Canada Not-for-profit Corporations Act

An Act respecting not-for-profit corporations and certain other corporations

This bill was last introduced in the 40th Parliament, 2nd Session, which ended in December 2009.

This bill was previously introduced in the 40th Parliament, 1st Session.

Sponsor

Diane Ablonczy  Conservative

Status

This bill has received Royal Assent and is now law.

Summary

This is from the published bill. The Library of Parliament often publishes better independent summaries.

This enactment establishes a framework for the governance of not-for-profit corporations and other corporations without share capital, 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 gives corporations with share capital created by special Acts of Parliament and subject to Part IV of the Canada Corporations Act six months to apply for continuance under the Canada Business Corporations Act or be dissolved.

The enactment makes a number of consequential amendments to other federal Acts. It provides for a phased repeal of the Canada Corporations Act as corporations cease being subject to the Parts of that Act.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 10:35 a.m.
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Conservative

Gord Brown Leeds—Grenville, ON

Madam Speaker, I am pleased to have this opportunity to address the House on the third reading of Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

First of all, I would like to thank the chair, the member for Wellington—Halton Hills, and the rest of the Standing Committee on Industry, Science and Technology, the committee on which I sit, for the committee's hard work in the examination of this piece of legislation. The extensive bill we were required to study dealt with highly complex subject matter, and the time and the seriousness for which the committee approached the task are greatly appreciated.

I would also like to thank all those who appeared before the committee to make comments and suggestions. In studying this bill, the committee was able to draw on the collective expertise of these witnesses, which allowed it to improve the bill through a number of amendments based directly on their recommendations.

This bill, which was returned to the House by the committee, is an important step forward for the volunteer and not-for-profit sectors in Canada in terms of governance.

The corporations that will benefit from Bill C-4 touch on all aspects of our lives. Some are charitable organizations, others represent groups of individuals or companies or provide services for their members or for their communities regardless of their mission or size. All of these organizations will benefit from the provisions of the new Canada not-for-profit corporations act.

It must be remembered that the current legislative framework for federally incorporated not-for-profit corporations has not been substantially altered in over 90 years. As a result, the current legislative framework imposes an administrative and financial burden on the organizations involved. Bill C-4 proposes that this framework be replaced by new legislation, the Canada not-for-profit corporations act, which will help alleviate those burdens.

Under the new legislation, incorporating a not-for-profit organization would only take a few days and would involve very little paperwork. The requirements imposed upon these corporations would be reduced to the strict minimum to ensure good governance depending on their size and objectives. The new act will give not-for-profit organizations the flexibility they need to concentrate on their mission. For example, these organizations and their members will finally be able to make full use of modern electronic means to communicate and to hold their assemblies and meetings.

The new act will provide a modern governance framework for the volunteer sector based on member accountability that will allow it to fully play its role. Members will be equipped with the tools they need to effectively manage their organizations. They will also be able to take appropriate measures to correct certain situations when necessary.

In addition, the governance framework will provide the Canadian public with a means of ensuring that sums of money raised are used appropriately and in a responsible manner, which should help boost Canadians' level of trust in not-for-profit corporations.

In order to be able to operate, most not-for-profit corporations count on the support of Canadians from all walks of life. Millions of Canadians are either employed directly in the not-for-profit sector or volunteer their time. In one way or another, they do this to help not-for-profit corporations.

Coming at a time when the expectations of the Canadian public and the members of these organizations have never been higher, the proposed new governance structure in the Canada not-for-profit corporations act will greatly clarify the roles and responsibilities of the directors and officers of the corporations.

The clear duty of care and the due diligence defence against liabilities will help ensure that federal not-for-profit corporations will continue to be equipped to recruit and retain the services of energetic and talented individuals as officers and directors.

For all these reasons, this bill is long overdue. During the committee hearings on Bill C-4, a number of witnesses stated that this new bill would greatly improve the governance system and legal framework of not-for-profit corporations and corporations without share capital in Canada. All agreed on the need to pass Bill C-4, some insisting that it be done quickly.

When such an important framework statute that affects our economy is being modernized and updated, certainty as to how the changes will come about and be enforced is of great importance to all stakeholders.

The government recognizes this and will take concrete steps to help the not-for-profit sector to transition into the new act. With that in mind, a number of tools such as guides and fact sheets along with model articles of incorporation and model bylaws are being developed by Corporations Canada to help not-for-profit corporations and their directors adjust to the new regime.

Notification of the passage of this bill along with information on the availability of materials that will assist in the transition to the new legislation will be sent out to all corporations that will be impacted. This information will be posted on Corporations Canada's website for easy reference, and officials will be available to assist, if required.

Finally, Corporations Canada will work with other government departments and voluntary sector umbrella organizations to deliver training materials to affected corporations.

I am convinced that the flexibility and ease of use provided by this new legislation will be recognized, accepted and welcomed by the volunteer sector.

Let us wait no longer. Corporations in the voluntary and not-for-profit sectors need a framework that is free of excessive demands and also of red tape. They need it as soon as possible. I therefore encourage all members to support this initiative aimed at providing organizations that are important to Canadians with a modern framework that will allow them to devote their full energies and resources to fulfilling their primary purposes of providing much needed services to millions of Canadians.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 10:40 a.m.
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Liberal

Keith Martin Esquimalt—Juan de Fuca, BC

Madam Speaker, one of the big challenges facing the non-profits right now is the fact that the CCRA, Revenue Canada, is coming down on them like a ton of bricks. As we are all aware, this has been an outfall as a result of the Banyan Tree Foundation NGO issue. In the CCRA's zeal to try to find some malfeasance in the non-profit sector, it has spread a broad net and is tying up non-profits which are trying, with minimal resources, to do an enormous amount of good work.

I want to suggest two things for the member. First, that he ask the Minister of National Revenue to call off the attack dogs and start dealing more reasonably with non-profits. The government should listen to their concerns and develop a structure that would allow them to work effectively with the limited resources they have. The member should also bear in mind that our non-profit organizations do an extraordinary amount of work with volunteers across our country. I know the government is trying to do that with the bill but it inadvertently is causing non-profits enormous pain and suffering and comprising their ability to help the people in need who need help from non-profits due to the government's failure to do its job in many areas, from housing to other issues that are affecting those most in need.

Second, I would recommend that the member ask the Minister of Finance and the Minister of National Revenue to change the tax structure to allow foundations to occur in Canada in a similar fashion to what occurs in the United States. If the member were to do that, we would liberate a lot of money.

The last issue concerns the transferring of assets to non-profit organizations, such as real estate. The Canadian Real Estate Association has some very constructive solutions that would enable people to give their real estate assets to non-profits, which would be a huge boon for non-profit organizations to acquire assets that they could use for housing and to run the programs for those most in need.

I would ask the member if he has any views on that and if he is willing to take that to cabinet.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 10:45 a.m.
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Conservative

Gord Brown Leeds—Grenville, ON

Madam Speaker, as a board member of the United Way in Leeds—Grenville since the year 2000, I understand very well the challenges that the not-for-profit sector has to face.

The committee spent a great deal of time listening to witnesses who came before the committee. There were in excess of 300 clauses in the bill. I did address in my presentation that a great deal of time was spent going through the various challenges that the non-for-profit sector is facing.

Many of the things brought forward in the bill would help alleviate the very questions that the hon. member has asked in terms of making it much easier for not-for-profit corporations to operate, but also there would be far more accountability and it would instill more confidence in Canadians in what they do and, hopefully, will make them more generous in their contributions to these various not-for-profit corporations.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 10:45 a.m.
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Conservative

Gord Brown Leeds—Grenville, ON

Madam Speaker, one of the problems with attracting directors to these not-for-profit corporations is the liability they may incur by sitting as directors of these corporations. What has been addressed in the bill is much more clear in terms of what their responsibilities are. From what we heard from the various witnesses, they are very happy, not only with the accountability but clearly laying out the responsibilities of directors.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 10:45 a.m.
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Liberal

Marc Garneau 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.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11 a.m.
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Bloc

Paul Crête Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Madam Speaker, I listened with interest to my colleague's speech, especially in light of the fact that I was industry, science and technology critic when this legislation was first introduced a few years ago. The drafting of a completely revised bill was delayed by elections. I believe it was urgent that it be done. Indeed, members of the committee did a good job and at this stage, the bill should be adopted as soon as possible.

However, as my colleague mentioned, bills can always be improved. This bill does not contain a classification system for existing types of organizations. This means that a charitable organization whose purpose is to provide services to non-members will be in the same situation as a mutualist organization that provides services to its own members. Under this bill, all not-for-profit organizations covered by the act will belong to the same general category. The Canadian Bar Association sees that as a weakness in the bill.

Could my colleague tell me if he thinks this situation should have been rectified? Was this noted in committee and did the committee decide to leave the bill as is? It seems to me that the current updating of the act, which had not been done in a very long time, may require further adjustments in three, four or five years to take the size of not-for-profit organizations into account.

I would like to know my colleague's point of view on this to ensure that the maximum has been done already so that the act is perfectly adapted to the new realities of the 21st century.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11:05 a.m.
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Liberal

Marc Garneau Westmount—Ville-Marie, QC

Madam Speaker, I thank my colleague from the Bloc for his very pertinent question which was thoroughly presented by his colleagues who were members of the committee.

The classification of not-for-profit organizations was presented as the member did in his question. However, after listening the Bloc members' arguments, the committee decided not to proceed with a classification of not-for-profit organizations for the moment.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11:05 a.m.
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Liberal

Keith Martin Esquimalt—Juan de Fuca, BC

Madam Speaker, many citizens in our communities are in dire need, particularly during the economic downfall that has happened in our country and around the world.

There have been a number of very constructive solutions from the non-profit sector. One of those has to do with tax credits, in that non-governmental organizations should receive the same tax benefit as political parties. Why on earth do donors to political parties receive a much higher tax benefit than donors to NGOs, which many of us would argue are certainly more worthy of receiving money for helping those most in need?

Does my colleague think that is something we may want to consider? Does he have any other ideas? Madam Speaker, I know that this is a big interest of yours.This is one of the prime responsibilities of government. The government has really failed to help those most in need. In the city of Victoria, there are 1,400 people living on the street. The absence of a credible platform dealing with housing is a huge problem. No matter what other issues an individual may have, that individual will never be able to deal with those issues unless he has a roof over his head.

It is important for the government to work with other parties and sectors outside the House to have a credible housing strategy. Realtors have some very constructive suggestions, one of which would be changes within the revenue act to include a tax rollover provision. This provision would enable people to sell assets they currently have and roll that money over if they purchase, rebuild or refurbish a new structure within one year. The government could make it a quid pro quo. If a person selling an asset to buy an asset accessed the rollover strategy, the person would be obligated to spend some of that money on affordable housing.

Does my hon. friend have any comments on these issues? Perhaps he could provide other solutions given his vast experience.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11:05 a.m.
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Liberal

Marc Garneau Westmount—Ville-Marie, QC

Madam Speaker, my hon. colleague from Esquimalt—Juan de Fuca is always thinking broadly in terms of policy in an incredible number of different areas dealing with government business.

During our deliberations in the three months that we saw witnesses, the issue of tax benefits did not come up. Like the hon. member, I certainly agree that people in the not-for-profit corporations, and I am an honorary patron of one myself, devote an incredible amount of their personal time to good causes, without remuneration. The great majority of not-for-profit corporations are made up of volunteers, and they do wonderful things.

The idea of recognizing the enormous contribution they make through some form of tax benefit is certainly appropriate, and perhaps it should be brought up at a future time. For the purposes of Bill C-4, it was not an issue that was raised specifically within the context of the law itself.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11:10 a.m.
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Bloc

Guy André Berthier—Maskinongé, QC

Madam Speaker, I have a question for the member.

As he said in his speech, he met various witnesses during the study of the bill. I will ask two questions. First, some would want to impose more controls on the role of directors of not-for-profit organizations. Does the member think that the people who will sit on the boards of the new not-for-profit organizations will be better informed of their roles and responsibilities because of the new structures?

My second question relates to the eligibility for charitable organization numbers which has been creating a problem for a few years. Many charities or advocacy groups, for example, would like to get charitable organization numbers and be able to issue tax receipts. That has been more difficult for some years now. Was the issue raised during the study of the bill? Does my colleague believe that the fact that there is absolutely no classification of not-for-profit organizations will allow the government to issue more of those charitable organization numbers?

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11:10 a.m.
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Liberal

Marc Garneau Westmount—Ville-Marie, QC

Madam Speaker, I would like to thank my colleague for his question.

The issue of a charitable registration number has not been raised during debate this time, but it was raised in the past when I was not yet sitting in the House of Commons. The question was not raised again during these discussions and meetings with the witnesses.

We know there is another department involved when it comes to charitable organizations, the Canada Revenue Agency. At this point, there is a consensus among the members of the committee, who believe it is important to keep these two areas, not-for-profit organizations and charitable organizations, in their own niches.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11:10 a.m.
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Bloc

Robert Bouchard Chicoutimi—Le Fjord, QC

Madam Speaker, a number of NPOs will undoubtedly be very happy to see that Bill C-4 is moving ahead and that there is a common desire to modernize Quebec and Canadian corporation laws.

For some years, a number of stakeholders, including experts, public servants and not-for-profit organizations, have been asking the government to modernize the legislation. Starting early in this decade, some people have participated in consultation sessions, while others have sent briefs to Industry Canada calling for speedy modernization of the Canada Business Corporations Act. It does seem that after several vain attempts, Bill C-4 may finally pass. It would seem to be very obvious that there is a common desire on both sides of the House to modernize the Canada Corporations Act, particularly given that the bills introduced by previous governments have many similarities.

We will recall that the Liberal Party introduced a bill in 2004. Then, several years later, in 2008, the Conservative government also introduced a bill with a different number, but that contained essentially the same points and same clauses as were in the bill introduced at the time of the Liberal government. Had it not been for the election, I believe that the bill presented by the Conservative government in June 2008 would have been accepted. Today, we are at the third reading stage for Bill C-4. Even though this is third reading, I think it is important to provide a summary of this bill.

The primary objective of this bill is to propose a new Canadian not-for-profit corporations act that will provide those organizations with a more modern and transparent framework. To that end, the NPO operational framework will base its corporate governance model on the one in the Canada Business Corporations Act. The new act will gradually repeal the Canada Corporations Act and replace Parts II, III and IV of that act. This transition period will be spread over three years. Although the bill is complex, the new framework that will govern not-for-profit corporations should greatly simplify and clarify the role of NPOs in our society, both for their members and directors and for the general public.

During consideration of Bill C-4 in committee, a number of witnesses explained to us how important it was to enact it. Although some groups had suggestions to make regarding the document, the message from the witnesses was practically always the same.

We strongly support Parliament’s objective of providing a modern, transparent and accountable framework for governance in the not-for-profit sector in Quebec and Canada.

Recognizing the important role that not-for-profit organizations play in our society, the Bloc Québécois is convinced that Bill C-4 should pass. According to the testimony we heard at the Standing Committee on Industry, Science and Technology and what the groups I met on the Hill had to say outside of the committee, this bill will be beneficial.

There are several reasons why the Bloc is in favour of this bill at third reading. As I said in a previous speech, Bill C-4 will considerably improve the efficiency and transparency of the process for incorporating not-for-profit organizations.

Not-for-profit organizations are currently required by law to keep itemized accounts of their activities, but they are not required to make the accounts public. These organizations are ultimately responsible, though, to the public. It is only natural for organizations which raise funds to be transparent and for the financial statements they submit to the government director—who supervises or collects all the information—to be available to the public and any citizens who want to know about the funds that were raised.

The legislation in Bill C-4 would require not-for-profit organizations to open their financial records to their members. That is very important. This information is often controlled by a particular member and is not available to other members because of procedures or obstruction. The government administrator and manager as well as the director—it is important that this should be the government—would make this information public. Above all, the information should be available to the grassroots of the organization. The effect will be to help directors and officers manage their organizations and agencies better and enable members to follow the financial situation of the organization between annual meetings to ensure that the funds really are being used for the stated purposes and objectives.

This framework is necessary for transparency and for the free flow of information within organizations outside of the annual meetings. These meetings are only once a year, of course, and information should naturally circulate the rest of the time as well.

When this bill was being studied in committee, one of the main points that kept returning, in addition to the objective of being modern and transparent, was improving the efficiency of not-for-profit organizations, especially by replacing the letters patent system by an as of right system of incorporation. This makes it much easier to establish not-for-profit organizations.

The current system of discretionary approval by the minister is eliminated and the process for granting incorporation is simplified, which helps organizations that could benefit from increased flexibility. In addition, the new process is less costly for both not-for-profit organizations and the government.

Another change that will facilitate the process for these organizations is the fact they will no longer be required to get their by-laws approved by the director or the government agency for not-for-profit organizations. As a result, they will have the flexibility they need to develop by-laws that reflect their particular needs. All this will increase public confidence in not-for-profit organizations and enhance their credibility.

During committee review of the bill, the Bloc Québécois felt that there were some minor flaws in the legislation that we would have liked to fix. However, none of the amendments that we proposed—and that were rejected by committee members—justifies rejecting Bill C-4. There is no classification system for NPOs in the existing act, and Bill C-4 still does not include a mechanism to change that. The need for such a mechanism was not recognized and was not supported by a majority on the committee, but I think that over time the importance of a NPO classification system will be recognized.

Government officials told us that the new legislation does not need a classification system because the framework is permissive and flexible, allowing organizations to choose how to apply many provisions.

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.

This is like a big funnel, because if a corporation asks to be incorporated as a not-for-profit organization and fits in that broad range, it can be recognized as such and thus have the right to operate as a not-for-profit organization.

We would have liked to amend clause 3 of the new legislation, which does not require NPOs to state their purpose in their articles of incorporation, thus sidestepping the whole notion of specifying what action an organization can take in accordance with its objects.

This is an important issue, considering that the federal Parliament has jurisdiction over only those organizations that do not pursue provincial objects.

Finally, we proposed an amendment to clause 181, dealing with public accountants. Based on the testimony heard, public accountants already meet all the qualifications required under a provincial act or regulation, depending on the province, to perform their duties under clauses 189 to 192. Most provinces have regulations to monitor the accounting profession. That provision seemed a little redundant to the Bloc, particularly because a public accountant who provides accounting services must already meet the requirements imposed by his association, whether these requirements are related to a matter of law or practice. The required monitoring level is adequately covered by other clauses in Bill C-4.

Again, despite the fact that we proposed amendments to the committee, and that these amendments were not accepted, we feel that this does not justify rejecting Bill C-4. The issues that the Bloc Québécois raised in committee were legitimate. Public officials presented arguments that reassured committee members. As for us, we wanted to examine the matter thoroughly, so as to avoid any potential conflict between the provinces and the federal government.

Not-for-profit organizations have been waiting a long time for changes that will modernize the Canada Corporations Act. In the light of the testimony we heard, and in the interests of transparency, effectiveness and fairness, the Bloc continues to believe that these changes are legitimate and essential. Those involved with not-for-profit organizations deserve to be able to work with a Canada Corporations Act that will effectively meet their needs.

Since I have a little time left, I will summarize the objectives of Bill C-4. This bill will, in a concrete way, simplify the establishment of not-for-profit organizations. We live in the age of speed.

In my view, the general public, and all those who work as volunteers, do not wish to be overly burdened by nitpicking regulations or forms that have to be filled out. Now we have something that would make their lives simpler.

The bill clarifies the duties and responsibilities of directors. When they belong to not-for-profit organizations that raise their funds from the public, I feel that directors must be aware of the duties and responsibilities that the role requires. Bill C-4 specifies those responsibilities.

The bill would establish means by which directors and officers could defend themselves in liability cases. Sometimes, members of the organization or of the public decide to sue an organization. In a previous career, I was a community recreation director in the city of Chicoutimi and I had an experience like that. Of course, it was not a federal organization, it was local. A conflict arose between a group and the organization responsible for certain activities. The citizens hired a lawyer and launched a legal attack on other volunteers—it was volunteers against other volunteers—with prosecutors and lawyers.

Bill C-4 would allow some protection when complaints are unfounded or groundless. This means that, when a complaint is made, it will have to be well-founded and serious.

Furthermore, the bill will provide members with increased rights to participate in the governance of their corporation. If a member decides he or she wants to see a list of members, can he or she consult it? Bill C-4 allows such consultations. Can he or she consult the accounting records? Bill C-4 also allows a member or director the opportunity to do so.

The bill will establish a better mechanism to oversee the organization's accounts. When doing the accounting or auditing the books, it is important that public accountants audit the books, especially in the case of a Canadian national organization.

Presentations have been made on the matter. We did not see the need to give too many explanations or details. We felt that Bill C-4 clearly states that it is sufficient to be recognized by a professional corporation in order to audit the books. Bill C-4 already includes that, but with a much more detailed definition of a corporation.

Those are the objectives. If I still have a little time left, I would also like to remind the House of the Bloc Québécois' position. I believe I have one minute left?

The Bloc Québécois is in favour of the principle underlying the bill and the overall wording of the bill, considering how outdated the current Canada Corporations Act is. Bill C-4 will modernize the act, encourage transparency and ensure accountability among those who are responsible, both on the board of directors and among the members of a corporation.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11:30 a.m.
See context

NDP

Charlie Angus Timmins—James Bay, ON

Madam Speaker, I listened with great interest to my hon. colleague's analysis of this bill and the plan by the Conservative government to try to actually deal with not-for-profit corporations.

Just over a year ago the government cancelled the program that was in place across Canada to support volunteers and the important work they do in our communities. There was very little funding to support the volunteer networks that existed. Yet the government clearly decided that it was not a priority. I do not know what my hon. colleague found in his communities, but in mine the voluntary sector suffered a great deal because of that loss.

While looking at a bill to help the non-profit sector in this country, we in the NDP were certainly hoping that we would see some leadership and a plan that would actually ensure that we have strong, stable and vigorous non-profit sectors, because they do so much of the grassroots work.

It seems this is a bill that tinkers with the regulatory framework. There are 170 pages of complex regulations. It might work if we were protecting corporate assets, but certainly the people who are supposed protect corporate assets never did that job no matter how many pages of regulations there were.

When we are looking at 170 pages of regulations for the non-profit sector, it seems to me we are excluding many people, average lay people who might want to help a local organization and want something simple, like the Robert's Rules of Order, a simple set of rules. Yet the regulatory framework that the government is imposing on the non-profit sector will certainly make it much more difficult to encourage people to participate in the non-profit sector and volunteer work in our communities, because of the onerous levels of regulations that are being imposed.

I would like to ask my hon. colleague what he thinks about this level of regulation on the volunteer sector by a government that is notorious for saying it thinks regulation on the financial sector and every other sector should be lessened.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11:30 a.m.
See context

Bloc

Robert Bouchard Chicoutimi—Le Fjord, QC

Madam Speaker, I think I would answer my colleague by saying that Bill C-4 regulates and governs organizations of a national character, that is organizations across Canada.

Obviously, we must help volunteers and make their task easier. However, local and provincial non-profit organizations are regulated by the Quebec government or other provincial governments. Having read and studied Bill C-4, I think it should be acknowledged that it brings improvement, modernization and more transparency and protection for volunteers.

I would like to get back to what my colleague said about the program to support volunteers that the Conservatives cancelled. They weakened a lot of programs helping disadvantaged people and the voluntary sector when they cut their financing by $1 billion. This is an aberration. Instead of cutting these funds, the Conservative government should have transferred the money to Quebec. I think Quebec and the other provinces are directly responsible for developing the voluntary sector at the local and provincial levels.

Canada Not-for-profit Corporations Act
Government Orders

May 5th, 2009 / 11:35 a.m.
See context

NDP

Carol Hughes Algoma—Manitoulin—Kapuskasing, ON

Madam Speaker, my colleague has explained Bill C-4 but I want to mention that the organizations would have preferred to see changes to secure stable, long-term financing. They would also have liked to see some rules that would clarify and improve the charitable status process. We are concerned about charities.

Would my colleague agree that this bill may discourage people from establishing non-profit organizations? Does he think this bill could be costly for these organizations?