficiency and fairness, the Bloc Québécois believes that these amendments are legitimate and essential. However, certain points need to be clarified in committee.

Whether on matters of classification or the jurisdictions of each level of government, we believe that the committee must provide clear answers. The representatives of not-for-profit corporations deserve to be able to work with a Canada Corporations Act that effectively meets their needs.

[Marc Garneau, Liberal, Westmount—Ville-Marie, QC]

Mr. Speaker, as my party's industry, science and technology critic, it is my honour to say a few words about Bill C-4, An Act respecting not-for-profit corporations and certain other corporations. This bill, you will remember, originated with the Liberal Party almost a decade ago in order to review the regulations and the governance rules of not-for-profit organizations.

As we know, this bill specifically concerns not-for-profit organizations; it would replace part II of the Canada Corporations Act and it would apply to some entities currently covered by part III of that act.

The bill would also provide for continuance of companies that were created by special acts of Parliament and subject to part IV of the Canada Corporations Act and, finally, it would repeal the Canada Corporations Act.

Bill C-4 was developed as a result of the previous Liberal government's commitment to the voluntary sector task force initiated in 1999 to modernize the governance of the non-profit sector. It proposes substantial changes to regulations going back to 1917.

Many of the corporate governance provisions, as well as many other provisions found in the bill, are modelled on the corporate governance provisions contained in the Canada Business Corporations Act, the statute that regulates federally incorporated for profit corporations; that is business corporations.

Generally speaking, this legislation is seeking to provide a framework for the modern corporate governance of some 20,000 federally incorporated not-for-profit organizations that include community, ecological, cultural and religious organizations as well as national charities and many others.

Since July 2000, and then again in March 2002, Industry Canada has shared its consultation reports while organizing new consultations across the country in order to discuss different reform alternatives.

Following the second round of consultations Industry Canada released a paper entitled “Reform of the Canada Corporations Act: The Federal Not-for-Profit Framework Law”. Two years later the Liberal Party introduced the first version of the non-profit corporations act as Bill C-21. The bill passed second reading, underwent three committee meetings, but did not reach a final vote before the election call in late 2005.

Under the Conservative government, the bill was reintroduced as Bill C-62 but only passed first reading before being lost in the September 2008 election call.

Bills C-62 and C-4 certainly do contain amendments to Bill C-21, as well as the definition of a “soliciting corporation”.

We are all aware that soliciting corporations receive part or all of their funding from public sources, whether by fundraising or other means.

I should point out that Bill C-4 is flexible enough to address the needs of not-for-profit organizations of all sizes effectively by introducing clearer rules and both accountability and transparency for the entire not-for-profit sector.

Overall, the bill introduces significant changes with respect to financial accountability, the rights and responsibilities of directors and officers, and the rights of members.

If passed, Bill C-4 will implement new rules on financial reporting based on the organization's annual revenue and sources of funding, new rules on standard of care for directors and new rules for direction liability, new rules that permit written resolutions in place of meetings and allow corporations to avail themselves of technological advances, also new rules permitting members access to certain information to monitor director activities and enforce their rights within the organization and a streamlining of the incorporation process and a reduction in the regulatory burden for the not for profit sector.

In other words, with this new bill, the sometimes endless and often complicated incorporation process will be streamlined and simplified.

Organizations will be able to fill out electronic forms and pay fees on line, and the current requirement that applications for incorporation are subject to a departmental review will be eliminated. This will make the incorporation process easier and faster.

The new office of director of corporations would replace the current system of ministerial review and discretion. This director would have administrative and regulatory functions and would be able to issue incorporation, amalgamation or dissolution certificates, investigate and make enquiries about compliance and access key corporate documents like membership lists and financial statements.

As stated, the new bill would also make significant changes in terms of financial accountability, the rights and responsibilities of directors, officers and members' rights. Improving transparency and accountability is a major objective of the new legislation through new rules on financial review and disclosure. All non-profits will need to make their financial statements available to their members, directors and officers in addition to the director appointed under the act.

Directors of soliciting organizations will have to make their records available to the public. This legislation will also improve financial accountability with new accounting audit rules. These rules recognize that not-for-profit organizations have different levels of revenue and different funding sources. All soliciting and non-soliciting organizations classified under the new legislation as having “significant” revenue will be subject to an accounting audit.

I want to point out that the stakeholders targeted by this new legislation supported the proposed changes during initial consultations, as did the witnesses who testified during the earlier committee meetings.

Strong support was given for the proposed reforms dealing with standard of care, due diligence defence, indemnification and insurance and limited liability of directors and officers. Some of the areas where there was less unanimity between those consulted included clarification of the rules governing non-for-profit corporations versus registered charities, whether there should be classifications under the bill that would stipulate different requirements based on the type of not-for-profit organization, whether it should be necessary to file bylaws and, finally, the level of auditing required.

The committee can certainly examine these points in detail. In the meantime, speaking as a person who has been involved in not-for-profit organizations, I must say that I support this legislation wholeheartedly.

I want to emphasize that my Liberal colleagues and I are eager to work with our colleagues on the government side to pass this important legislation, which has been a long time coming.

Telecommunications Act

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, it is my pleasure to rise today to address an issue that is of interest to many Canadians.

It would be safe to say that few people enjoy receiving a call from a telemarketer during supper hour. In fact public frustration with the persistence of ill-timed incoming phone calls has entered the realm of popular culture. I am not sure if members remember the Seinfeld episode where Jerry Seinfeld turned the tables on the telemarketer by saying he was too busy and asked the caller for his phone number so that Jerry might call him back during the caller's supper hour. This amusing sitcom moment illustrates the intrusion felt by many of my constituents when the phone rings as they are about to sit down for dinner or do something with their children. Someone is either trying to sell them something, probe them for information, or leave them listening to a recording.

Clearly the Conservative Party and I as the representative for the riding of Saskatoon--Humboldt do not support such invasions of privacy.

Let me say that the principle of this bill, the underlying goal, is very good. However the do not call legislation under discussion has some serious problems. Legislation that is flawed but good in principle must be amended. It is typical of the government to produce such legislation.

As has been pointed out too often in the past, Liberal governments try to deal with important issues by designing half-baked solutions. Ask any farmer in my riding about the prospect of losing their land without guaranteed compensation under the Species at Risk Act and members will get an idea of what I am referring to by poorly crafted laws.

Let me pause for a moment in order to say one thing about the Species at Risk Act to illustrate the problem of poorly thought out legislation. If only the federal government had had the presence of mind to work with farmers and ranchers, the protection of wildlife habitat could have taken a quantum leap forward across this country. We in the Conservative Party recognize that our farmers and ranchers are stewards of the land. They are quite willing to preserve the habitat, to cooperate with groups such as Ducks Unlimited Canada, yet the Liberals in their anti-rural and often unthinking way with their legislation showed evidence of not following through on the details. In bills like the Species at Risk Act the devil was in the details, as it is with this legislation.

Bill C-37 is poorly drafted legislation because the bill is very scant on important details. Bill C-37 would allow the Canadian Radio-television and Telecommunications Commission, the CRTC, to create a national do not call list. The CRTC would be empowered through Bill C-37 to hit telemarketers with substantial penalties. Bill C-37 does not spell out how this national do not call list would be maintained. There are no details in this bill concerning what information would be required from consumers to build the list into an effective database. There are no details in Bill C-37 setting up how telemarketers would check the do not call list in order to comply with the law. There are no details in Bill C-37 setting out how often telemarketers would have to check the list to be operating within the law. These are all important details, and details can change legislation.

In summary, under Bill C-37 telemarketers could be fined $1,500 per offending call, for individuals. The penalty for corporations that do not respect the do not call list is $15,000 per offending call. However there are no details in Bill C-37 setting out how telemarketers would check the national do not call list in order to comply with the laws.

In addition Bill C-37 does not explain who would have access to the do not call list. Imagine that, a national database of telephone numbers, callers' names, and who knows what other information provided by callers, and there are no legal parameters spelling out who has access to this information. We must be sure in this legislation that we do not, in seeking to protect privacy, end up invading privacy even more severely.

To top this all off, Bill C-37 does not have any reporting requirements on how the list is being run. Let us consider the implications of this. It would be a massive database with no reporting requirements. It is rather odd that there is nothing in Bill C-37 about these reporting requirements.

I thought the Prime Minister was going to have more government transparency and accountability as hallmarks of his government. Apparently, the timely reviews of government programs are not a priority of the Liberals. We need to know the details. We need to have proof up front about how the bill would work.

Too often we have seen that there are promises made and they never seem to be delivered. As another example of other government activities, I point to what my colleague from Edmonton—Leduc is still waiting for, a full review of Technology Partnerships Canada. It is a review that has been promised to be undertaken by three industry ministers.

Canadians watching this debate will be pleased to know that the Liberals have strived to recover a stunning 5% of the $2 billion in Liberal taxpayers' money spent on TPC since 1996. The government is following up this excess with the national do not call list, with no reporting requirements. Promises must be spelled out so that promises are kept.

We think of another registry, the national gun registry, a $2 million program that ballooned to $2 billion. Now the Liberals want to create another mega database of information, allowing the CRTC to create and regulate a do not call list as it sees fit.

Will the do not call list turn into another gun registry in terms of costs and management? I certainly hope not, but with this government, it is more than possible. Is the creation of a do not call list, its administration and enforcement including the penalty phase, within the CRTC mandate?

Finally, I want to talk about the bill's effect on charities. There are no exceptions in the bill for charities or companies that wish to have a relationship going on between themselves and their current existing clients, whether it is a charity or other groups that use the telephone to contact their members or clients.

In addition to a wide range of charities, this group could include telephone survey, polling companies and political organizations such as parties. Many charities and not for profit organizations rely on telemarketing campaigns. Without proper thought, exemptions for charities, Bill C-37 is going to severely restrict the good that a lot of groups do for our fellow Canadians, and people abroad like tsunami victims.

Personally, I do not know what the Liberals have against charities and volunteer groups. They drew up Bill C-21, the Canada not for profit corporations act, a bill which places a heavy burden, a continual bureaucratic burden, on not for profit corporations to keep up with all the reporting requirements stipulated by Industry Canada.

The legislation has been described as very detailed and technical, even by officials at Industry Canada. Bill C-21 is thick with regulations. Volunteer groups and service clubs will have to change their bylaws and their constitutions in order to comply with this new act. The legislation with its long list of requirements would make it harder to attract good volunteers and good directors for not for profit organizations.

Now the Liberals have brought forward Bill C-37 without any exemptions or exceptions for charities. What we have here is another Liberal example of symbol over substance. The PMO is quite happy to have a photo op showing the Prime Minister drinking purified water by the DART members, quipping meanwhile that he needs a little scotch while the troops are in, of all things, a dry camp.

While the Prime Minister is touring tsunami ravaged areas, the Liberals back here in Ottawa are pushing forward legislation that would hurt charities and not for profit groups to raise funds for others. I hope this is pure thoughtlessness.

A do not call list of some fashion would provide relief to people across our country who do not want their family time, their meals or TV programs interrupted by someone on the other end of the telephone selling some unsolicited service. I support the principle involved, but I believe the details need to be adjusted.

Committees of the House

[Rahim Jaffer, Conservative, Edmonton Strathcona, AB]

Mr. Speaker, I would like to start by saying that we in the Conservative Party support this motion for concurrence. This motion moves concurrence in the first report of the standing committee, as we have been debating this morning, “Duty Remission and the Zero-Rating of Tariffs on Textile Inputs: The Canadian Apparel Industry”.

I want to share some background on this because, as the revenue and customs critic, I was quite involved at the time we actually pushed this report forward. This issue first came to the finance committee during the third session of the 37th Parliament when we heard from witnesses on amendments to Bill C-21, an act to amend the customs tariffs. As I mentioned, I was in charge of this at the time. The issue was that the duty remissions which underpin Canada's apparel industry are set to expire on December 31, as we have heard.

Bill C-21 also did not look at the overall tariff structure or textile imports into Canada. That is why we decided to continue on. We said that we would deal with the remission issue but then would ensure that we reviewed the overall tariffs to see what we could do as a committee to work with the industry, and then finally we would look at another problem within the industry, one that dealt with gender biases.

That is what I will do. I will quickly read over the recommendations. We have been focusing on the first one quite heavily this morning, but I think the other two are just as important.

The first recommendation states:

That the federal government immediately extend, for a further seven years, the duty-remission orders covering the apparel sector that are set to expire on 31 December 2004.

Recommendation two states:

That the federal government immediately end tariffs on inputs which are not produced domestically. Textile producers seeking continued tariff protection should be required to establish that they sell their products to Canadian apparel manufacturers.

Finally, the third recommendation states:

That the federal government immediately undertake a study of temporary adaptation measures to enhance competitiveness, as well as the benefits and costs of eliminating tariffs on imports of fabric for use in the Canadian apparel sector, the types and quantities of products produced by the Canadian textile industry and the practice of tariff differentiation on fabrics based on their end-use. The results of this study should be tabled in Parliament no later than January 31, 2005.

That is what the original report said. From what I understand, there may have been a recommendation on or an amendment to that particular date.

Mr. Speaker, I just want to remind you that I will be splitting my time with the member for Cambridge.

All those recommendations, as we can see, are very clear. I think they were agreed to by all members, as I have mentioned, and a lot of thought went into structuring them in such a way that they would not cause problems for the finance department, especially in regard to extending those duty remissions in the meantime.

The remission orders have been around for quite some time. They were first introduced around 1997. There are remission orders for various textiles. Specifically, there was a new shirt remission order that provided shirtmakers with transitional assistance to help them remain in the shirt business in Canada. Similar remissions are also being considered for manufacturers of outerwear apparel and women's blouses and shirts. Shirting fabric and outerwear fabric are sub-sectors that are currently receiving assistance under existing remissions. This means that the duties on those particular areas of fabric will be reduced.

Duty remissions will enable Canadian manufacturers to complement the products they manufacture in Canada so that they would help to continue to encourage our industry to grow and flourish here in Canada. That will also help the textile apparel manufacturers in these import-sensitive sectors to adjust to the same kind of increased competition faced by shirtmakers. This recommendation calls for the extension of these remission orders for the next seven years. This was an easy decision for the committee to make and was reached unanimously, as I mentioned.

The surprising thing about it, as I mentioned in a question to the parliamentary secretary, is that there has not been any action by the government even though many representatives of the finance department themselves said that this issue needs to be dealt with and that we were getting closer to the end of the deadline. Why was there not greater attention paid to what other help is required to keep our industry competitive? Why was there not greater attention paid to the tax structure and the tariff structure?

My colleague from Peace River raised the idea of whether we should even be placing tariffs on these particular products here in Canada, seeing that many of the companies are importing these products that are not produced here. It seems to put them at very much of a competitive disadvantage with all these other competitors around the world. If the government had taken action at the time, maybe we could have moved this industry forward and we would not on the eve of this deadline be faced with this very important motion here in the House.

In the words of the committee:

--remission orders are, by their very nature, an incomplete and ad hoc method of addressing the needs of the entire Canadian apparel sector with respect to input costs: some textiles and sub-sectors are covered, while others are not. Moreover, we note the comments made by witnesses that the 31 December 2004 expiration date of the duty-remission orders is fast approaching, and companies need to make procurement and employment decisions in the immediate future. Consequently, it is vital that the federal government take immediate action to, at a minimum, maintain the current system.

Hopefully that cannot be impressed upon the government too much. I hope that message will get to the finance minister and that action will be taken immediately.

In my remaining time, I would like to focus on the last two recommendations.

The second part of the report details the mishmash of bureaucracy that government employs to deal with determining what is Canadian-made fabric and what is not. Simply, this recommendation calls for a streamlined process to determine if a fabric is made in Canada or not. If it is not, then it should not be entitled to tariff protection, as this raises the cost of importing it into the country. If it is, then it is necessary to see that the fabric is being put toward Canadian uses and not just being produced because of outdated tariff protections. This initiative is estimated to save the apparel industry approximately $9 million a year in unnecessary duties.

As I have said, extending this would specifically help Canadian companies with their inputs. Some of these products are not available in Canada. Clearly that is something of which we should be cognizant. If we are not producing these products at home, we should lower those tariffs because it would give Canadian companies the opportunity to access those particular products. A good example of this that was brought out in the committee was the idea of lycra or other poly-synthetics that are not produced here. Importing these products is very expensive.

Finally, the third recommendation dealt with the end use of fabrics when they are imported into Canada, especially the built-in gender bias that I spoke about. When textile importers bring in a fabric, they must declare what the end use of that fabric will be. For instance, if silk is imported to produce ties for men, the tariffs are not high; they fall under a preferential tariff. However, if silk is imported to produce women's blouses, it is subject to higher duties and tariffs. Therefore, women's blouses are more expensive because the fabric costs more to bring into the country.

It is really bizarre in this day and age that this sort of differential exists. We in the Conservative Party find it really unreasonable for the Liberals to be promoting this sort of gender bias in today's society. It does not make any sense. Gender bias could be eliminated with that simple recommendation.

In the little time I have left, I want to impress upon the House, as I did during the period of questions and comments, that this issue has unfortunately been dragging on for far too long. This affects our industry from coast to coast.

The committee received a number of submissions in the past. It studied the issue a great deal in the past as well. It is not like this has not been lingering around, especially when it comes to the extension of the duty remissions. I think it is clear. There was unanimous support on the committee. There seems to be unanimous support in the House, from what we have heard from the previous chair of the committee and members of the NDP. I am sure we will hear that from the Bloc as well. It seems that there should be some indication from the Minister of Finance that this particular act of extending the remission orders will be put in place.

This has really left the industry in a bit of a lurch. I have to impress this upon members. I was talking to some of the members of the industry. They are making plans for next year. They are trying to be competitive and want to continue to employ Canadians, but they are trying to deal with an industry structure that is very outdated and not responsive to the challenges they are facing.

I agree with the parliamentary secretary when he says it is up to the finance minister, that the finance minister does not have to adopt all the recommendations in this report. That is fine. We will deal with those other recommendations very soon, I am sure, but clearly we have to extend those remission orders so that our industry can feel safe about continuing to operate in this country, continuing to employ Canadians and still remaining competitive.

I will impress again on the Minister of Finance that he should not wait another seven years to deal with this issue. Let us address the tariff structure. Let us ensure that our industries remains competitive here in Canada. Let us not drag our feet on this any longer.

Canada Not-for-profit Corporations Act

[Michel Guimond, Bloc, Charlevoix—Montmorency, QC]

Mr. Speaker, I rise on a point of order. Earlier, I alluded to Bill C-7, but the Chair will know that Bloc Québécois members are in favour of the motion dealing with Bill C-21.

(The House divided on the motion, which was agreed to on the following division:)

[The Speaker]

The House will now proceed to the taking of the deferred recorded division on the motion to refer Bill C-21 to committee before second reading.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, it is a pleasure to rise in the House today in order to discuss the strengths and weaknesses of Bill C-21 respecting not for profit corporations and other corporations without share capital. The bill is also to be known as the Canada Not-for-profit Corporations Act. This legislation will replace parts II and III of the Canada Corporations Act.

The government's intention in drafting Bill C-21 is to make it “easier for Canadians in the voluntary sector to take advantage of the protections offered by incorporation”, according to a November 17 release from the Department of Industry.

In short, the implied aim of Bill C-21 is to provide corporate directors with a better idea of their duties and responsibilities and to provide said officers with better protection against liabilities.

Other provisions of this legislation include improvements on financial oversight of the corporations and better member participation in corporate governance.

As I am not a lawyer, I must ask, what does all this legalese mean?

Officials from the department have assured my office that this legislation will make it easier for volunteers, especially those in small organizations, to incorporate and to become involved generally because their rights will be spelled out with respect to decisions by their own executives that have an impact on them.

Assuming this to be true, it is music to my ears. Giving grassroots a say in their own future has long been a trademark of Canada's Conservative political parties. It is nice to see that the enhancing of the rights of members to participate in their own organizations has made it into Bill C-21.

Perhaps the Prime Minister could read over the applicable clauses of Bill C-21 and work on his own democratic deficit in his own government.

Bill C-21 is also designed to provide “the accountability and transparency necessary to maintain public trust and confidence in the not-for-profit sector”, according to the Industry Canada November 15 new release.

Accountability, transparency and public trust are all important democratic concepts that this government across the way needs to work on, but I digress.

One of the most important stated features of Bill C-21 is the protection it says to provide to faith based corporations. It is my understanding that this legislation aims to prevent activists from using corporate law as a sword to attack faith based organizations for, among other things, not performing same sex marriages. This protection, if real, will surely be welcomed by faith based groups.

My fellow hon. members are constantly presenting petitions in the House calling for the definition of marriage to remain the voluntary union of one man and one woman to the exclusion of all others, a position which I am on the record as supporting.

The millions of Canadians who support the traditional definition of marriage will be relieved if Bill C-21 provides a small measure of protection to such a crucial social institution in Canadian society.

For those volunteers watching from home, the faith based defence is found in clause 251 of the bill. Without reading all the subclauses under clauses 250 and 251 in the interests of time, it is important to note that paragraph 251(2)(c) states the court may not make an order to redress a corporation's oppressive or unfairly prejudicial action that disregards the interests of any shareholder, creditor, director, officer or member if:

(c) it was reasonable to base the act or omission, the conduct or the exercise of powers on the tenet of faith, having regard to the activities of the corporation.

This of course means a religious corporation.

It is not beyond the realm of possibility that a member of a religious corporation or affiliate thereof might feel oppressed because the faith based organization does not support same sex marriage. It remains to be seen how the courts are going to define the word “reasonable” in this context. If I may note, this subclause may need some strengthening when it goes to committee.

I can understand why the government would want to modernize legislation in order to expand governance for not for profit corporations since the Canada Corporations Act was last substantially amended during the first world war in 1917.

For example, it is a good thing to provide directors and officers of corporations better protection against liabilities, especially with the defence of due diligence. However, if this legislation means that in the end corporate directors will have to pay for thousands of dollars in directors' insurance, this requirement will create a dampening effect on the volunteer recruitment and sustainability of existing members.

It is a common practice that men and women involved in volunteer organizations to improve the life of their community often wear more than one hat. A person may be a member of the local volunteer fire department, the local golf or curling club and the Lions Club or the Kinsmen. The Royal Canadian Legion and other organizations are common in my riding. The federal government should not require that these volunteers take out directors' insurance, especially at a time when volunteer groups are in need of more members.

The work that volunteers provide to communities in my riding of Saskatoon—Humboldt is very important. Let me give an example. I was reading in the Wakaw Recorder , a paper published in my riding, that volunteers are building an addition to the curling rink. Curling club bonspiels, raffles, concessions, sales and donations raised about $12,000 for the Wakaw Curling Centre to provide a new water supply and upgrade the curling stones.

It is time to recognize the sweat equity that volunteers such as these put in day after day, year after year, which improves the lives of Canadians in communities large and small across the country. It is for this reason that I stand here and voice my opposition to Bill C-21.

Even though the inclusion of faith based defence in the bill may offer some respite upon the assault upon traditional marriages across Canada, this is a very technical, complex bill. While legislation regarding not for profit groups needs to be updated, the complexity of Bill C-21, especially the blizzard of requirements that would be imposed on the volunteer sector, would make it harder for groups to attract new blood.

The classified ad section of any newspaper has columns of ads from organizations needing new members to help housebound seniors, volunteer for the local hospital, raise funds to build a new community hall or provide playground equipment. The need for volunteers and the time they provide out of already busy lives is at a premium.

Now, thanks to Bill C-21, not for profit corporations, the vast majority that are respectable corporate citizens, will have to change their bylaws, their constitutions and hire auditors and pay for liability insurance.

Second, I will note as a member of the Standing Committee on Industry, Natural Resources, Science and Technology that I do not believe this bill should be sent to committee before second reading. The government should have come to committee with legislation in draft form for review.

By Industry Canada's own admission, Bill C-21 is a complex technical bill. The bill needs extensive hearings and the industry committee needs to hear from a cross-section of witnesses representing the 18,000 federally incorporated not for profit corporations. Debate is limited to 180 minutes in the House. Under regular rules for second reading, there would be unlimited debate. What this government is doing is limiting debate.This is not fair to the democratic process or the millions of volunteers who would have to work under these heavy regulatory requirements.

Reference to committee before second reading allows this minority government to say to Canadians that if they do not like it they can take their current concerns about the bill to committee, thereby making the committee process the scapegoat in a minority situation. It is also a neat way of using up the committee's time.

The government had two options on how to handle a bill as complex as Bill C-21. The first was to send draft legislation to committee or, if the Liberal government believed in this creation, it should have had the courage to send it through the proper processes and allow all members enough time to make the legislation better.

It is for these reasons that I oppose the current Bill C-21.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Mr. Speaker, I rise today on Bill C-21, an act respecting not for profit corporations and other corporations without share capital.

The not for profit sector in this country is made up of approximately 18,000 not for profit organizations that collectively have over $100 billion in revenue, which is a significant part of the third pillar of our economy and something that this bill addresses but not without major flaws.

I want to speak to four aspects of this bill, some of which are good and some bad. Those four aspects concern the streamlined incorporation process, improved financial accountability, the rights and responsibilities of directors and officers, and the ability for members to appeal or seek redress for actions that a board has taken.

In terms of the streamlined incorporation process, the government has done a good job in replacing the letters patent system of incorporation by an incorporation as of right system. That will allow many not for profit corporations to more easily incorporate than in the previous process. It eliminates the current requirement for ministerial review of applications and replaces it with the standard filing specified forms and the payment of a fee. If this system were also implemented via an online form, it would also be advantageous.

However, the second element of this bill that I want to speak to is the improved financial accountability, which creates too many different classes of not for profit corporations to regulate themselves in terms of financial reporting requirements. There are five different classes: first, a low revenue soliciting corporation; second, a medium revenue soliciting corporation; third, a high revenue soliciting corporation; fourth, a low revenue non-soliciting corporation; and fifth, a high revenue non-soliciting corporation.

I think there are far too many levels of categories for these not for profit corporations to determine what their reporting requirements are and as one not for profit moves from year to year into one category and the next, it is going to create a lot of confusion as to what category they are in and what level of reporting they require.

For many larger soliciting corporations, the threshold for not reporting a review engagement, in other words, for them not to have to file with Industry Canada a review engagement, is the consent of all their members. In this particular situation, for these not for profit corporations, that have a significant number of members, this may be too onerous a threshold for them to forgo the review engagement that in some cases can cost upwards of $1,000, which may be a lot of money for a corporation that does not have a lot of revenue.

The third area which creates an onerous burden on not for profit corporations is the rights and responsibilities of directors and officers. The government has said that it wants to create a framework under this act to ensure that not for profit corporations can more easily go about their business, especially with regard to the standard of care that must be taken into consideration by the board of directors.

This is something that many not for profit corporations will find difficult to deal with because many of them do not pay their board of directors. Many not for profit corporations approach people of stature in the community to see if they are willing to lend their names, to sit on a board of directors, and to lend their expertise. Most community leaders are more than willing to lend their names and time to a not for profit corporation because they know that the standard of care is not the same that applies to corporations engaged in normal for profit business.

This bill creates a standard of care that is significantly higher than the existing standard of care that private enterprises are obligated to follow. This is going to do two things. It is going to make many people seriously reconsider whether or not they want to take on the liability of sitting on a board of directors for a not for profit. Also, it is going to lead to increased costs for the not for profits because many of the boards will now elect to take out directors liability insurance. That adds another burden on the not for profits, many of which are without a great deal of revenue.

The fourth area I want to speak to, and one which I think is onerous for the not for profits, is the provision in the bill that allows members to enforce their rights and to appeal to a court. The bill allows members to seek relief from a court if they believe their rights have been oppressed.

In this case the bill does allow religious organizations an exemption based on a tenet of faith. In other words, if the organization made a decision based on a tenet of faith, the members could not appeal to the courts to seek redress for whatever action the corporation had taken.

However, this tenet of faith is not clearly defined in the bill. My worry is that this will potentially infringe on religious freedom when appeals are made because the bill is not clear as to what exactly is a tenet of faith. For that reason also, I think this bill should be opposed.

Most important, this bill should be opposed simply because it is a travesty. It has been five years since the government engaged in the voluntary sector initiative, and this is all it has come up with. In 1999 the government announced the initiative as a result of its commitments in the Speech from the Throne.

This voluntary sector initiative at the time was announced as a five year action plan at a cost of $94.6 million. It was to examine the regulatory framework of the voluntary sector, to examine capacity building measures, relationship building measures, and to do this in strong and in-depth consultation with the voluntary sector.

One of the commitments made in this voluntary sector initiative was to clarify the guidelines on allowable expenses. It was to streamline the process and make the process more transparent for the regulation of charities under the Income Tax Act. It was to make more transparent the method by which charities receive their charitable status, and to possibly examine whether or not the rules that are currently in place and which have been in place for centuries dating back to Elizabethan law, should be broadened for charities. In other words, it was to see whether or not the rules for which charities should be recognized should be broadened to include not just those religious organizations and those organizations whose intent is to educate, but also to broaden it to advocacy work and other areas.

However, the bill is absolutely silent on that aspect. The government has fallen far short of what the voluntary sector was expecting. For that reason I oppose sending the bill to committee before second reading.

[Lynn Myers, Liberal, Kitchener—Conestoga, ON]

Mr. Speaker, I am pleased to add my voice in support of a new not for profit corporations act. Over the last few years corporate governance has become an issue that has attracted the attention of government, the press, business groups and indeed concerned Canadians. Most of the attention has been devoted to business corporations, but the basic principles of good governance and corporate governance apply and should apply to all corporations including not for profit corporations and other corporations without share capital.

The most important corporate governance features for corporations under this act are the new rules for financial review and disclosure. Financial disclosure, particularly for corporations who solicit money from the public or who receive grants from any level of government, is fundamental to ensuring public trust.

The financial disclosure requirements under this act strike the appropriate balance between ensuring that the public's trust in the not for profit sector is maintained and providing the necessary flexibility for corporations to adapt depending on their size and type.

For instance, it is essential to recognize that smaller corporations may not have the financial capability to undertake full audits. Likewise, corporations whose revenue is derived only from members do not have the same public profile than those corporations that solicit funds or receive government grants.

Under the old Canada Corporations Act, all corporations were required to place before their members an auditor's report, but there was no specific requirement that members had access to the financial statements of the corporation. There was certainly no requirement that these financial statements be made available to the public. Under this act, that would be changed. The new not for profit corporations act significantly improves the level of required disclosure and for the most part ensures that the broader public interest is served.

The act would provide extensive standards regarding the availability of financial statements to the membership and for soliciting corporations to other interested parties. These standards are in keeping with what are generally seen as best practices in modern corporate statutes. As well, the new act recognizes the distinction between corporations that exist only to meet the needs of their members and who are financed solely by those members and those whose activities are financed by the public or the government.

At each annual meeting the directors of all corporations must provide members with comparative financial statements for the year in question. The preceding year is reported to a public accountant if there is one and any relevant information as deemed appropriate. The corporation must also keep financial records at the corporate office where they are to be freely available to the members. Finally, all soliciting corporations will be required to file their financial statements with the director appointed under the act. This will ensure public access and scrutiny of this information.

Both non-soliciting and soliciting corporations will have graduated levels of financial review based on gross annual revenues. These annual revenue threshold levels, which at this time are only proposals, will be set by regulation once this bill is passed. There are two categories of non-soliciting corporations. The first category will be those with gross annual revenues of less than $1 million. These corporations must undertake a review engagement of their financial statements by a qualified person. However, if they wish, members could unanimously resolve not to undertake any form of outside review.

An example of this type of corporation would be a mutual benefit or a sporting club such as a curling club, for example, where no public interest is served by having the organization publicly disclose its financial information. In such cases, it should be up to the members themselves to determine the level of financial review that best serves their needs.

The second category is non-soliciting corporations with gross annual revenues of equal to or greater than $1 million. These large corporations must have their financial statements audited by a qualified person. Soliciting corporations would have three graduated levels of financial review based on gross annual revenues. The smallest soliciting corporations, those with gross annual revenues of less than $50,000 would be required to have a review engagement of their financial statements.

The members of these corporations could resolve, with the unanimous consent of all members, not to undertake any form of outside review. This is appropriate. Audits, even review engagements, are expensive undertakings.

There is little to be gained by requiring very small locally-based not for profit organizations to spend a considerable percentage of their revenues on a review of their books. This could severely diminish their capacity to fulfill their mission. To those who would suggest that there would therefore be no oversight at all of these corporations, the Canada Revenue Agency could always intervene should there be a suspicion of any financial wrongdoing. The second category of soliciting corporations would be those with gross annual revenues of more than $50,000 but less than $250,000. Such corporations would be required to have an audit of their financial statements. However, members of these corporations could resolve by a special resolution to undergo a review engagement instead.

Finally, soliciting corporations with gross annual revenues of more than $250,000 would be required to have an audit of their financial statements. These measures are responsible and fair. Corporations are given the flexibility they need and at the same time these measures ensure a degree of public transparency that does not exist at this time for not for profit corporations.

We all have an interest in ensuring that not for profit corporations and other corporations without share capital, who perform outstanding services in Canada and around the world, are not overburdened with regulations. We also have a responsibility to protect the public interest.

It is my contention that the bill meets both of these requirements. I urge all members to support the expeditious passage of Bill C-21. I think it is a good bill and deserves our support.

[Brent St. Denis, Liberal, Algoma—Manitoulin—Kapuskasing, ON]

Mr. Speaker, it is my pleasure and honour to participate in the debate on Bill C-21, an act respecting not for profit and other corporations without share capital.

I have listened to comments on the other side of the chamber and some of the ideas are very good and others need further discussion.

I am pleased to have the opportunity to contribute to the deliberations and to assist the House and later the committee to resolve some very important questions.

As has been noted, the act is a comprehensive restructuring of the old, outdated statute governing not for profit corporations. As a result, it would provide these important organizations with new tools, including modern corporate governance standards that would ensure their viability to Canadian individuals and communities for decades to come.

Some of the key elements of the new statute include a streamlined incorporation process, improvements to the financial accountability structure, specific rights and responsibilities for the directors and officers of corporations and an enhanced regime for members' rights.

The CCA, or Canada Corporations Act, currently uses a letters patent system of incorporation. This creates a significant burden on both applicants for incorporation and the government. It requires that the minister review applications for incorporation and improved bylaws and bylaw amendments.

The new act will replace this system with incorporation as of right. The new system will grant incorporation upon the filing of the articles of incorporation under a specified form and payment of a fee. This will greatly expedite the process of incorporation. What used to be done in a couple of weeks will now be done in a day or two, or even within a few hours since electronic filing will be allowed once the act is in force.

Not for profit corporations take many different forms. In particular, there are variations in size and in the manner in which they are funded. The act will separate corporations into two categories. A soliciting corporation is one that solicits donations from the public or receives government grants. A non-soliciting corporation is one funded directly by its members.

The financial oversight of these organizations will vary depending under which of these two categories they fall and on their revenue levels. The act sets revenue thresholds that determine whether the corporation requires a full audit or whether a review engagement, which is somewhat less rigorous and certainly less expensive, will suffice. For the smallest, non-soliciting corporations, members may, if they unanimously choose, dispense with any formal financial review altogether.

For those corporations that undertake either a review engagement or an audit, the new act will require that the corporation provide ready access to their financial statements for members, directors, officers and the director of corporations responsible for administering the act.

In addition, soliciting corporations will have to file financial statements with the government in order to allow the information to be available to the public. Disclosure of financial statements is one of the important tools to provide greater transparency and accountability to the millions of Canadians who make donations to charitable organizations.

One major shortcoming of the current law is its failure to indicate what standard of care directors are expected to meet. The new act will explicitly state the standard of care that directors must achieve. This will establish clear parameters for the director's responsibility and eliminate uncertainty. The standard of care will be a modern one, as is contained in the CBCA, or Canada Business Corporations Act, and other modern corporate law statutes. The standard will require that directors act honestly and in good faith and in the best interests of the non-profit corporation.

The new standard of care will provide improved protection for directors against unwarranted liability. A director who meets the prescribed standard of care will be protected by a due diligence defence. Therefore directors who do their best and do so honestly need not worry.

The new explicit standard of care and the due diligence defence that accompanies it are measures that the not for profit sector expects will reduce the uncertainty directors currently face regarding their personal liability and which should help to attract the qualified individuals needed to act as directors of non-profit corporations.

Members rights will be further protected and enhanced by the new act. Such protections will serve to promote active member participation and will encourage members to properly and effectively oversee the activities of the corporations' directors.

The measures that will now be available to members are the ability to access corporate records, including financial records; access membership lists; request meetings of members and make proposals at such meeting; use the oppression remedy and compliance orders to protect their rights; and use derivative actions to enforce the rights of the corporation.

In summary, the bill would promote good corporate governance and ensure proper levels of financial accountability. It would improve the public transparency of organizations that solicit funds from the public or receive government funding. It would improve the ability of members to take a more active and meaningful role in the corporation in which they have invested time, money or effort.

The new act would be important to the voluntary sector and could serve as a model for reform in other jurisdictions. Its subject would continue to gain importance in coming years. Its continued relevance must be ensured. With that in mind, the act would be reviewed in 10 years after coming into force to assess its operation and impact, and if necessary, address any issues that might develop.

There is widespread support for the reforms contained in the bill. Stakeholders strongly supported proposals for a new statute during a consultation process that included two rounds of national consultations between the fall of 2000 and the spring of 2002.

The Government of Canada is committed to ensuring the strength and success of the not for profit sector. This sector is the foundation for much of what is good about this country. Industry Canada is working to provide the necessary tools that would allow the not for profit sector to meet the challenges of the 21st century. One such tool is good corporate governance. Bill C-21, that we are debating today, is just such a law.

There is not likely one member present who does not have some connection to a not for profit organization. We or members of our family or our closest friends are all members or participants or patients or students or donors. Enhancing the ability of these corporations to do their necessary and valuable work is an issue that touches us all and one in which we can be proud to have been involved.

As chair of the industry committee and along with my colleagues, I look forward to seeing this legislation pass in the not too distant future.

[Werner Schmidt, Conservative, Kelowna, BC]

Mr. Speaker, it is a privilege to speak to Bill C-21. I cannot help but refer to the member who just spoke, the member for Glengarry—Prescott—Russell. He is a very experienced and knowledgeable person in the affairs of the House and how things operate in the House. I congratulate him with the knowledge and persistence with which he pursues his particular line of argument.

I am sure the hon. member for Edmonton—Leduc would be only too pleased to answer some of the criticisms that the hon. member for Glengarry—Prescott—Russell advanced in his particular speech. However, by the nature of the debate right now, it is impossible for the hon. member for Edmonton—Leduc to even begin to address some of the points that were made by the member for Glengarry—Prescott—Russell. I think that illustrates the difficulty with this kind of legislation. It is very technical and involved and deals with the business of not for profit organizations, many of which are very much oriented toward helping people who are less fortunate than others.

These charity organizations are very powerful. The United Way, for example, is one of those organizations. I know from serving on the board of directors of the United Way in Kelowna, for example, and continuing to serve with that group, it is an absolutely fantastic organization. United Way organizations do wonderful work in various communities right across Canada. However there are a whole host of other organizations, including private foundations.

I cannot help but also look at the Minister of Industry who is advancing this legislation. It has been a privilege to work with several other ministers of industry in the House and I have to suggest that the minister who is now presenting this bill could benefit from discussions with one of the previous ministers, the hon. John Manley.

Mr. Manley was a gentleman who was very concerned about doing what was right in legislation and in making sure that all the information that could possibly be gathered was put on the table. I think he honestly wanted to do what was best for the legislation.

I think what happened here is that we have legislation, which, as has been referenced, has had broad consultation over several years, but when I look at the various details and provisions in the bill I cannot help but wonder whether these organizations, for which the legislation is being proposed, recognize and know what the implications of the clauses in the bill mean to them as organizations.

I want to focus on a couple of the clauses in some detail. I was absolutely amazed. I know how some of the organizations operate and when I look at some of the provisions in the bill I wonder whether they will actually like them. I cannot help but ask myself to what degree there was a need expressed by the organizations to have a new bill written for their benefit.

I know the bill would replace parts I and II of the Canada Corporations Act, but I have to wonder whether there was a need expressed for those things to be taken out and that a completely new bill be written. I do not think there is any question that the act needed to be amended because that act, which was passed by the House in 1917, was quite old and a lot of things have changed in the meantime.

I think they had reason to believe that some updating and some modernization had to take place but I wonder whether the kind of modernization took place that they wanted. It removes the requirement of letters patent, for example, to be approved by the minister. All that has to be done is to have articles presented to the director. The director is appointed by the minister and the director then receives these articles. Once he receives them, that is good enough. Just like that, the organization is incorporated and recognized.

No real attempt is made to decide whether the organization is a bona fide organization. They simply submit the articles and they are accepted. It is very interesting that is all there is. The organizations are divided into three broad categories: small, medium size and large. Obviously, the United Way would be one of the large ones but there could be individual small community organizations like a curling club, for example, that has a few members. It, too, could be incorporated. If it were to do so, all it would have to do is send articles in. It only needs one director and that would be good enough.

As I go through the other analyses, members will recognize and want to know whether we really want that kind of power to be given to the director.

What are the advantages of being incorporated under the act or not being incorporated? It seems to me that every existing organization that is under parts I and II of the Canada Corporations Act has three years to transfer and be incorporated under the new act. If they do not do it in three years, they are dissolved by the director without any particular motion on their part. Having been dissolved by the director, does the existing corporation have the option then to continue to exist as a corporation? It is not clear. Could they immediately miss that one and then become incorporated with different articles within seconds of the other one? It does not speak about that at all.

What are the advantages and disadvantages of being incorporated under the act, vis-à-vis being registered under the Societies Acts of the various provinces? Many of these charitable organizations are part of the Societies Act and registered within each of the provinces. What is the advantage of going to this organization rather than being under the provincial Societies Act? It is not clear at all as to what the advantages would be under this particular act.

The bill contains a very interesting provision concerning complaints. We must remember that if a member of one of the organizations issues a complaint, the director then has the power to investigate, but he actually does not investigate it himself. He has the power to have the investigation take place. Whatever the results of that investigation are, he then has the right to dissolve that corporation.

I want to read clause 287 of the bill because it is rather an interesting provision. It states:

(1) In the prescribed circumstances, the Director may cancel the articles and any related certificate of a corporation.

(2) Before proceeding under subsection (1), the Director shall be satisfied that the cancellation would not prejudice any of the members or creditors of the corporation.

(3) In the prescribed circumstances, the Director may, at the request of a corporation or of any other interested person, cancel the articles and any related certificate of the corporation if

(a) the cancellation is approved by the directors of the corporation; and

(b) the Director is satisfied that the cancellation would not prejudice any of the members or creditors of the corporation and that the cancellation reflects the original intention of the corporation or the incorporators.

(4) On the application of the Director, the corporation or any other interested person, a court may--

I am just beginning. That was only one clause where the director could actually dissolve a corporation because somebody was complaining about how the corporation was running.

We have heard all kinds of talk about transparency and about meeting the objectives of the organization and yet if someone were to complain, there is no time schedule as to how the complaint would be handled. If there is a capricious complaint, where perhaps someone is dissatisfied or does not like the director, then, if it is a small or medium sized organization with one director, the organization can be dissolved. There is no clear-cut way of dealing with this.

The bill has not been properly studied and has not been given the kind of attention it should have been. I think the minister and the staff who support him are honourable people and they have tried hard but the bill is not ready to be referred to committee.

[Brian Masse, NDP, Windsor West, ON]

Mr. Speaker, it is a privilege for me to speak about the bill, but I also want to speak about the process of Bill C-21, an act respecting not for profit corporations and other corporations without share capital.

This is a process that has been very frustrating for opposition members. The government tabled the bill and did not even have briefings available before it introduced it in the House of Commons. The bill is 160 pages long and very thorough. It is described in a small summary by the government as complex and technical. There have not been the appropriate supports that are necessary to have the best debate possible.

There are 18,000 not for profit organizations that could be affected by the bill. It is very important that we have a good process that will allow questions and direction in debate in addition to amendments that are necessary to improve the legislation. I am disappointed in the government not doing that.

I am reserving judgment on whether or not I will be recommending support of the bill to go to committee at this point in time. A number of things are still waiting. There are information kits that are supposed to provide essential elements that are still outstanding. We have not seen them. We have not seen any regulations being prepared as well.

The bill is an update from the early 1900s. We would have expected at least some of those things to be completed if there was going to be this rush to get into the House of Commons and then into committee.

I will spend a little time talking about the bill and what it does and what it does not do. One of the key elements is that it will provide a framework that applies to not for profit organizations and corporations without share capital. In terms of the proposed framework, it deals only with the narrow scope of the broad regulatory concerns of the sector itself, that is, the voluntary sector which is so important to Canadians.

The bill does not deal with any of the broader concerns that the sector has expressed, for example, securing long term financing, clarifying and improving the charitable status process, and also addressing advocacy needs that were certainly expressed by the organizations during the voluntary service initiative. I was part of that initiative, participating in my local community and very much involved in that process.

The regulatory regime may well be outdated, but it is unlikely that many of the not for profit organizations wanted to see the Robert's Rules of Order cleaned up first as opposed to the other important initiatives that are facing the industry; that is, a lack of ongoing sustainable funding and accountability that has been issued through different changing practices required by them when funding becomes available with strings and conditions attached.

That is something I hear on a daily basis from not for profit organizations. It is the ability to carry out changes in government legislation, changes in regulations that they are supposed to be able to accommodate under the current budgets and financial constraints. I know my community and other communities across the country are increasingly under pressure to fundraise.

Some of these expectations, in terms of new Liberal requirements, can be very good in many respects, but if they do not have the appropriate resources for accounting as well as accountability and transparency then those organizations have to pull from their existing resource base which is very difficult to do. They would fundraise for people or an organization with a specific cause and then request that the money go to accounting or some other type of department that does not see the direct result of their dollars going to advance a particular social cause in their community.

That is the frustration that the sector has expressed to me on a regular basis and what I have seen myself working in the sector for 10 years.

The bill will incorporate not for profit corporations. They will be able to apply for incorporation and define the rights and responsibilities of directors, officers and members, report their finances and administrative processes and also propose new provisions of director liability. Those are the key elements of the bill. Once again, this came as part of the voluntary service initiative.

There are also clear rules around the director liability that provides a standard of care approach and provides for due diligence. For many organizations this is critical in being able to attract the appropriate directors that they see fit. At the same time, if they do not have the appropriate resources to meet the expectations of the government on these matters, then they are going to have to pull from their existing resource base and that is going to affect the services that they provide to people.

I would like to point out some specific organizations so that people understand what we are talking about. I mentioned at the beginning of my speech that there are 18,000 approximately organizations that would be affected by this bill. They include business and consumer associations, airport and harbour authorities, community based organizations, charitable organizations, private foundations and religious groups. All of those organizations would be affected by this legislation.

There does not appear to be a willingness by the government to provide the resources to those groups and organizations to deal with the changes that the bill is going to mandate. That is something of a concern. If we cannot get that in Parliament, it is hard to believe that those 18,000 organizations will get it themselves.

It gets very complicated because some of these organizations are very small. However, it does not matter if they are small or large, they will have to comply with these new rules. If they do not have the technical expertise, it will frustrate some of the smaller organizations that are important to social movements and that take care of people.

A specific example is a local legion would be required to vote on matters in the same prescribed way as that of the Toronto Airport Authority. Small anti-poverty groups would be required to pass resolutions and record them in the same way as the United Way. The Lions Club would have to maintain its membership lists in the same way as the Red Cross.

That again goes to the supports that we believe should be appropriately installed in this bill so the government has the resources to assist those organizations. This would ensure that they would not become frustrated or have problems in following the bill, which later on could lead to them having difficulty in attracting new leaders and new participants. If there is some due diligence that they cannot comply with or if they do not have the appropriate resources for that, it could make it very difficult for them to grow and move forward. When groups are supported, they flourish. They also make considerable contributions, whether it be in poverty, in social justice or in religious organizations. They need those necessary supports. I am not convinced the government is willing to do that. If it will not do it here, what type of guarantee do we have it would do it abroad or anywhere else?

I want to talk about a couple other parts of the bill. One thing the government seems obsessed with is the concept of smart regulations. It throws that term out continually. Smart regulations means something to the government in terms of what it wants to produce and get out for people. However, to people, it means regulation changes. When the government talks about smart regulations, it wants accounting practices that fit its agenda.

What smart regulations means to me is the ability for groups and organizations, whether they be a business or not for profits, to have the best accounting practices that meet their needs and to ensure that there is no duplication or conflicts with government legislations. Smart regulations require two parties. The government uses that jargon. It is obsessed with the terminology. However, it does not recognized that two partners are needed to make that type of structure work efficiently.

I want to touch on some of the things the bill does not address. I mentioned in my preamble that it does not deal with the reduced amount of funding. The government has brought forward a number of different programs with a lot of terms and conditions which also do not provide for adequate supports.

I worked for a number of years with Youth Service Canada projects, which were fantastic for the community. However, they always had to be renewed after six or seven months, and a lot of time was wasted. As opposed to having due diligence with organizations that were very accountable, we had to ensure that we accounted for all the dollars. However, we simply did not have enough so we had to seek out partners. We were very fortunate to have an over 90% success ratio for returning individuals to the workforce or to school, but we spent far too much time having to prove our case for ongoing funding.

I also want to talk about a healthy civil society. The different not for profit organizations have expressed to me their concern with the current 10% rule of the government in terms of advocacy and the vagueness around that. In my opinion there has been far too much political pressure put on organizations so they cannot advance their cause. It is very much a part of a healthy democracy. Those organizations that do speak up must have the ability to do so without intimidation and with the due respect necessary to ensure their causes do well.

A traditional institution that has done well, with strong advocacy, is the United Way, as well as other groups and organizations beneath it. When strong advocates speak out for social programs for Canadians, better solutions are found to some of the most difficult challenges we face.

I will conclude by expressing my disappointment that the government has proposed to move this bill forward in such haste, without due diligence and without respect for the members of the House of Commons. It also affects the legislation we could have on this important initiative. I believe it needs to have more than a particular focus. It needs to be full and broad ranged.

[Christiane Gagnon, Bloc, Québec, QC]

Mr. Speaker, I share my Conservative colleague's frustration over the short and even non-existent briefing session offered on the new bill before us today.

Last Thursday, we were invited to a quick briefing session on a bill which is extremely complex. It is 150 pages long and is divided in 20 parts. We would really need more than the 10 minutes we had this morning if we are to be able to debate this bill and explain the purpose of the bill to the public and the organizations concerned.

Bill C-21 is a new piece of legislation on not-for-profit organizations. It purports to give these organizations a more modern framework, a more centralist governance system. It would repeal parts I, II, and III of the Canada Corporations Act in order to rely more on the Canada Business Corporations Act.

The bill before us will help ensure the long-term strength and vitality consolidation of the voluntary sector and of organizations in the social economy industry.

More specifically, this bill facilitates the constitution in bodies corporate of not for profit organizations, NPOs, thereby speeding up the process. It sets out standards of diligence and specific responsibilities for administrators and gives them better protection against civil proceedings. As well, the bill reinforces the rights of members of non for profit corporations to governance of these bodies. Finally, it makes closer surveillance of these organizations' finances possible.

There are, as I have said, 20 parts to the bill. We in the Bloc Québécois are in favour of the underlying principle, but feel that reference to a committee is necessary to clarify certain questionable points. I will try to summarize the problems we find very briefly, since we have only 10 minutes to debate the matter this morning.

As we know, in the 2004 Speech from the Throne, the government restated its position and made a commitment to encourage the social economy and the numerous activities relating to the not-for-profit corporations.

What is more, in its 2004 electoral campaign, and the reason we are in favour in principle this morning, the Bloc Québécois made a commitment to re-examine the federal government's economic support packages in order to make them more appropriate to the specific needs of the corporations in the social economy, as well as to ensure that such corporations can enjoy enhanced access to permanent sources of capital and other funding that suit their characteristics.

I will set out the context of the reform, although I realize that the Liberal member who has just spoken has done that to some extent. In recent years, certain community stakeholders have expressed concerns about how dated the act has become, and how it is no longer a fit with the requirements of the not for profit sector. We are therefore calling for the act to be modernized in order to respond to the objectives.

There has been public demand from stakeholders for some time. In 1989, a task force on the voluntary sector was struck by the federal government. It called for improvements to the regulations governing the sector, with the Industry Canada proposal to modernize the legislation being part of the plan.

This is why we are here today looking at a new bill, and it is our hope that the reference to a committee will provide answers to the points being queried by the Bloc Québécois.

This new legislation has four goals: flexibility and permissiveness; improved transparency and accountability; higher efficiency; and fairer treatment of not for profit organizations.

With respect to the flexibility and permissiveness of the legislation, as in the case of the classification system for not for profit organizations in the Canada Corporations Act, Bill C-21 makes no changes in the new not for profit corporations act.

Nevertheless, we think that there is still a possibility of including a classification system, which is not provided in Bill C-21, because the government believes such a system could be established with broader categories. Such a system would further improve transparency in financial management.

The second objective after transparency is accountability. The Canada Corporations Act currently requires not for profit corporations to keep detailed accounts of their activities but does not require disclosure of these accounts. To permit administrators and managers to better manage and supervise the management of the corporation would be to make it possible to monitor the financial situation of the organization between annual meetings and ensure that funds are used only in the pursuit of the stated goals and objectives.

The bill also includes a provision to ensure a balance among transparency, accountability and privacy.

I know that there are other objectives beyond this concern for transparency but I cannot go into all the details. We will certainly have an opportunity for more debate here in the House and to hear witnesses in the committee.

Let us move on to the third objective, efficiency. The act provides for a system of letters patent. In this system, creating a corporation is not a right. That is where we think there may be room for improvement.

Anyone who wants to form a not for profit entity has to apply to the Minister of Industry for a charter creating a body corporate for the purpose of carrying on objects of a national, patriotic, religious, philanthropic, charitable, scientific, artistic, social, professional or sporting character, or the like objects.

This application has to be accompanied by draft bylaws. In a system where incorporation stems from right, it would happen automatically, provided the required bylaws were submitted to the Director of Corporations. This major change means therefore an approval process that is much simpler, more flexible, more efficient, enhanced and less expensive.

Once again, we will make a point of debating this issue when the various players concerned with one or other aspect of this bill testify.

With respect to fairness, the Canada Corporations Act does not set out the fiduciary responsibilities of directors. It does not contain any provisions concerning standards of care, whereas we know very well that the new legislation on not for profit corporations will provide for the establishment of such standards.

Hon. members can see how terribly complex this bill is. We in the Bloc Québécois wonder whether it is consistent with Quebec's laws or if it could, for instance, contravene certain provisions of our legislation. We are going to be very vigilant. We know very well that standardizing the management of not for profit corporations is beneficial, but it must be done in the respect of Quebec's jurisdictions.

For example, in the implementation of governance mechanisms, the new legislation would take into account the financial position and size of the organization. It provides a relatively flexible framework for the making of bylaws. Nevertheless, we are going to be vigilant because this could violate what we have in Quebec in terms of support for not for profit organizations.

[James Rajotte, Conservative, Edmonton—Leduc, AB]

Mr. Speaker, I understand that I have 10 minutes with no questions or comments, with no actual real debate in the House today.

I rise today to speak to Bill C-21, an act respecting not-for-profit corporations and other corporations without share capital. The bill would also commonly be known as the Canada Not-for-profit Corporations Act.

I want to begin by addressing the new practice of the Liberal government of sending bills such as Bill C-21 to committee before second reading. Bill C-21, like the other industry bill before the House, Bill C-19 on competition policy, which we addressed a week ago, has been referred to committee for study.

In theory, the purpose of sending a bill to committee before second reading is to allow the committee members to introduce a broader scope of amendments to the legislation. The committee is allowed to propose changes that are outside the principle of the bill, which is what we debate at second reading: the principle of the bill.

In my view, however, the government is abusing this process. Eleven of the 23 bills that have been introduced by the government have gone or are going to committee before second reading. Debate in the House on this issue is limited to 180 minutes instead of the unlimited debate that would occur under regular second reading rules. Thus, through the back door, the government is limiting debate on this and 10 other bills. We are limited to 10 minute speeches with no time for questions and comments and no time to question the minister on the bill.

The fact is that a reference to committee before second reading is a handy scapegoat for a minority government. Rather than giving each legislative initiative careful thought and defending it, the government can tell Canadians that if they do not like the bill they can take their concerns to committee. This is also a very effective way and a strategy of this government to tie up a committee's time. A committee is supposed to be the master of its own house, to debate and deliberate policy on its own.

The Standing Committee on Industry, Natural Resources, Science and Technology has a bigger mandate in this Parliament with the addition of the combination of natural resources and industry. This is a minority government and the opposition wants to discuss issues like smart regulations and energy policy, as advanced by the member for Kelowna, but the fact is that those issues then get pushed to the back because we are studying these complex bills that are introduced one week before.

I just want to touch upon the process here. This bill was introduced last week. It is about 152 pages long with well over 300 clauses. A briefing was set up for the opposition last week. The member for Kelowna--Lake country went to the briefing. The briefing for Liberal members was extended so the briefing for Conservative members was essentially cancelled. Finally a briefing by the department was set up again for yesterday. The bureaucrats were late, by the way, so my colleague from Kelowna and I sat there twiddling our thumbs waiting for the government bureaucrats. They came in with an eight page briefing, in size 20 font, and here now are some of some of the wonderful things those officials told us.

They said the bill is complex and technical; well, that really indicates to us what is in the bill. They said information kits will provide essential elements; we are still waiting for these information kits. They also said that the bill was expected by stakeholders and some of them will seek to participate in the committee review process. Of course they will. This is the most common, basic information. Of course people interested in the bill will appear before the committee. Did we need a briefing to tell us that?

That was what we were told at the briefing on this very complex bill that the government wants sent to committee before second reading to tie up the committee because the government does not want to actually debate the issue in the House. Quite frankly, with respect to the minister and his staff, I have dealt with four industry ministers in a row and I have to say I am very disappointed with the way they have dealt with the opposition, particularly in a minority government. If the government is interested in passing this legislation, perhaps it ought to pass it over to us and give us maybe a week to prepare for it.

The government could tell us what it likes in the bill and what it thinks we should support about it because “we as a minority government recognize that we need at least one other party, in some cases two other parties, to support our legislation”. That is what it could say. Instead, the government is introducing Bill C-21 without debate, sending it to committee before second reading and frankly, in my view, avoiding the entire legislative process.

Having gone on that tirade, I do want to touch briefly upon the actual substance of the bill. I do not know if I will have time within the 10 minutes allotted, but I do want to also state publicly that the Conservative Party does not support sending this bill to committee before second reading and we are also not supportive of the substance of the bill at this time.

We have some concerns about this bill, the first under monitoring and enforcement. The fact is that Industry Canada has drawn up a very complex set of regulations and laws for record keeping, conflict of interest within these corporations, communications with membership, and financial reporting, to name just a few issues. But there will be no one at Industry Canada who will police or monitor the not for profit corporations' struggles with these requirements.

This is similar to the Elections Act. The government is setting up a huge bureaucracy and yet Industry Canada will not have someone who will actually assist all of these not for profit organizations across the country in terms of trying to fulfill all these requirements. Instead of setting up an arbitrator to help these organizations, most of whom I think rely on volunteers, this legislation would force disputes directly to the courts.

Having a lawsuit, either criminal or civil, because both are possible under this bill, would cost a not for profit organization time and money. In terms of the cost, there would be a larger financial burden on not for profit corporations in trying to meet the legislative requirements to change their bylaws and constitutions, to hire auditors and for liability insurance, to name a few areas. If the House passes this bill, a federally registered not for profit corporation would be required to make the transition to the new act within three years of the new act coming into force. Failure to do so would result in the director of not for profit corporations at Industry Canada taking action to dissolve the corporation.

In terms of the issue of how complex this bill is with respect to regulations, when someone is stalled in getting an organization up and running quickly by government inaction or by government regulatory burdens, the fact is that it costs the organization money and it delays what the organization does and what its purpose is. Frankly, the government has paid a lot of lip service, as the parliamentary secretary just did, to smart regulation when in fact it has failed to implement its own government committee on smart regulation, which came out just this year.

In addition to the bylaws contained in this bill that must be adopted by not for profit organizations in order to be allowed to exist by Industry Canada, there is a regulatory package that accompanies this legislation.

Under the proposed regulations, the degree of financial reporting is divided into five classes. For example, the type of financial report a not for profit corporation is required to submit to Industry Canada depends on the revenue of the not for profit corporation. The more revenue earned, the more formal the reporting requirement. There are no exceptions, so if a corporation has an exceptional fundraising year, the reporting responsibilities would increase as would the costs of the corporation for possibly redoing their books and paying for a more professional audit.

The regulations outline a very strict schedule for issuing notices of meetings. The minimum notification for a meeting of members is 14 days. This is in the actual legislation. This bill would make it illegal to call an emergency meeting within less than 14 days, thus removing some of the flexibility that smaller organizations rely upon to resolve important local issues.

The regulations do allow for some exemptions, such as the publication of membership lists if, for instance, the not for profit corporation is a battered women's shelter. One could apply to the director at Industry Canada not to have that membership list published. However, this application for an exemption would have to appear in the Canada Gazette and Industry Canada estimates that it would take at least 18 months for this process to be completed. It seems rather pointless to have to wait two years for an exemption if they only have three years to comply with this legislation in the main.

I do want to touch upon one other aspect, which is the whole issue of membership lists. It is a concern. What this legislation would allow is that if someone is a member of a not for profit corporation, that person would be able to access the entire membership list of that not for profit organization. The concern there obviously relates to privacy. Many members join these groups, but they do not feel they should have their personal contact information shared with anyone else who happens to be a member of that group.

The answer we were given by the people who gave the briefing was about how what if they want to contact these people in advance of the annual general meeting to advance one of their issues or to discuss something at the AGM and they want to inform people ahead of time. That may be a legitimate point, but should there not be another way to do that other than allowing an entire membership list of that organization to be eligible to just one person who signs up for a membership for $10 a year or something like that? Therefore, we do have some serious privacy concerns as well.

We also have some concerns with respect to liability. Many directors in the not for profit sector are volunteers. However, under this new scheme they will be liable for the actions of the not for profit corporation. I think organizations across Canada should read that section carefully.

Under the new standard of care, directors will have to act honestly and in good faith with a view to the best interests of the corporation, exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances, and comply with the act, articles, bylaws, and any unanimous member agreements. My concern is that this type of liability will deplete the pool of volunteers in the small, local, not for profit corporations that are simply trying to help their communities.

I could go on, Mr. Speaker, but I assume my 10 minutes are up.

[Jerry Pickard, Liberal, Parliamentary Secretary to the Minister of Industry]

Mr. Speaker, it is my honour and privilege today to come before this House and speak to Bill C-21, an act respecting not for profit corporations and other corporations without share capital.

The legislation, which would enable the governance regime for federally incorporated not for profit organizations, is a long overdue replacement of the present Canada Corporations Act, or CCA. The CCA, which, to this point, has set the rules for some 18,000 organizations, was first enacted in 1917 and has not been substantially changed since.

Needless to say, the CCA no longer responds to today's needs for the not for profit sector. For example, it is silent on major elements of modern corporate governance which creates uncertainty in the public mind.

Second, it is an administrative burden on the sector and the government.

Finally, it fails to provide adequate protection for men and women who manage or operate these corporations.

In the years since the CCA was originally enacted, the world has changed dramatically and the not for profit sector faces governance challenges that cannot be dealt with under the existing legislation.

In response to these challenges, the government has taken a measured and reasonable approach to addressing the urgent need to reform the not for profit statute. It has looked at the Canada Business Corporations Act as a model of worldclass corporate statute. It then built on the provisions of the CBCA to reflect the requirements of the not for profit sector. It utilized, where appropriate, examples found in provincial not for profit statutes.

Finally, it was benchmarked against similar legislation in the United States. As a result, the new act will be one of the most modern statutes of its kind, measuring favourably against the best features of similar statutes throughout North America.

It may be asked: why now? Why has Parliament not addressed this in the last 80 years? In fact, there have been four previous attempts to reform the CCA but, for a variety of reasons, members of this House or our partners in the other place have never been able to complete the necessary scrutiny of previous bills before they died on the order paper.

We are now presented with an opportunity to bring this legislation up to date and to position federal not for profit law as the new benchmark for other jurisdictions.

The development of a new not for profit corporations act has been a long journey. It began with a commitment under the voluntary sector initiative in June 2000, followed by two rounds of cross-country consultations with shareholders.

The not for profit sector plays many important roles in Canadian society and our economy. It mobilizes citizens and creates a sense of community, enhances democracy, fosters community participation and strengthens our ties to one another. From national corporations created to fight disease to local sports associations, from faith organizations to facilities that provide job training and education to new Canadians, the sector touches most aspects of Canadian life. It is essential to our national identity and to our economy. Many are important government partners in providing services to Canadians.

The Government of Canada recognizes the importance of strengthening Canada's social economy and the thousands of entrepreneurial enterprises that form its backbone. These organizations are not only the key to social economy, but they are also an important pillar of the economy as a whole.

Research indicates that there may be up to 160,000 not for profit organizations creating opportunity in this country. When universities and hospitals are included in these figures, the revenue of the sector is estimated up to $112 billion a year.

The not for profit sector is one of the country's largest employers, employing more than 2.2 million people, with payroll expenditures as high as $64.1 billion. Most of these corporations are incorporated provincially. However more than 18,000 are federally incorporated and many are among the largest and most influential not for profit corporations in Canada.

The proposed new statute would demonstrate the government's commitment to strengthening its partnership with the sector. Current federally incorporated organizations include national charities such as the United Way of Canada and the Heart and Stroke Foundation of Canada. It includes umbrella organizations such as the Canadian Centre for Philanthropy and the Consumers' Association of Canada and several national businesses. It includes religious groups such as the Canadian Jewish Council.

There are health and community based organizations, environmental organizations, and cultural and heritage societies. Also included are transport related organizations such as airport authorities and small harbours. There are also many private foundations that pursue philanthropic objectives to the benefit of Canadians. Each of these and thousands of other small and large organizations perform an important function for their members, their communities, the recipients of the services and, collectively, all Canadians.

Replacing the CCA with a new framework law was a commitment made and reaffirmed many times over the last years. Fulfillment of this commitment would ensure that federally incorporated enterprises are governed by a modern legislative framework that is flexible enough to meet the needs of both small and large organizations while providing the accountability and transparency necessary to secure the support of the Canadian public.

The proposed new act provides a perfect example of smart regulations. It would reduce the administrative burden by making it easier and faster to incorporate and develop internal arrangements that suit the needs of the organization. It would promote good governance by emphasizing accountability and transparency to members and self-regulation more generally. At the same time, it would enhance the scope of governmental and public oversight by requiring greater financial disclosure requirements for organizations that solicit funds from the public or receive government funding.

The act is good for Canadians. It is good for them as individuals and it is good for our communities. I urge all members of the House to support the legislation.

[Andy Scott, Liberal, for the Minister of Industry]

moved:

That Bill C-21, an act respecting not-for-profit corporations and other corporations without share capital, be referred forthwith to the Standing Committee on Industry, Natural Resources, Science and Technology.

Questions on the Order Paper

[Some hon. members]

Agreed.

Bill C-21. On the Order: Government Orders

November 15, 2004--The Minister of Industry--Second reading and reference to the Standing Committee on Industry, Natural Resources, Science and Technology of Bill C-21, an act respecting not-for-profit corporations and other corporations without share capital.

Business of the House

[Tony Valeri, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I want to inform the House that the Hamilton Tiger Cats are certainly looking forward to next year at the Grey Cup. We actually have a great contingent up here for the Sunday game.

This afternoon we will continue with the opposition motion.

Tomorrow the House will proceed with report stage and, if possible, third reading of Bill C-7 respecting parks. When this is complete, we will consider a motion to refer to committee before second reading Bill C-20, the first nations fiscal legislation. Should there be time left after that, we will return to Bill C-9, the Quebec economic development legislation.

On Monday, Tuesday and Wednesday we will start with Bill C-7 and Bill C-20, if they are not already complete. We will then proceed to consider reference before second reading of Bill C-21, the not for profit legislation. This will be followed by second reading of Bill C-23 respecting human resources, and Bill C-22 respecting social development. We will then return to any bills not yet completed.

On Tuesday evening, as all members know, the committee of the whole will consider the estimates of the Minister of Health.

Next Thursday shall be an allotted day.

Canada Not-for-Profit Corporations Act

[Reg Alcock, Liberal, for the Minister of Industry]

moved for leave to introduce Bill C-21, an act respecting not-for-profit corporations and other corporations without share capital.

(Motions deemed adopted, bill read the first time and printed)