Evidence of meeting #12 for Industry, Science and Technology in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was organizations.
A recording is available from Parliament.
4:40 p.m.
Senior Director, Corporate and Insolvency Law Policy and Internal Trade Directorate, Department of Industry
I have noted that you will begin studying the bill on Thursday. We will get back to you as quickly as possible. We will try.
4:40 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
Let us continue in the same vein. A little earlier, we were discussing clause 180 and areas of jurisdiction. Mr. Lennon, you stated that the provinces will decide. Is that found in the new bill? Will it indicate that, with regard to accounting, every province that asks for or requires the necessary competencies shall prevail?
4:40 p.m.
Senior Director, Corporate and Insolvency Law Policy and Internal Trade Directorate, Department of Industry
The first requirement of the clause in question is that the person shall be a member in good standing of the professional order—I do not have the exact French in front of me. Second, this clause states that they must comply with any applicable provincial laws. Hence, provincial legislation in the matter must be respected.
4:45 p.m.
Senior Director, Corporate and Insolvency Law Policy and Internal Trade Directorate, Department of Industry
No. The actual text states:
181. (1) In order to be a public accountant of a corporation, a person shall (a) be a member in good standing of an institute or association of accountants incorporated by or under an Act of the legislature of a province; (b) meet any qualifications under an enactment of a province for performing any duty that the person is required to perform under sections 189 to 192; and...be independent—
The requirements of clause 181 already include the need to meet any qualifications under an enactment of a province. Thus, we do not see the need to add anything.
4:45 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
In fact, some witnesses, including the group we heard before you, told us that, with regard to clause 181, required changes required had not yet been made by the provinces. For example, the definition of an accountant or a public accountant has not yet been established. Consequently, regulations do not allow everyone to be treated equally across Canada, because the requirements vary from province to province.
4:45 p.m.
Senior Director, Corporate and Insolvency Law Policy and Internal Trade Directorate, Department of Industry
We should look at this from another angle. For the purposes of this bill, the idea was to refer to the applicable provincial regulations with respect for areas of jurisdiction. With regard to labour mobility and establishing who can do what across the country, we do have the Agreement on Internal Trade, which was recently amended.
The rules to ensure labour mobility within Canada have resulted in an exercise in implementation. The main issue is to determine who can act as an accountant or public accountant. This has led to proposed changes to Quebec laws, for example. Legislative amendments are being considered by Ontario for the same purpose. This issue has been raised by various efforts pertaining to labour mobility. The provinces are currently holding discussions with the federal government in order to find ways of ensuring this mobility.
4:45 p.m.
Conservative
Chris Warkentin Conservative Peace River, AB
Thank you, Mr. Chair.
Thank you for coming in this afternoon. A couple of our witnesses brought up the issue of soliciting versus non-soliciting organizations. Could you define for me an entity that would be non-soliciting? There are significant provisions that are provided for them.
It was the bar association, among others, that recommended that we simply do away with all the provisions regarding non-soliciting and require everybody to provide all the information that soliciting organizations provide.
For my own information, could you give an example of a non-soliciting organization? How many are there in the country? The frustration that some of our folks were bringing up is that an entity may be soliciting in one year and in the following year may be non-soliciting, or vice versa. They're moving from one set of requirements to another.
Could you give me an example of a non-soliciting organization?
4:45 p.m.
Senior Project Leader, Corporate and Insolvency Law Policy and Internal Trade Directorate, Department of Industry
Allow me to back up a bit. A soliciting corporation is actually easier to define. A soliciting corporation is a corporation that receives money from the public, or from a government grant of any level of government, or from another corporation that receives money from the public or gets a government grant.
Non-soliciting corporations are everybody else. A curling club, for example, which is strictly funded by the donations or the dues of its members, would be non-soliciting. An airport or a port would, under this act, be non-soliciting, if it's self-financing. There are golf clubs; there are various service organizations.
4:45 p.m.
Conservative
Chris Warkentin Conservative Peace River, AB
So in any given year, if a port, as an example, or a curling club—traditionally they get their funds from certain sources, the revenue stream they just have from their members.... If all of a sudden they got a government grant, would they then have to move into the soliciting framework? If they apply for a government grant and receive the funds, all of a sudden they would be under that.
Now, I know a number of organizations in my province, the province of Alberta, especially community-based organizations, will get grants from time to time from the lottery commission. These are ad hoc. They wouldn't be consistent, just one year; it's an ad hoc payment to a certain organization. I can see there would be frustration.
I guess the recommendation to our committee has been that we do away with the non-soliciting avenue and just make everyone soliciting, thereby simplifying things for everyone, including the government.
Is that something you would entertain as being a good recommendation? Or is that something that—
4:50 p.m.
Senior Project Leader, Corporate and Insolvency Law Policy and Internal Trade Directorate, Department of Industry
If you make everybody a soliciting corporation or put them....
First of all, there are only about five rules that are different between the two. A soliciting corporation must have three directors. A non-soliciting corporation can have one. A soliciting corporation has to file its financial statements with the government. A non-soliciting corporation doesn't. A soliciting corporation cannot have a unanimous member agreement transferring the powers of the director to members. A non-soliciting corporation can. Then there are differences, upon dissolution, as to where the money goes. Then there are different rules for the auditing of their financial statements. But that's it.
4:50 p.m.
Conservative
4:50 p.m.
Senior Project Leader, Corporate and Insolvency Law Policy and Internal Trade Directorate, Department of Industry
What I'm saying is that if you make everybody soliciting, you're increasing the burden upon non-soliciting corporations.
4:50 p.m.
Conservative
Chris Warkentin Conservative Peace River, AB
I understand in theory how this works. But in practice, I don't know an organization out there that, if they were non-soliciting and got an offer of a government grant, would turn it down. Then it causes a problem, because they have to immediately move to become a soliciting organization, having to undertake a number of things, including increasing the number of directors, including how they report to governments and the rest.
Do you see the complication? Is it something that you think...? I'm just wondering if I can get some advice.
We've heard this from a number of folks who are concerned. I happen to have some concerns about this. I'd like to put those to rest.
March 31st, 2009 / 4:50 p.m.
Coleen Kirby Manager, Policy Section, Corporations Canada, Department of Industry
With respect to soliciting, as Wayne said, there are five obligations. The way the definition works is that if you have received more than $10,000 in income from either the public or from the government, in the course of a year you become soliciting for the purposes of three years—the three years following, which we feel are the three years you're using public money and therefore should have the increased obligations.
One of the things that is in this bill that was not in Bill C-21 answers the concern that was consistently expressed about the one good fundraising year.
There is an exemption available for soliciting corporations only, that if they do have the one good year or the one government grant, they can apply to the director for a deeming of a lower amount on their income for that one year to leave them in the non-soliciting category, the scenario that's always done.
But because you have public money, we restrict to some extent where that public money goes for three years.
4:50 p.m.
Conservative
Chris Warkentin Conservative Peace River, AB
I think you've addressed my concern, but I just want to ensure that I understand this correctly.
In order to receive a government grant, you would not necessarily have to be a soliciting organization. It's just that the following three years after that year you would have to become a soliciting organization, and then it would be up to you if you reverted back to non-soliciting. Is that correct?
4:50 p.m.
Manager, Policy Section, Corporations Canada, Department of Industry
The thinking was at the time that you now have public money. You should not have one director; you should have three, so you have better oversight of the organization.
We didn't want somebody to do a really good fundraising year and then dissolve and split that money between the members. It's public money. We're giving you a certain time period where you can't split it between the members on dissolution. You must turn it over to another organization. You've got public money. The public should be allowed to look at what your financial statements are to determine where the money's going. Are you buying corporate jets for the CEO of this not-for-profit to travel around the country, or are you taking the money and using it for your purpose? That was very much the thinking behind it. But it would be time limited.
If you are a soliciting corporation that is not a registered charity, because obviously the tax system will put an additional requirement on you, it would only last for three years.
4:50 p.m.
Conservative
4:50 p.m.
NDP
Brian Masse NDP Windsor West, ON
Thank you, Mr. Chair.
Do you think you'll be able to have this analysis information for us in both official languages for tomorrow? I would certainly like to hear the department's response to the submissions--that is the normal practice--and not have it rushed in front of us at the last minute. In front of clause-by-clause usually makes for a better process. Or is that an impossible request and should we be looking at doing this on Tuesday?
If we come here Thursday with it just dropped in our lap, it's going to be a more difficult process. I don't want to put demands that can't be met, so we need an honest answer here, I think.
4:55 p.m.
Senior Director, Corporate and Insolvency Law Policy and Internal Trade Directorate, Department of Industry
We will do all we can to try to bring the documents in both languages by the end of the day tomorrow, but it's difficult to commit to more than that.
4:55 p.m.
NDP
Brian Masse NDP Windsor West, ON
If you can't commit to it, I think this committee needs to have a discussion about that, Mr. Chair, because I certainly don't want to set up a timeframe for it.
4:55 p.m.
Conservative
The Chair Conservative Michael Chong
Mr. Masse has a good point.
It was the committee's intention to go clause-by-clause on Thursday. I know you may greet that with a bit of incredulity, in that this has been in front of us a number of times. But if you can't deliver the answers and opinions to some of the suggestions from witnesses, like the Canadian Bar Association, by the end of the day tomorrow in both official languages, then I think the committee would be prepared to consider moving this to the Tuesday after the break week.
You can think about it, and by the end of this meeting today, let us know whether or not you feel you could reasonably do that by the end of the day tomorrow. That would help guide us in our discussion before we break off today as to whether or not we go clause-by-clause on Thursday or we delay that till after the break week.