Bill C-4 (Historical)

Canada Not-for-profit Corporations Act

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

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.

Canada Not-for-profit Corporations Act

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, things come in threes, as the saying goes. I have seldom had occasion to address questions and comments to my colleague three times in a row. This third time proves that I enjoy talking to my colleague, through the Chair, of course.

It appears that at some point the committee will hold a lengthy period of consultations on this bill. Can my colleague tell us whether a series of consultations has already been planned? A number of round table discussions were held to draft this bill. Will the consultations take place in committee only, or will there be other consultations on Bill C-4?

[Robert Bouchard, Bloc, Chicoutimi—Le Fjord, QC]

Madam Speaker, I must tell my colleague that I cannot answer that question. However, I believe it will be necessary to hold extensive consultations in order to understand the whole issue of not-for-profit corporations. I will take his question to the committee and make sure that we hear a great many people, in order to get an overview of this issue.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, it is a pleasure to speak to Bill C-4. It is an important bill for a couple of reasons, but it really shows how the government has missed the mark, especially for the not-for-profit and charitable sector.

At a time when charitable donations have gone down, the government has reduced what people get back in terms of giving. It has not adjusted the formula properly. Over the last number of years a lower tax rate has been applied and it has reduced the charitable money we get back from the government. In not having fixed that, it has taken money away from charities and from individuals who give to charities. The government has decided to bring forward a bill that is basically a legalization of Robert's Rules of Order at a time when charities are struggling to get by. I am not going to accept that. I am not going to accept the bill in its current form. The government needs to be told to clean up its act and do something for charities that are struggling.

Right now there is an economic meltdown. Many groups and organizations are suffering and trying hard to get by but some are actually closing their doors. The government is going to pass on incredible legal costs and also the costs of a whole process to those organizations. It is important to recognize that this started back in 2000. I remember going to the voluntary sector initiative outreach that was done in 2000. That was eight years ago.

My background is in the not-for-profit sector. I worked as a job developer at Community Living Mississauga. I worked at the Association For Persons With Physical Disabilities. I worked at the Multicultural Council of Windsor and Essex County. I have been a board director for the AIDS committee and board director for the Canadian National Institute for the Blind. I have been at the table and I know how complicated it is and how we need to improve some of the processes.

Accountability is important and some elements in the bill do that to some degree, but it is not the only thing that is in the bill.

We were asking quite clearly for new regulations with regard to charitable giving. We asked that volunteers be rewarded for their time. This is done in the United States where there is a tax writeoff for volunteering of time. We asked for the ability to give money back to people, as the Victorian Order of Nurses does in that it gives receipts for gas and volunteer hours.

What do we get from the government? We get a process that is going to further cause pain and suffering in those organizations which have to deal with it right now. There is no plan or assistance. That is the problem. That is why I am saying now is not the time to do this. The government should be told to go back to the drawing board and come back with something that has balance, bring back something that is going to provide the charities and the not-for-profit organizations the capabilities to fulfill the requirements of the bill without having to draw from their programs. That is what will happen, because they will have to retrain board members and staff to implement new administrative processes.

The technological age that has come about has made things even more complicated, through emails and a whole series of other initiatives which are also going to have some rules around them. All of that will have a cost to the organizations through their management systems, their computer systems and their processes. Where is the money going to come from for that?

Is the government going to come down hard on those organizations that will not be able to do that right away? Is it going to go through an audit and target different organizations that do not have the same capability as the large ones? That is important to recognize because not all organizations operate in the same way. I can understand the impetus and support the principles of trying to bring some accountability forward, which is important, but the Lions Clubs, the legions and many others are going to be pretty shocked and wonder if they are going to have to follow the same process as the Toronto Port Authority. That is not right and should not be done without providing any type of supports.

The government has had alternatives in the House. I had a private member's bill that would review the whole way charitable donations are treated. What I proposed is similar to a political donation; when money is given, there is a generous return. I have asked for the same thing, and for the charities to be capped at a certain level so it does not cost an exponential amount of money. People could get their return and the charities could move forward. When people give to a political party in this country, for example, $400, they get 75% of that back. If they give to the United Way, Scouts Canada, or the Victorian Order of Nurses they get a mere pittance back. I propose that we invert that so that those charities can have another revenue stream and ensure that the fiscal stimulus that happens in local communities goes to social organizations that are combatting the issues they are facing right now.

Some of the great organizations available to the public in my riding, such as the United Way, have to spend money from their reserves to support their current programs. They are going to be dealing with the consequences of a government that has put its head in the sand with regard to the economy for so many years and had this thrust upon them. The government has no plan. People are losing their homes. They have more social problems. They are experiencing greater stress in their lives. They will be turning to those organizations to get support. They will be turning to credit counselling. They will be turning to the Alzheimer's association to get assistance for their loved ones. They will be turning to all those groups to get the support they need.

Those groups will have to learn 170 pages of legislation and implement it at the time of greatest need in Canada. That is the wrong approach. The government should be told to go back to the drawing board and bring back some tools that would enable those agencies to deal with this change, put some money toward it and deal with the other issues that the voluntary sector initiative raised. Those elements were to strengthen those core organizations so that they would have the capability to plan for the future and expand their mandates in Canada in order to deal with new cases and problems in a fair way.

There are some elements in Bill C-4 that I do support. There are some good things, but they cannot be done alone. Once again, there were consultations in 2000, eight years ago. There were some talks and discussions by some groups back in 2002 and 2005. They were a more modest approach than the 2000 consultations which took place across Canada. However, those are years in the past and those consultations were done in a time that is totally different from today.

The government needs to start thinking about the organizations that are supporting the social economy. The social economy is significant in this country. Eight per cent of our GDP is tied to those groups and organizations that are helping people get by. They provide the services and programs that governments often turn their backs on because they do not want to fund them. People in our civil society decide that they are not going to put up with that and they form collective organizations to make a real social change, to make a difference. They fight back by creating an organization, choosing a board of directors and becoming incorporated. They start doing the charitable work that is so necessary for the people of their community, and in fact their country, because those organizations work together across many regions and provinces.

These organizations are going to have thrust upon them another cost, expense, process and procedure that is going to divert them from their necessary work. I think of some of the things that have happened just recently in my area. The Alzheimer Society just opened up a new facility in Windsor and Essex county. Sally Bennett Politidis is the chief executive officer. It is a great organization and has been able to open its doors and provide more respite care to assist a number of people who are not getting support from government programs. People are behind it. Lots of money has been donated.

The Alzheimer Society had a good campaign and has opened a beautiful new building that it is sustaining. Now, that organization is going to have to spend its time looking at a bill and deciding how it is going to change its operations to cope with this new set of rules when what it really needs is support from the government to sustain its operations. That is what should be happening.

There is absolutely nothing in the budget; the economic action plan, as it is referred to, did absolutely nothing for not-for-profit entities, not a single thing. Not only did it not support the traditional programs, such as child care, that we have been fighting for in Parliament, the government turned its back on every not-for-profit and charitable organization.

It has known about its actions and about clawing money back from Canadian taxpayers for the last number of years. The last number of budgets have reduced the bottom income for taxation. That is coupled with the rate of return one gets for charitable giving and that has shrunk over the years. It has gone in the reverse direction. I will concede that it is only a few dollars per person, but it is a symbolic gesture of a government that will not even address a simple issue and it turns its back on charities and other organizations. That is unacceptable.

Once again, I submitted a private member's bill. There have been other submissions, but my bill is about treating charitable donations similar to the way political donations are handled. I asked for unanimous consent for the bill to bill to pass and it was denied. It would have been an important one that could have been effective.

When I put the bill forward last year, parliamentary research came back and said that it would cost around $800 million to do it. I said we could phase it in over time, but at the time the government said that it was just too much money, that it could not afford $800 million of taxpayer money.

Ironically, that money would have gone to local communities because it would have gone toward donations of individuals. It would have been a tax return for people, a tax investment back to the social programs that we support in our community. Those charities and organizations would be able to track new donors. The number of donors is dwindling in Canada because people cannot afford it as much any more.

The government said that it was too much money at that time. Look at what it is doing right now with the billions of dollars going out to the banks and so forth. They seem to get their share, but there is no money for individuals who give to charities. There is no money to reward people who give to Scouts Canada or to hospitals and universities. They count as well. There is no money for people to decide how they want to help advance civil society.

Instead the Conservatives have come back to Parliament with an old retread bill that has been tabled a couple of times in the House of Commons, a bill that was widely consulted on eight years ago. Society was much different eight years ago than it is now. Now the government is going to ram it down our throats.

This is what the government is going to do for the not-for-profit sector this year. It has not included them in the economic stimulus package. It will reduce the amount that individuals can get back at tax time. It is also going to give them new Robert's Rules of Order so boards of directors, staff and all administrative components will need to be reviewed and evaluated. In addition, the organizations will probably require some legal advice on that, for which the government will not provide assistance.

That is not right. These organizations, such as the Big Brothers Big Sisters in my riding, need to be concentrating on ensuring people can continue to volunteer and support them.

They have two fronts with which to deal. They have a front where people do not have enough money right now to donate, and donations are slipping. They also have to deal with the fact that volunteers are drying up as well, and that is important to recognize. The volunteer initiative needs focus. The not-for-profit organizations said at the time that they wanted to stimulate their volunteers and reward them.

There are all kinds of things we could do. The United States gives a tax credit for that. There are all kinds of opportunities to do something for those individuals. Let us face it. A lot of Canadians now need one or two jobs, or they go back to school, even if they work right now. They have less time to give to those organizations.

This needs to be adjusted. We need to focus on some type of legislation that will facilitate that type of encouragement. I cannot believe the government would come forward with this bill without including some of those other initiatives. It has denied the other requests that were made and has brought in a new set of Robert's Rules of Order for the not-for-profit organizations. They are on their own.

Enough is enough. If this makes it to committee and we end up spending time on this, we will have to bring all the not-for-profit organizations to the table. We need to hear from them. We need to know what is happening in their industry. We will need to know how they are getting by right now. We need to know how they will implement the legislation, while not affecting a single penny of the revenues going to their programs.

It would be a shame if the Conservatives, supported by whomever here, would implement a bill at a time when these charities need our support. If passed as is, the bill will take money out of programming, because not-for-profit organizations will have to do more administrative procedures. This needs to be addressed. There needs to be a plan behind it. I have not heard that plan. I have listened to the government on this and I have not heard anything from the comments of the Conservatives to deal with that situation.

I do not think anybody in the House wants to go back to their communities right now and see money taken away that could go to programs right now or to updating facilities to deal with the financial and other implications and the stresses with our current economy.

My area has had 10% unemployment for the last number of years. We just finished our United Way campaign and it had to pull from the reserves. That traditionally is not the situation. With the downturn in the automotive sector and a number of different manufacturing sector losses over the years, we have lost great generosity from members, men and women, often in the CAW. Also our salaried employees give the most per capita in Canada.

However, we are having a problem now. The loss of those jobs has eliminated the donations, not only from the companies that used to donate, and some of which made large donations to the United Way, but also those individuals who used to be employed by them. That has dried up as well. The ones left are stuck with having to pull things together.

I congratulate the men and women of CAW Local 1973. Despite having their transmission plant close in 2010, they upped their donations and led the United Way. The men and women of the CAW came forward and gave more money than ever before, knowing they would lose their jobs.

They are not giving up on the charitable sector. Those individuals are saying that we have to more. What does the government do? Yes, it does more. It gives them a Robert's Rule of Order that will take away from those groups, and that is unacceptable. It could have put something in the budget. It could have attached something to the bill. Even if it did not want to put out cash or some type of stimulus for the agencies, it could have rewarded Canadians who give to charities. The government decided not to do that.

The government decided as well to not even reward the volunteer effort of Canadians, the thousands of hours that people give to charities, whether it be for the environment, for children, for seniors or for educational institutions, on all of those things it could have given some type of reward for individuals to show them that needed to get engaged in their communities and if they did, the government would reward them. It could have shown people that it recognized the fact that they needed to get more active in their communities.

That is what is happening in other parts of the world. There is a recognition that people need to come together stronger than before. The government could do some type of small initiative for that or at least throw a crumb, just do something. People are willing to continue to do these things, but they are under much greater stress. Once again, they are either working one or two jobs, or going back to school and retraining. All those things are happening right now.

I say no to Bill C-4. I want the government to go back to the drawing board and bring forward something that will be progressive and balanced for the charities and ensure that it will not cost any money for them. If the government is going to bring in something, it should at least acknowledge there is going to be a cost.

This side of the House recognizes that there is a responsibility on the government side to reward those Canadians who are giving their time or their money. Both are values that are important to recognize and they are values that strengthen our civil society. They help eliminate poverty, reduce crime, improve literacy and help people who are sick get better, whether one sits on the board of directors at a hospital, or on a board at a university or college or whether one is the person working the bingos at night. This is another industry that has been crushed because of the border issues. We have seen revenues dry up from that. People would go out and give their time, with late hours, just to ensure that a few dollars would come into the organizations.

We recognize there needs to be a partnership and the government needs to be there for them. Implementing a Robert's Rules of Order that will cost their administration time, money is irresponsible. They are also probably going to have to deal with some of the computers and other systems they run and to do so without any support. We want to see something brought forward that will meet the needs of Canadians, not-for-profits organizations and their charities, not attack them at this time.

[Alan Tonks, Liberal, York South—Weston, ON]

Madam Speaker, I listened to the member, and I know the House has a great deal of respect for the member, in particular for the subject matter on which he has spoken.

The Minister of State for Small Business and Tourism, and there is a great deal of respect for that secretariat as well, has brought in legislation on the Canada not-for-profit corporations act. From time to time, when we deal with the link between bureaucracy and the grassroots organizations in our communities, we are always cognizant of many of the points that the member has raised. I am quite taken when he says that volunteering represents the values that strengthen civil society.

This bill is going to committee. The member has already indicated that he has a private member's bill, and I know he has put a great deal of research into it. He has linked the bureaucratic regime and the capacity that is necessary for non-governmental organizations, NGOs, to meet the criteria embedded in this bill. Would he and his party be prepared to bring forward suggestions at committee that would alleviate the kind of stresses he has indicated, and I believe he is correct? The stress will be in excess of the capacity that non-governmental organizations in my riding already have. They are experiencing a huge amount of problems.

Would he be prepared to put forward suggestions to committee in order that the bill could come back and address some of the major concerns he has raised?

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, the member is right. There is an opportunity at committee to bring forth a number of different amendments. My concern is whether the government will have any interest to allow them. That is why I decided today to hold the line and send the Conservatives a message. We are extremely unhappy that they even initiated it without any thought or even a gesture of support for those organizations having to go through such a process. In fact, it will even be stressful for them to examine and analyze the bill to determine how their local organization will be affected and then to get a lobby going on the Hill to have a presentation to make changes.

I agree with the member. If this bill goes forward, I will propose a series of different amendments. This corner of the House will also demand extensive consultations with not-for-profit organizations to be inclusive of how they deal with the current climate.

However, my concern in general, even right now, is that as we move toward that process, it will be taxing on organizations. If this is passed, I need to ensure that my not-for-profit organizations get copies of the bill. I know they will have to go to their board members with it. If they are lucky enough to have a lawyer on their board, that member will have to examine it and get back to the board. They will have to focus on those things as opposed to what is important right now. Sometimes it is just outright survival. There are groups that are clinging on right now will not even have the opportunity to get involved in the lobbying. They will be too busy surviving and later on, they will have a surprise at the end of the day.

[Linda Duncan, NDP, Edmonton Strathcona, AB]

Madam Speaker, I am very pleased to hear from our member for Windsor West, and I fully endorse his comments on the bill. I, too, am very disturbed that the government did not choose to come forward with a much larger package.

Since becoming elected last October as a member of Parliament, I have had organization after organization approach me looking for assistance because of the bureaucracy and red tape the government has imposed on them. These organizations serve the disabled. One organization had been a charitable organization for 20 years, but it missed one filing deadline and had its charitable status taken away. We have organizations that serve the Latin American communities. These are groups of new Canadians that, instead of making a lot of money in Alberta like a many other people, are dedicating their time to volunteer organizations. They are being harassed by the red tape of CIDA because they missed one deadline. Organizations like Preserve Agricultural Land in Alberta was founded simply to tell people the value of preserving agricultural land and it was denied charitable status.

Would the member please address the bigger issue of how we deal with charitable status and enable people who help Canadians to raise funds?

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, that is important to recognize and I thank my colleague for the question because it touches upon a subject that I did not have time to address.

The bill further complicates the grassroots organizations that are trying to get together to form a social movement for education, literacy, anti-poverty, and a whole series of different initiatives. It could be agriculture, the preservation of land, or the environment. A number of groups that will try to get together will have further complications to do so under this bill and that is an issue.

It is important to contrast what we are seeing from the government with regard to not-for-profit organizations and charities versus the business sector, the government's pal. We know from the national survey of not-for-profit and voluntary organizations that 48% of organizations said they had difficulty obtaining funding from other organizations, including government. There is no surprise there. Some 20% said this problem was serious. The same proportion of organizations said that they had difficulty obtaining funding from individuals, although only 13% said this problem was serious. Finally, 42% of organizations said they had difficulty earning revenue. We know that is the current environment right now.

We have a budget that is going to be passed that does not do anything at all for not-for-profit organizations, not a single thing. It does not increase the amount of money people will get back nor does it provide any type of new supports or structures. The evidence is out there and in members ridings people know that they are losing organizations. They know that a number of them are being taxed when they try to get people information or actual work. Turning our back on the community is wrong right now.

[Glenn Thibeault, NDP, Sudbury, ON]

Madam Speaker, I too had the opportunity to work in the not-for-profit and charity sector for a number of years. I want to commend the hon. member for his speech and for bringing forward several of these issues. Maybe he could speak to what he has been able to discover, in the legislation and sledgehammer of bureaucracy in the budget, when trying to recruit new board members. We know how difficult it is to find volunteers. I would ask the member to explain the impact on all of these not-for-profit organizations and charities.

[Brian Masse, NDP, Windsor West, ON]

Madam Speaker, the question from my colleague is an important one right now.

Every not-for-profit organization spends a lot of time trying to recruit board members. Not-for-profit organizations need board members for a variety of reasons. They need people in accounting, they need lawyers, they need people who are connected to the community in different capacities to be able to raise funds. They need people who can deal with social policy. They want to make sure they have somebody who is going to be good with the people the organizations represent and being an advocate for their boards.

The organizations are now going to have to shift their vision to how they are going to educate their current board members under this 170-page document and how they are going to implement a strategy to shift it. It is going to require an extensive shift and a business operational plan. At the same time, they are going to have to recruit board members. It is going to be extremely confusing and more and more difficult to bring board members online, in my opinion, at this particular time because people are concerned with a lot of other issues right now.

It is actually a sledgehammer approach and one that is very much focused on the Robert's Rules of Order way of bringing that in. Our gift to charities this year is that they are getting more rules of order and more things to learn, and by the way, we are not going to help them with it. We are not going to provide them with new tax incentives. We are not going to reward their volunteers and we are not going to improve their facilities or provide some type of stimulus. We are going to let them do this on their own. I say, good luck.

By the way, if they want to lobby us, they should come to Ottawa because back in the year 2000 we did some consultation, eight years ago, and that will be our justifiable reason that we can do it on the Hill as opposed to what we should be doing, which is hearing from Canadians and their communities on how their charities are dealing with the current economic problems and how their communities are going to deal with cutbacks to services and the increased capacity necessary to deal with the social problems around a failing economy. That is what the government should be focused on.

The House resumed consideration of the motion that Bill C-4, An Act respecting not-for-profit corporations and certain other corporations, be read the second time and referred to a committee.

[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—

[The Acting Speaker, NDP, Denise Savoie]

The hon. member for Terrebonne—Blainville has the floor for questions and comments.

[Diane Bourgeois, Bloc, Terrebonne—Blainville, QC]

Madam Speaker, I thank my colleague from Sherbrooke for his explanations of Bill C-4. His activities in his previous life contributed a lot to his understanding of this bill.

I have a question for him. The minister introducing the bill would seem to be saying that the bill would promote transparency and require not-for-profit corporations to be accountable. I would ask my colleague to explain how this bill achieves the objective set by the minister.

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, I thank my colleague for her question.

In the past, the directors of many not-for-profit organizations and the organizations themselves have been prosecuted. As I said at the start of my remarks, an organization is like a natural person. It may be prosecuted for various reasons under a number of environmental or civil liability laws.

In the matter of transparency, reference was made to the public disclosure of financial statements and many other matters I did not mention, such as the protection of members' privacy and the fact that the list could not thus be made available to everyone. There is also the matter of due diligence by directors.

Directors are protected when they act appropriately. In some other organizations, this may not always be the case. Some directors do not always necessarily act appropriately and could be prosecuted. And so, some directors who are being prosecuted and have made errors will have their costs covered. In this regard, while there may be transparency and accountability, it is still not clear whether a person is hiding errors behind due diligence. In this situation, costs would be covered in the case of mismanagement.

So there are a number of points. It may seem relatively complex, but a degree of transparency can be obtained through this bill. As I said earlier, the bill must be returned to committee to have certain aspects refined and, possibly, to address concerns of legal counsel, who have serious questions about various aspects.

[Glenn Thibeault, NDP, Sudbury, ON]

Madam Speaker, as the hon. member is very knowledgeable in this area, I would like his opinion on how he thinks we can continue to recruit volunteers to not-for-profit boards and to charities when it seems that this legislation will make it more difficult?