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.

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

Thank you, Mr. Chair.

I think you answered the question. You anticipate conducting a review of the Canada Business Corporations Act, along with the committee. Officials from Industry Canada came before the committee on Bill C-4 and told us that they planned to modernize certain provisions, particularly with respect to securities transfer. This may have already been discussed, but I was away for a period of time.

Have you heard that it would be important to review these provisions specifically?

Canada Not-for-profit Corporations Act

[Roger Pomerleau, Bloc, Drummond, QC]

Mr. Speaker, I want to thank the hon. member for his remarks.

I would like to remind him that, as members, we all know of numerous organizations and non-profit organizations in our ridings that do incredible work. So we have all come across volunteers and seen them working every day. However, during election periods, we have an outstanding volunteer working for us, the official agent.

In my view, he is, in some ways, the ideal volunteer who meets all of the requirements of the new act we have been discussing. The hon. member was just explaining the merits of Bill C-4 and why we will be supporting it.

This bill will simplify the constitution of non-profit organizations. A volunteer agent could be chosen from among everyone in the organization.

It will clarify the duties and responsibilities of the directors. A volunteer agent's role is laid out in the elections act in a way that it is not generally explained to the members of society.

It will establish lines of defence for the directors and officers in liability cases. An official agent's role and responsibilities are very well explained, as are the ways in which he is to fulfill those responsibilities.

It will give members more rights, allowing them to be involved in their organization's governance. We know that the official agent's documents are clearly printed and made public a few months after an election.

It will establish a better mechanism for monitoring the organization's accountability. We know that the financial agent must keep the books according to a specific method and that they are examined twice before being made public.

Can the hon. member tell me if he does not see that by adopting Bill C-4 we are perhaps making the people and volunteers in these organizations and non-profit organizations a little more like financial agents during an election?

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

Mr. Speaker, I congratulate the member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup for his excellent presentation. He spoke to a point that we argued for in committee, the classification of organizations.

In the hon. member's opinion, how would Bill C-4 have been improved if a classification of organizations had been accepted and made part of the bill?

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

Mr. Speaker, I thank the hon. member for his question, though I find the question a little far removed from Bill C-4. Certainly, the more not-for-profit organizations that have clear objectives and members who know what they have to do, the more possibilities there will be for those raising funds for good causes such as preventive health programs, and the better off we will all be.

Certainly, in Quebec, very important and interesting measures have already been taken. Everything to do with health is under provincial jurisdiction, of course. Just last week, I had meetings with people responsible for health in my region. They stressed how important it is to discuss prevention.

There is the whole area of curative medicine that must come into play when people are sick. But we also have a responsibility for comprehensive preventive medicine. This is not just the practice of medicine; it is also making each person responsible for his or her own health and making the government responsible—in Quebec's case—for health education. There is the role of physical education, the way in which each individual must be responsible for his or her own heath. We must also make sure that we have all kinds of tools for our young people so that they are able to determine the quality of their own health and so that they can avoid having to resort to curative medicine unless there is no other choice.

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

Mr. Chairman, I am very happy to rise to speak on Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

We are indeed at the last stage, in the House of Commons, of a long process that began several years ago. The act governing these matters is completely obsolete. It must consequently be modernized and that is the purpose of Bill C-4. The new act will take financial means into account, as well as the size of the corporation and the implementation of management mechanisms. It offers a flexible framework for the submission of financial statements as well as the establishment of regulations and the structures of the organizations it will govern. There is a considerable increase in the efficiency and transparency of the incorporation process for not-for-profit corporations.

I sat as a member of the Standing Committee on Industry, Science and Technology. We had already begun working on this matter in 2004. This is a very hefty act which demanded an array of detailed analyses. I think that the members from all parties who sat on the committee did their work very well. And consequently, today we have an interesting bill.

The letters patent system of incorporation has been replaced by an as of right system. The incorporation of not-for-profit corporations is greatly facilitated by this procedure. The abolition of the minister's discretionary power in this regard was more than necessary to eliminate the discretion that could be exercised by the minister, which went back to a whole other era. This needed to be corrected.

This will increase the confidence of the public and the credibility of not-for-profit corporations. And we know that the public already has a very favourable view of the nature of not-for-profit organizations. In our work especially, members know that many organizations work to help our citizens and provide different types of support and help their own members. If these organizations did not exist, the state would have to step in instead, in one way or another. From that perspective, it was urgent that the federal act which governs federally incorporated not-for-profit corporations be modernized.

In fact, the Canada Corporations Act, which is the existing act, and will still be in effect until we have passed this bill, provides the frame of reference for the incorporation of not-for-profit federal corporations.

In fact, the types of corporations governed under part II of the Canada Corporations Act include religious, charitable, political, mutual-benefit, and general not-for-profit organizations.

In recent years, some concerns have been raised that the act is outdated, as I was saying earlier. Since 1999, there have been public calls for the act to be reformed. It has been ten years now. A voluntary sector task force created by the federal government called for improvements to the regulatory structure that governs the sector. Industry Canada's proposal to modernize the act was part of the task force's plan.

In July 2000, Industry Canada issued a consultation paper entitled “Reform of the Canada Corporations Act: The Federal Nonprofit Framework Law”. The department then held a series of round-table discussions in cities across the country to consider the ideas presented in the document. That process eventually led to the Liberal government introducing Bill C-21 on November 15, 2004. The bill never made it to second reading.

At that point, we entered a cycle of minority governments, which we are still going through and which I do not think we will get out of for a while yet, in both Quebec and Canada, because the population does not have enough confidence in a single party today to give it a majority mandate. That is especially true in Quebec, where people feel that they have been regularly shortchanged by federalist parties, which have a Canada-wide vision. As a result, they have often put Quebec's interests on the back burner while putting Canada's interests first, and these two sets of interests are not necessarily the same.

So, we are caught in this cycle of minority governments, and we do not know how much longer the cycle will last. In my view, as long as any party aspiring to become the government does not introduce a project that reflects Quebeckers' wants, among other things, the party will not win people's support. Based on experiences in recent years, such as the Conservative party's recognition of the Quebec nation, which was an empty shell and not followed by any other commitments, I think the population has received a very clear message and, as a result, it has not been willing to give such a mandate.

We are now seeing the same thing with the Liberal Party, which is boasting about the fact that it will reform the employment insurance system, when we know very well that that same party is the one responsible for the Axworthy reform in 1994. Even though the Liberals had promised Canadians that they would stop the Conservative reform, instead what we saw was an even speedier reform that hurt the unemployed and had them contributing the most to reduce the deficit. And no one ever returned the favour. I do not think this period is over.

However, in terms of Bill C-4, which is currently before us, this new Canadian legislation on not-for-profit corporations is making its way through the various stages. In this Parliament, we have the opportunity to vote at third reading and send it to the other place. We hope the new legislation will come into force quickly.

I agree with the minister who said this bill will cut administrative costs faced by not-for-profit corporations. That is a good thing, and it will strengthen and clarify the governance rules that apply to these corporations. The only reservation that the Bloc Québécois has expressed in committee and that it strongly defended, although unsuccessfully, is that the bill contains no classification measures. All not-for-profit corporations will be lumped into the same category. I think that constitutes a weakness and that we will be back in this House in three, four or five years to amend the act accordingly. Only then will people see that the Bloc Québécois was right about that.

Overall, the Bloc Québécois believes that this is a good bill that will simplify the incorporation of not-for-profit organizations. Previously, corporations had to obtain letters patent with clear objectives. Now, all they need is articles of incorporation that are recognized. I believe that this will be simpler. The bill will clarify the directors' duties and liabilities. We have seen in the past in this sort of organization that when things are going well, there are no problems. When things are not going well, it is important that each person's liabilities be well defined and that the directors know what they are getting themselves into when they join the board of a not-for-profit organization. There was a need for clarification.

The bill will also establish defences for officers in the event of liability, so that a director's personal property is not at risk. These issues will be clarified in the act, which may motivate more people to get involved in not-for-profit organizations. Our society will benefit, because not-for-profit organizations often fill needs that the government cannot fill and the private sector is not filling either. Consequently, it is appropriate to keep going in the same direction.

The bill will also give members greater rights by enabling them to play a role in the governance of the organization. The liability of members versus directors was not always clear in the old act. These things are clarified in the bill, and anyone who joins a not-for-profit organization will have a clearer understanding of his or her rights, responsibilities and authority and will be able to act accordingly.

The bill will also establish a better oversight and accounting mechanism for corporations. We believe that this will be a great improvement. This bill has many parts that are very complicated, but I would just like to mention a few.

Part 1 outlines the bill’s purpose, which is to allow the incorporation of organizations without share capital for the purposes of carrying on legal activities, and defines the concept of a soliciting corporation. This expression designates any corporation that solicits funds from the public or a government or any corporation that receives private donations or government grants. We can see that this clarification is designed to distinguish soliciting corporations from non-soliciting corporations. I believe that this will be an appropriate clarification.

As I said, the present letters patent system is being replaced with an as-of-right system. Once again, this represents some worthwhile progress. It also sets out the capacity of a corporation as a natural person. This is a simplification as far as the legal interpretation of these matters goes, and will be to the benefit of both members and the corporation itself. A number of more technical aspects are also clarified, for instance the technical aspects relating to issuing debt obligations and trust indentures. These are more technical and more complex matters that would do well to be clarified.

It is stipulated that the by-laws must set out the conditions for membership, and the articles of incorporation the categories of voting rights for each.

There is a section specifically on members' rights, as well as another complete section on complainants and their recourse in the event of such things as abuse, and the possibility of court orders. It establishes a defence based on religious doctrines against the actions and recourses referred to. A religious organization can make use of this defence when it can reasonably prove that the act leading to the court action was based on a tenet of faith held by the members of the corporation. In such a case, the court may not make an order under this legislation against the organization in question.

There is a clear delineation of individual and collective rights, while taking into consideration the charter implications but without this meaning that people will have to take their recourse as far as a charter challenge on each occasion. These clarifications will be welcomed. There is also indication as to how organizations are to communicate with their members electronically, something that was not there before. The act is obsolete and was drafted at a time when there was nothing like the Internet and various other means of electronic communication. It is important that this be included, especially since it will result in significant savings.

There are a number of general administrative provisions as well to ensure that the framework functions very smoothly, but there are still a few questions left untouched. For instance, there is still no classification system, as I have said before. I think that great attention needs to be paid to the application of the law, and perhaps the Senate will re-examine this matter.

There is transparency and accountability. The current law requires non-profit organizations to keep detailed accounts of their activities; however, there is no requirement—as there is under this bill—to disclose this information. With Bill C-4, non-profits must make their financial statements available to their members, directors and officers as well the director. This makes it possible for directors and officers to have better oversight of the corporation's management, for members to monitor the organization's financial position between annual meetings and to ensure that the monies are truly used for the stated purposes and objectives.

We were speaking earlier of the interest in democratization so that members truly know what organization they belong to, what powers they have and how to obtain information. This clarification is welcomed by most stakeholders and organizations. This bill is the result of consultations undertaken in various parts of Quebec and Canada. This is the umpteenth version and one which, I believe, will result in an important consensus in this House.

The current legislation allows anyone to obtain a copy of the list of members of a non-profit organization, and the law contains a list of permissible uses. The new bill would restrict this right to members, creditors and directors. This provision will make it easier for members to communicate, to require directors to keep an up-to-date list of members, to protect the sales of certain types of non-profit organizations, prevent the misuse of such a list and ensure that it is not forwarded to just anyone. We have all received documents inviting us to apply for a certain credit card or program. We wonder where they get their information? On occasion, these lists were provided under this law, which was not specific and did not prohibit this type of transfer of information. That will now be prohibited. That is a useful benefit.

In terms of effectiveness, the former law had a system of letters patent that were very difficult to obtain. Under the law, establishing a corporation was not a right. Now, it will be one and it will be much easier to be approved. In an “as of right” system the establishment of a company is automatically granted. With this major change, the procedure for discretionary approval will disappear.

This is an improvement to the whole of the system and advances its democratization. The incorporation process will be simplified and corporations will benefit from increased flexibility, and a more efficient and less costly system. In that regard, improvements are considerable and well-thought-out.

As regards fairness, we can see that with the new legislation the clear definition of the duties and responsibilities of directors will facilitate the recruitment and retention of qualified people on boards of directors. This was not always the case under the previous act.

The due diligence standards that are being proposed are well defined by the courts. Thus, they offer an established instrument to not-for-profit corporations. This standardizes diligence standards for directors, and the bill takes harmonization with other federal acts into account.

It was urgent that this be done, as the acts that are affected were obsolete and referred to several acts that were no longer in effect or had been modernized.

This too is important: directors and officers are currently exposed to much liability. The new legislation introduces several measures to limit liability, for instance, the incorporation of the organization, which creates a legal entity that can be held responsible; a clear definition of diligence standards; the possibility for the director of defending him or herself by invoking a due diligence defence; new provisions which would compensate the director for costs incurred and costs entailed by legal action pursuant to an unfounded suit or incidents which would, in the opinion of the corporation, justify compensation.

After several years of consultation, this act now appears to us to be one which deserves our support. There will be some specific follow-up to be done on certain aspects of the bill but overall this is a positive piece of legislation. The Bloc Québécois contributed to making this a bill of the highest possible quality. We have arrived at the final stage and I think that the House of Commons will see fit to pass this bill. We will thus have carried out the modernization of the not-for-profit corporations legislation, which will be to the advantage of this entire sector.

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

Mr. Speaker, I would like to congratulate the member for Repentigny on his brilliant speech about Bill C-4.

As he pointed out, Bill C-4 modernizes the existing act and makes the system more democratic.

I would also like him to comment on an element he did not mention, but that I am sure he can discuss: the elimination of the minister's discretionary power. I would like him to comment on the fact that the powers are now in the hands of members and organizations.

[Nicolas Dufour, Bloc, Repentigny, QC]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Speaker, I first want to congratulate the member for Berthier—Maskinongé for his speech. He gave us a good summary of Bill C-4. It is obvious that he is very well acquainted with the voluntary sector and the structure of not-for-profit organizations. This is very interesting and commendable. I also think that volunteers who work at the local and national levels deserve our admiration.

He talked about a lot of things but I want to ask him a question about financial statements. These have to be made available to members, to the director appointed under the act and to organizations collecting funds.

I would like the member to tell us why, in his opinion, financial statements are useful and should be made available to the public and to members.

[Guy André, Bloc, Berthier—Maskinongé, QC]

Mr. Speaker, I am pleased to speak today to Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

I would like to start by saying that the Bloc Québécois is in favour of this bill. As several of my colleagues have already mentioned, the current act governing not-for-profit corporations is considered somewhat outdated. For the past few years, a number of representatives of community and economic organizations governed by that act have been calling on the government to update the Canada Corporations Act.

I would like to tell this House that before I became a member of Parliament, I worked regularly with several not-for-profit corporations that came under part III of the Companies Act of Quebec's Department of Financial Institutions and Cooperatives. I realized at the time that the people working in these not-for-profit organizations faced a number of challenges. They had to deal with issues such as funding for these organizations, which is a never-ending problem. Often, these people work in various areas of activity, whether it is with disadvantaged people, youth or women or in volunteer centres that provide street worker or mental health services. I am talking about areas with well-targeted clienteles. These people spent hours and hours working in often difficult financial circumstances.

These people were also managed by the administrators of these not-for-profit organizations, community volunteers who worked evenings and weekends and handled the organization's finances, managed staff and looked after community relations. This work is very demanding. I admire all the people who give of their time to help others. In my community, in Berthier—Maskinongé, all these organizations are made up of people with big hearts. That was the theme of this year's National Volunteer Week, and it is worth pointing that out today.

In summary, many people who work in these areas were aware that some provisions of the act were outdated and simply no longer addressed the increasingly complex and diverse demands of today's not-for-profit sector. The law in Quebec has been adjusted. The federal government is now following suit and, with this bill, is trying to make things easier for these not-for-profit organizations by providing a better framework for their actions.

Let us give a brief overview of the background to this bill. Following on a paper published by Industry Canada—my colleague from the Bloc Québécois sits on the Standing Committee on Industry, Science and Technology—titled “Reform of the Canada Corporations Act: the Federal Non-profit Framework Law”, the federal government held a series of round table discussions with a view to preparing the various possibilities for reforming the not-for-profit law.

After those round table discussions, the government felt it was time to make some concrete proposals for a reform of the legislation on not-for-profit organizations.

Since 2002, in fact, there have been a few attempts by the Conservative and Liberal governments to introduce bills, but these have all died on the order paper.

Finally, last January, a bill was at last introduced, the one we are debating today in this House.

In short, the underlying principle behind Bill C-4 is to propose a new Canadian legislation on not-for-profit organizations which would make their administration more effective and more transparent. Transparency and effectiveness are vital to these organizations, particularly the ones I am familiar with, because they are faced with increasing challenges. Day in and day out, they have to deal with the poverty and the ageing of their respective populations.

The underlying principle behind this new legislation would be to take into consideration the financial means, size and objectives of the organization as far as these management mechanisms are concerned.

With this new act these organizations will, I believe, and I am certain my colleagues share my opinion, be able to operate within a more flexible framework with respect to such things as presenting financial statements or setting up by-laws.

For example, the new legislation encompasses: voting procedures, by-laws regulating general meetings, special meetings, regular meetings, and notices of meetings, and quorum. The new provisions will be better suited to not-for-profit corporations in today's reality.

Another part of the bill talks about financial statements. It states that the corporation must make available to its members the financial statements and any report submitted by its public accountant. As we know, not all not-for-profit corporations are required to perform audits. It depends on the financial statements and on the money administered by these corporations. Some not-for-profit corporations manage very small amounts of money and, therefore, are not always required to do an audit. However, when a large amount of money is involved, it is normal for these corporations to have financial statements that meet the criteria of an audit.

That part of the bill provides that corporations must table a copy of their financial statements and of the report submitted by their public accountant to the director, who will then make these documents available to the public.

So, this bill sets more specific operating rules. To this end, the operational framework for NPOs would be similar to corporate governance under the Canada Business Corporations Act.

The new legislation would gradually repeal the Canada Corporations Act and would replace parts II, III and IV of that act.

In addition to significantly clarifying the role of these corporations in our society, both for their members and directors, the bill will also establish defences for officers and directors, in the event of liability.

We must protect the directors who serve on the board of these not-for-profit corporations and who, as we know, do so on a voluntary basis and often with little information on the responsibilities and duties that come with their role within these organizations. We must protect them from the sometime dubious practices that can be used by a member and which have the effect of laying responsibility on all members of these corporations.

I personally believe that the bill achieves that goal. In this regard, it would be important if, at some point, Parliament could look at another issue related to this legislation, namely how to better train the directors who sit on the boards of these not-for-profit corporations.

It is all very well to enact a law that defines the roles and responsibilities of members of organizations, but people are not always informed and do not always have the time to read a law that is 150 or 200 pages long before joining the board of a not-for-profit organization. Often, if we simply look at the mission and objectives of the organization and see a little of the everyday work that is involved in sitting on an organization’s board, they do not always have the time to learn about all the procedures that their role, responsibilities and duties involve, and the relevant laws.

It is the role of government to give the volunteer members who often sit on the boards of these not-for-profit organizations more information. Very little information is provided. I just wanted to point that out.

This bill will also give members of those organizations additional rights, and will thus allow them to participate fully in the governance of their organizations. As well, it will establish a better body to oversee the organization’s accounting, and this is very important. Another benefit of this bill, one that I think is very important, is that it increases public confidence in not-for-profit organizations and their credibility among the general public.

It is important that the people who sit on the boards of these organizations, often as volunteers, and the organizations themselves, which often have few resources for taking action in the community, be perceived by the public as a whole in a positive way.

For example, in my riding, there are often organizations that deal with young people in difficulty or with disadvantaged or illiterate people, and there are many prejudices often expressed against those organizations.

Having a law that can provide more protection for the directors and managers of those organizations is an accomplishment in itself, and it will certainly facilitate the organizations’ work.

Bill C-4 is indeed complex, because it imposes an entirely new framework on not-for-profit organizations, those under federal jurisdiction of course. Organizations under federal jurisdiction and organizations under the jurisdiction of Quebec and the provinces must never be confused. However, this legislation had become necessary here, in Parliament, because the existing law did not reflect our modern circumstances.

The issues this bill addresses are important and it involves major and necessary changes in the way not-for-profit organizations operate.

Bill C-4 involves transparency and accountability, that is, financial responsibilities. At present, the law does not require that detailed accounts of their activities be disclosed. Under Bill C-4, not-for-profit organizations will now be obliged to make their financial records available to their members, directors and officers, as well as the director. That is a step forward.

In more concrete terms, this bill will certainly simplify the incorporation of not-for-profit organizations. Incorporating a not-for-profit organization should be a relatively simple matter. The process should not be surrounded by hard and fast administrative procedures that would make it so that people who came together to create a not-for-profit organization would be reluctant to take action to provide greater support for the community in whatever area or field of activity it might be.

What is interesting in this bill is that the minister will no longer have the right to agree or refuse to allow a group to incorporate a not-for-profit organization.

As I already mentioned, this bill will clarify the duties and responsibilities of the directors. It is important for people who sit on boards to know what their responsibilities, duties and roles are in not-for-profit organizations. This kind of information needs to circulate more freely. My experience has been that people who sit on the boards of these organizations sometimes learn on the job. People show up at the general meeting some evening and end up on the board. They do not always know, though, what their responsibilities are.

More specifically, this bill will set forth defences for managers and directors in case they are held responsible. It is important to protect volunteers who sit on boards against suits from the public, other institutions or other businesses as a result of a purchase or any other situation. I think that the volunteer directors of these not-for-profit organizations should be protected.

The bill will also increase the rights of the organizations’ members and help them participate in the governance of the organizations. These people need to be in charge of what they are doing and have a certain amount of autonomy in the exercise of their duties on boards and in voluntary organizations. The bill provides a certain latitude in this regard.

Finally, the bill provides a better mechanism for overseeing the accounting of these organizations. It is hard to be against that. I think that any organization that receives money and grants should be ready to account to its donors.

In summary, I have taken a good look at Bill C-4 and I think it is a step forward. However, as my colleague in the Bloc Québécois indicated previously, we would have liked to see at least some procedures for classifying the different kinds of organizations. There are no classifications in this bill. Whether it is a charitable organization, an economic organization or a cultural organization, there is nothing in the bill to enable the public or the government to know what kind of organization it is.

[Siobhan Coady, Liberal, St. John's South—Mount Pearl, NL]

Mr. Speaker, I am pleased to rise today to speak to Bill C-4, an act respecting not-for-profit corporations and certain other corporations.

The legislation has seen several incarnations since first being introduced by the Liberal government in 2004 and makes important modernizations to the regulations governing Canada's valuable not-for-profit sector. While provisions within this bill are modelled on those of the Canada Business Corporations Act, the creation of dedicated legislation governing Canada's voluntary sector will better respond to and address the needs of this country's charities, community organizations and other not-for-profit entities.

Canadians value volunteerism and charitable organizations. On average, each Canadian is a member of four non-profit or voluntary organizations and some 22 million people donated approximately $9 billion to such enterprises in 2004.

Among other things, Bill C-4 eases much of the regulatory burden on non-profit organizations in this country by allowing these organizations a heightened degree of flexibility in how they choose to operate. A major potential benefit under this new legislation enables non-profit corporations to hold meetings electronically as opposed to sometimes costly and less responsive face-to-face meetings currently required.

The new ability to file documents under Corporations Canada electronically may also serve to reduce strain by reducing paperwork and other regulatory burdens currently faced by non-profit entities. Given that the non-profit sector employs some two million people across the country working in some 160,000 not-for-profits, this flexibility to adapt bylaws based on the needs of the specific organization stands to benefit a significant portion of the population.

I am pleased to have had the opportunity to work with other members of the industry, science and technology committee to review this legislation and respond to some of the concerns put forth by stakeholders. Recognizing the importance of getting this long overdue legislative framework right for the nearly 19,000 federally incorporated not-for-profit organizations, it was necessary to ensure that those concerns were heard and addressed through our study of Bill C-4. In fact, a number of issues highlighted by witnesses appearing before the committee have been acted upon through amendments presented during a clause-by-clause review of the bill and have not been adopted and incorporated into this legislation.

Chief among the concerns raised by stakeholders, particularly by the Canadian Bar Association, was the need for clarity concerning important definitions within the legislation. The diversity of the non-profit sector in Canada is a great source of strength but it also poses challenges in balancing the needs of large organizations that solicit public funds with small sporting organizations or mutual aid societies for example, when it comes to setting a new legislative framework.

While there are few differences between how non-soliciting and soliciting corporations are treated under the act, there are rules governing the number of directors required, the filing of financial statements with government and agreements transferring powers within the organization. This is why I and other Liberal members of the committee made it a priority to ensure the distinction between soliciting and non-soliciting corporations was clearly and precisely laid out within the bill.

I am pleased the committee saw fit to adopt an amendment prescribing the test period for determining whether a not-for-profit corporation was soliciting to the corporation's most recent financial period. It was also vital to ensure newly minted soliciting corporations would have adequate time to make preparations for compliance with the more onerous regulations inherent in this classification.

As such, we brought forward a clarification ensuring the change in status would only take effect at the conclusion of the next ensuing annual meeting of the corporation. These changes would go a long way to ensuring non-profit corporations will be prepared for compliance should such a change in status occur.

A further issue of balance with this bill concerns the complexities of what I will call contingency sections of the act. The size and complexity of this bill are largely due to provisions contained in clauses 6 and 7 dealing with debt, trust indentures and receivership, which are situations that likely will never be faced by most of the non-profit organizations incorporated federally.

The inclusion of this complex regulatory road map fills in some of the gaps that currently exist but also enforces compliance on all non-profit corporations in the sector, whether they will ever need these provisions or not. This is a concern for me, as it seems to streamline a process for very few corporations at the expense of many smaller charities, community groups and foundations that will never require these clauses of the bill. The committee agreed that it would be better to offer clear direction to organizations that wished to proceed in this manner than to leave a further regulatory void.

Several organizations, including Imagine Canada, articulated concerns surrounding some rights of members being enshrined within the act itself as opposed to within individual bylaws or articles of non-profit corporations. Some stakeholders felt that the important issue of voting rights of members must be subject to periodic review and change as the mandate and nature of the organization changes, and should not be specified within the act itself.

Bill C-4 does require that each non-profit corporation determine what voting rights will exist for members but does not prescribe the mechanisms for doing so, and authorizes the creation of a class of non-voting members. Should a situation arise where fundamental changes to the corporation are possible, non-voting members would be given the right to vote under this legislation.

According to Industry Canada officials, non-voting members will have the right to vote when, for example, their membership is to be exchanged to another class or their class rights are to be changed; the corporation intends to amalgamate with another corporation; the corporation intends to continue into another jurisdiction; the corporation intends to sell off all or substantially all of its assets; and, if the corporation intends to dissolve. It would seem that these situations would likely be rare. and this is again the case of building in a contingency to ensure appropriate procedures are set out for organizations to follow.

Some concerns surrounding the liability of officers and directors were raised during hearings on the legislation. Boards of directors and officers from many of Canada's charities, foundations and other non-profit entities are often composed of volunteers who dedicate their time to ensuring important causes are furthered to improve the lives of Canadians. At times, some organizations can find the recruitment of these volunteers to be a challenge, as it often means taking on a degree of personal liability and responsibility for the actions of the organization.

Bill C-4 introduces provisions for the due diligence defence for directors and officers, which satisfies many of the concerns raised by organizations intervening on behalf of the non-profit sector.

I am pleased to support Bill C-4, which comes after many years of work and review undertaken by industry officials, advocates in Canada's voluntary sector and the many organizations that made presentations on this legislation.

Not-for-profit organizations provide many of the services cherished by Canadians. Universities, colleges and hospitals across this country provide vital services to their communities and are general regional employers.

In 2003, the non-profit sector accounted for some $112 billion in revenue. Thousands of organizations are supported by over 12 million volunteers, fully 45% of the Canadian population aged 15 and older, who contributed an average of 168 hours each. This totalled 2 billion hours, the equivalent of more than 1 million full time jobs in 2004 alone. Truly, there is no end to the value this sector offers to Canadians.

As a new member of Parliament, it is a pleasure for me to have taken part in the study of this bill. It was impressive to see the balanced approach taken by my colleagues on the industry, science and technology committee in reviewing the legislation. I thank all of my colleagues for their hard work on this matter, for those who intervened and for those who made presentations during the committee hearings. I look forward to seeing this long overdue legislation become law.

[Glenn Thibeault, NDP, Sudbury, ON]

Madam Speaker, I am very glad to be here today to discuss Bill C-4, an act to amend the not-for-profit corporations act. It is of importance for not-for-profits in our communities right across our great land.

I can offer some advice, as the former executive director of the United Way in Sudbury, that there were several initiatives we were involved with that caused us to slow down the process because of the bureaucracy, red tape and heavy paperwork involved. This amended legislation that we amended in committee would actually help us change some of that.

However, before I go into the discussion that took place at the industry committee in these past few weeks, let us first look at how we got to this point.

For five weeks in the spring of 2002, a team from Industry Canada crossed the country listening to the views of stakeholders on proposals for a new not-for-profit corporations act. Over 300 individuals participated in the consultation sessions, while others sent in briefs to the consultation website.

A preliminary round of consultations was held in the previous fiscal year, and feedback from those first consultations and commissioned research studies was incorporated into the two discussion papers circulated prior to this second round of consultations. Written in plain language, “Reform of the Canada Corporations Act: Draft Framework for a New Not-for-Profit Corporations Act” promotes a corporate governance structure grounded on the themes of transparency, accountability, fairness, and efficiency. The second volume, “Discussion Issues for a New Not-for-Profit Corporations Act” highlights some of the proposals in more detail.

What was determined by these consultations?

A number of stakeholders who had participated in the preliminary round of consultations thanked Industry Canada for incorporating many suggestions in the new framework proposal.

Participants were generally supportive of the various reform proposals, as well. Strong support was expressed for the proposals concerning: the due diligence defence, the standard of care and insurance, and limiting liabilities of directors and officers. There was a divergence of views among participants on issues such as: a classification system, the filing of by-laws, and audit requirements.

At the end of the consultations, participants had several overarching concerns. Co-ordination with other federal statutes and provincial legislation was imperative. Many participants were concerned with ensuring that new legislation would fit with other federal statutes and provincial legislation. In each venue, participants concluded that coordination and consistency at the federal and provincial levels was imperative.

There is ongoing confusion about the distinction between not-for-profit corporations and registered charities. Many issues that arose were tax specific and, as such, under the jurisdiction of the Canada Revenue Agency and the Ministry of Finance.

Discussion of many issues returned to the need for a classification system. Although participants were divided on the need for a classification system, discussion of many other issues returned to the question of whether to include a classification system in a new act.

I will now look at some of the structures within the act that caused some concern.

The first structure that was of concern was the classification system. Reaction about the merits of including a classification system in the new not-for-profit legislation was mixed across the country. However, participants returned to this issue time and again, often noting that other issues could not be resolved without deciding on the issue of a classification system.

Those opposed to the inclusion of a classification system felt it would unduly complicate matters. One of the reasons offered was that it would be difficult to classify some organizations because of the varied work that they do and/or the services that the provide. For example, the United Way that I used to be involved with offers leadership development services which provide support, governance training, fundraising training, training to all sorts of small not-for-profits and charities throughout the greater city of Sudbury and, at the same time, offers services to do people's taxes, to help people find shelter. Those are some of the services that we offer, as well as fundraising.

A number of participants were in favour of a classification system that was either based on levels of revenue or number of members or that distinguished between public benefit, mutual benefit, religious and, in some cases, political organizations.

Another area of concern was the filing of by-laws. There was general agreement that moving away from the archaic letters patent system was a positive step. With respect to the filing of by-laws, a number of participants expressed support for the simpler structure proposed; in fact, a minority of participants agreed that there should be no filing requirements at all.

There was a difference of opinion on whether by-laws and amendments should take effect immediately upon passage by members, or only when filing was complete.

Some did not see the benefit of filing at all if by-laws become effective when passed. Others noted that there could be problems if by-laws did not become effective at the moment when members passed them, particularly for organizations that do not meet frequently. One person predicted that with a filing requirement but no scrutiny, Industry Canada would end up with “the worst of both worlds”: organizations that are not in compliance with the law and filed by-laws that are inaccurate. Participants in a number of cities voiced concern about the possibility of an increased security risk without thorough scrutiny.

Recognizing that some organizations have rapid turnover and limited corporate memory, many participants supported the notion of the government acting as a central repository. There were several requests for Industry Canada to put by-laws online if it accepts the repository role.

Most participants agreed that model by-laws would be very helpful, and urged they be kept simple. Some asked for the creation of an easily updateable web interface, including secure access and summary reports.

Another area of concern was the disclosure and accountability. A majority of participants across the country were in favour of the framework proposal that organizations be required to make corporate financial statements available to members, directors, officers, and the director. However, not all agreed that members should be subject to a fee for copies of the financial statement, and many more disagreed with the proviso to allow exemptions to the requirement.

Those opposed to the requirement were concerned that a requirement to make financial statements available could be burdensome and expensive. A number of participants at one meeting objected strongly to the director having access to financial statements at any time. One suggested that the law be written in as narrow a context as possible, only granting the director a right to information for a specific purpose.

It was proposed that a clearer definition of “financial statement” be developed. A number of participants took exception to the notion that financial statements are presented to members “for their approval”. A suggestion was made to change the language on page 45 to read, “directors would be required to present the audited reports”, without mentioning approval or acceptance.

Several participants in Edmonton, Regina, and Toronto were very concerned about the proposal to allow exemptions from the disclosure requirements, arguing that issuing an exemption would place Industry Canada between the auditor of an organization and the organization itself. Exemptions were seen to contravene the principles of transparency and accountability, and should only be granted according to clearly articulated criteria.

Another issue was membership lists. A majority of participants agreed with the framework proposal that would allow members to obtain copies of the membership list of their organization, provided that the framework is narrowly defined and access is restricted. Several asked that the issue of selling lists be addressed. Some participants noted that it would be essential to ensure that the new act mesh with other federal legislation including the Personal Information Protection and Electronic Documents Act and the Anti-Terrorism Act.

In order to circumvent the release of membership lists that include names, addresses, and telephone numbers, it was suggested that an organization charge for undertaking mailings on behalf of members in order to ensure that the privacy of members is not breeched.

The definition of member was confusing to some and worrisome to others.

The definition of “member” was confusing to some and worrisome to others. Some organizations define members as anyone who receives services while others include donors. The statement on page 35 of the “Draft Framework for a New Not-for-Profit Corporations Act”, 'the act would contain a provision defining a member as anyone designated by the board of directors', alarmed some participants and elicited a promise to clarify the wording.

Some participants believed that signing an affidavit in order to obtain a membership list would be pointless. The cost, and the expense of tracking down individuals to sign the affidavit in the first place and pursuing legal action in the event of an infraction, was also seen as problematic.

In addition, the proposed timelines were questioned. The allotted 15 days for changes was seen as too short, and the requirement to maintain records for six years was viewed as “impossible” for many organizations.

Rather than the framework proposal that stipulates a prescribed amount as a threshold above which corporations would be required to have annual audits, most participants across the country favoured a graduated approach, or one based on classification or size.

Many supported the Saskatchewan model in which provincially incorporated not-for-profits with revenues of over $100,000 must be audited, those between $25,000 and $100,000 must have at least an internal review, and those with less than $25,000 have no audit requirements. Concurrent with this was widespread support for the adoption of a graduated standard such as a review engagement, which is less than an audit but satisfies an understanding of the costs involved.

Other suggestions included differentiating between organizations that receive public funding and those that do not, or basing it on classification. For example, if an organization is classified as political it should be required to have an audit regardless of its size, a charitable organization with tax benefits should be subject to a threshold, and mutual benefit organizations could determine their own thresholds.

Suggestions were made to adopt the Canadian Generally Accepted Accounting Principles rather than keeping separate books for protection against not-for-profit corporations using their tax benefits to subsidise for-profit activities, or to have separate statutes for charitable and noncharitable organizations.

Yet another issue was auditors. Representatives of the Canadian Institute of Chartered Accountants did not agree with the framework proposal as it pertains to auditor qualifications and proposed that the new act adopt the Canadian Business Corporations Act definition of “auditor”. The opposite view was conveyed by representatives of the Certified General Accountants, or CGAs), of Ontario. There were several calls to have audits not be restricted to either CGAs or CAs if made mandatory. Some agreed that a smaller organization should be able to agree to an internal review by a non-accountant, provided that individual had no ties to the board.

Two specific suggestions were made about the wording in the “Draft Framework for a New Not-for-Profit Corporations Act”: First, the last paragraph on page 46 be amended to read, “The auditor meets the standards of the auditing profession.” Second, on page 47, “Right to attend meetings,” would imply that the auditor’s expenses to attend all meetings would automatically be paid by the corporation, something that might be a burden for small organizations. It was suggested the wording could be changed to “the auditor is entitled to attend at the request of the board, and expenses will be paid.”

Something I know quite personally about is directors' liability. The vast majority of participants at the 10 consultations favoured the adoption of the framework proposal that specifies that every director or officer of a corporation would owe a duty of care to the corporation. This objective test would create a uniform standard of care for directors and officers, and is clearly understood by Canadian courts.

It was noted that there could be ambiguity in the notion of “acting in best interest.” As many organizations registered as not-for-profit corporations address a public good, one participant wondered about a potential conflict of interest when a director acts in the best interest of the entity as opposed to the community it was designed to serve.

Participants emphasized the need for consistency with other statutes such as the Canadian Human Rights Act, the Employment Standards Act, and the Income Tax Act, commenting that little can be changed in one without amendments to the others.

There was unanimous approval of the framework proposal that would include a due diligence defence for directors and officers of not-for-profit corporations. Participants saw this as a codification of common law and the right thing to do.d

A majority of participants favoured adoption of the framework proposal that would broaden the scope of situations to allow organizations to identify directors and officers, to provide mandatory review of directors and officers in specific circumstances and to allow corporations to purchase insurance. Many participants were concerned about insurance issues, and many supported advancement of defence costs. Many participants across the country were very concerned that the cost of insurance would be prohibitive for small organizations and impossible to obtain.

A majority of participants also agreed with the framework proposal that would place no statutory limit on liabilities for directors and officers and would encourage proper care and diligence in management of organizations. Participants who supported the framework proposal liked the idea of clarifying but not limiting liability. Some remedies were suggested for these concerns.

Mainly, the draft framework proposal does not make a recommendation with respect to the derivative remedy. The concept of including a derivative remedy received mixed reviews across the country. Those opposed to providing for derivative action said that its inclusion would be used to burden organizations with frivolous actions, or allow a third party to hijack the agenda of an organization.

Those who favoured the inclusion of this remedy felt its inclusion was necessary in order to ensure accountability and credibility. A number of other saw this mechanism of accountability as important and urged that it be included as a hallmark of modern statutes. Others suggested keeping derivative as a remedy, but limiting access so that small, special interest groups could not abuse it in clarifying the rules under which it could be used.

Participants were mixed in their reaction to the framework proposal, which does not provide for an oppression remedy. Those who agreed with its exclusion included a participant who argued that any one disgruntled member could use it to halt the workings of an organization. It was pointed out that the common law remedies were made for truly distressful situations.

Among those who argued in favour of including this remedy was one participant who contended that there were many disputes within not-for-profit organizations and therefore a real need for remedies. In Quebec a participant found this option redundant because such protection was already available under civil law.

A strong consensus emerged across the country for the proposition that the dissent right and appraisal remedy should not be included in the new act, but the corporation should be free to include similar provisions in its articles or bylaws.

The framework proposal includes no provisions respecting natural justice and fair procedures. The majority of participants from across the country agreed with the framework proposal. Many participants liked the fact that corporations would be free to include these provisions in their articles and bylaws, rather than enshrining them in the act.

Most participants in St. John's, Halifax, Winnipeg, Edmonton and Vancouver agreed with the framework proposal not to include a modified proportionate liability regime, while several participants in Montreal, Ottawa, Toronto and Regina did not agree with it. A number of the comments made during the consultations were actually points of clarification that reflected the highly technical nature of this subject area.

One participant saw no valid reason for including MPL in the statutes as not-for-profits were not the types of corporate organizations that needed it. Another disagreed and urged that MPL be included, stressing the importance of consistency in legal approaches. Secured creditors rely on audited statements and auditors would be liable to secured creditors, as would directors and officers. A suggestion was made to make the NFP statute consistent with the CBCA.

The CICA argued that the MPL should be included in the act for the sake of fairness. Accountants should be responsible for their own acts, but not the acts or omissions of others. A person who makes a relatively smaller, non-existent contribution to a wrongful act should not, in all fairness, have unlimited liability.

The framework proposal, which has no provision allowing for the creation of corporations sole, met with strong approval across the country. However, the provision to allow standard, not-for-profit corporations to be set up with only one director and one member was not enthusiastically embraced. Many participants in most cities preferred to see a minimum of three directors.

Bill C-4 is long overdue legislation for a very crucial, important part of Canadian society. I urge all members to support this amended and improved bill so the Canadian Parliament can improve the systematic framework for not-for-profits.

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

Madam Speaker, the main purpose of Bill C-4 is not to propose funding, but to modernize regulations governing rights of incorporation in Canada.

One good reason to make that happen is transparency. When an organization raises funds from members of the public, it is accountable to those providing the funds. Financial reports have to be made available. Any member belonging to a national corporation should have access to the list of members and, as a member, should be able to review the organization's financial information and management policies. The current act does not allow for such things.

Bill C-4 introduces transparency and a modern approach. Organizations should be accountable to those who contribute financially.

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

Madam Speaker, Bill C-4 creates legislation regulating and governing organizations incorporated across Canada. In my opinion, what may discourage both volunteers and non-profit organizations is not Bill C-4 but this government, which is cutting programs indiscriminately. That is what will discourage the voluntary sector and stifle new corporations at the local and provincial levels.

[Carol Hughes, NDP, 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?

[Robert Bouchard, Bloc, 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.

[Robert Bouchard, Bloc, 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.

[Marc Garneau, Liberal, 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Guy André, Bloc, Berthier—Maskinongé, QC]

Madam Speaker, I had asked the hon. member a question about Bill C-4. How will this bill provide clear, additional protection for the directors of these not-for-profit corporations against possible lawsuits that could be filed against them in the course of their activities as volunteer directors?

[Gord Brown, Conservative, 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.

[Keith Ashfield, Conservative, Fredericton, NB]

moved that Bill C-4, An Act respecting not-for-profit corporations and certain other corporations, be concurred in at report stage.

The House proceeded to the consideration of Bill C-4, An Act respecting not-for-profit corporations and certain other corporations, as reported (without amendment) from the committee.

Business of the House

[Jay Hill, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, I am very pleased that today we have already completed the second reading stage of Bill C-6, consumer product safety. We expect to conclude debate on the third reading stage of Bill C-11, human pathogens and toxins. At least, it is the hope of the government to see that bill move along.

Following Bill C-11, it is our intention to call Bill C-3, arctic waters, which is at report stage and third reading. It would be nice to see that bill move along as well and get over to the other place.

As we all know, the House is not sitting tomorrow to accommodate the Liberal Party convention. This will certainly give government members the opportunity to be back in their constituencies doing lots of hard work.

Next week, we will continue with Bill C-3, arctic waters; the second reading stage of Bill S-2, the customs act; and Bill C-4, not for profit, which was reported back from committee on April 23.

Adding to the list are two bills that are at second reading: Bill C-28, the Cree-Naskapi bill, and Bill C-26, auto theft.

I would just respond to the opposition House leader, who referred to the two departments that will be called before the chamber for committee of the whole: Fisheries and Oceans and Agriculture and Agri-Food. Of course, we will be scheduling those debates in good time and within the Standing Orders.

Industry, Science and Technology

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

Mr. Speaker, I have the honour to present, in both official languages, the third report of the Standing Committee on Industry, Science and Technology on Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

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

My second question is for Mr. Hatton.

You mentioned some of your concerns, including the difficulty in recruiting quality volunteers and the need to simplify requirements for small organizations.

Do you feel that Bill C-4 can address these concerns?

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

But was that in keeping with bill C-4?

[Christiane Brizard]

No, I am referring to “vérification” or “audit”, if we again wish to use the term used in France. In fact, it is known as an audit and review engagement, as per clauses 182 and so forth of Bill C-4.

[The Chair, Conservative, Michael Chong]

Mr. Maloway, I think the witnesses came prepared to talk about Bill C-4. I don't think FINTRAC relates to this particular piece of legislation in front of us.

Did you have another question?

[Wayne Gray, Member, National Business Law Section, Canadian Bar Association]

Merci.

Honourable Chair, members of the committee, we come to praise Bill C-4, not to bury it.

[Tamra Thomson, Director, Legislation and Law Reform, Canadian Bar Association]

Thank you, Mr. Chair and honourable members.

The Canadian Bar Association welcomes the opportunity to appear before you today on the Canada Not-for-profit Corporations Act. We consider this to be very important legacy legislation that you are considering today.

The Canadian Bar Association is a national association representing over 37,000 jurists from across Canada. The analysis of Bill C-4 was done with members from our national charities and not-for-profit law section and from our national business law section. These are the eminent practitioners in these areas of law, and indeed there are elements of both areas of law in this important bill.

In looking at this bill--it was an extensive process--the CBA members were keeping in mind our primary objectives, which are improvement in the law and improvement in the administration of justice. It's under those considerations that we have made our recommendations to this committee.

I'll just make a note about the paper you have in front of you. You have an executive summary that highlights the priority issues from the bill, from the CBA's perspective, and a list of our recommendations. A far more extensive brief was prepared and sent to the minister last month, so a complete analysis of all of those recommendations is in that larger brief. We would be willing to expand on any of the recommendations you have in front of you.

Mr. Gray and Mr. Stevens will comment on the substance of the recommendations. I might note that not only have they participated in the CBA's analysis of this bill but they have also co-chaired a committee of the Bar Association that reviewed similar Ontario legislation that is under consideration. So they bring a vast amount of knowledge and expertise to this bill.

I will ask Mr. Gray and then Mr. Stevens to make those comments.

[Carole Presseault, Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada]

Thank you, Mr. Chairman and honourable members.

Mr. Chairman and Honourable Members.

Thank you for your welcome this afternoon and for the opportunity to appear before this committee to talk about Bill C-4, An Act respecting not-for-profit corporations and certain other corporations. The Certified General Accountants Association of Canada, together with its 71,000 members and students, represents really the future of the accounting profession. Our designation is built on a strong foundation of ethics, education, examination, and experience.

CGA Canada strongly supports the objective of providing a modern, transparent, and accountable framework for the governance of the not-for-profit sector in Canada. CGA Canada recognizes the important role of the not-for-profit sector, a role that it plays in communities across our country. Many of our members work with and within the sector as chief financial officers and chief executive officers of not-for-profit organizations. Others provide public accounting expertise and services to these organizations in communities across Canada.

Our interest in this legislation is quite narrow, Mr. Chair. It resides really in the provisions concerning financial disclosure, so I'll have some very brief remarks about our recommendation in this area. But I want to start by saying that as the not-for-profit sector benefits from the benevolence of Canadians and a favourable tax regime, a rigorous financial disclosure regime ensures appropriate transparency and accountability.

The financial reporting regime must adhere to exemplary governance practices. Professional accountants must meet the highest standards of professional competence, conduct, and ethics, no matter which sector they provide services to.

We would therefore like to suggest improvements to what we think is to simplify and strengthen the financial reporting requirements. Our focus is on clause 181 of the bill, specifying the qualifications to meet the three requirements to qualify to be a public accountant under Bill C-4. The first requirement is that the public accountant be a member in good standing of an institute or an association of accountants. The second requirement regards meeting any qualification under an enactment of a province. And the third one is with regard to independence criteria.

The first requirement recognizes that it is the responsibility of the professional association to ensure its members are competent and qualified to provide professional accounting services.

The professional bodies set professional standards of competence and ethics and only those professional bodies have the duty to ensure their members meet those standards by adhering to a conduct and disciplinary regime. In turn, these provincial institutes or associations of accountants have been delegated by their provincial and territorial governments to govern their respective members in the public interest.

The second provision requires public accountants to meet any qualifications under an enactment of a province. This is vague and redundant because a professional accountant who provides public accounting services must comply with the requirements of his institute or association whether these requirements are matters of law or practice. The requisite level of oversight is appropriately captured in the first requirement.

We also think that this provision in subclause 181(2) could impede the mobility of accounting professionals. Chapter 7 of the Agreement on Internal Trade, which was recently amended by Canada's trade ministers, stipulates that any worker certified for an occupation by a regulatory authority of one province or territory will be recognized as qualified to practise that occupation by all other provinces or territories. We believe this provision could be interpreted as adding another test of competency that is unnecessary.

The third provision requires the independence of the public accountant and proposes that professional accountants meet a number of tests of independence. We totally agree that the public accountant needs to be independent of the corporation. In fact, in the aftermath of major corporate failures in North America and Europe, the accounting profession, internationally and in Canada, proceeded to develop independent standards to ensure that the audit process is free of interference, conflict, or undue bias. These standards are more rigorous than what is required in Bill C-4. They are current, and they will remain current through a constant renewal process. They satisfy not only national requirements but international requirements, and they mainly require the identification of all threats to independence and the application of necessary safeguards. These standards are recognized for other types of corporations including report issuers.

We propose that Bill C-4 require that professional accountants comply with the standards of independence established by the professional regulatory body--whether it be CGA-Canada, the CICA, or CMA Canada--that has jurisdiction over them.

CGA-Canada's proposals to strengthen the legislation by clarifying the provisions respecting the qualification of auditors and also by significantly strengthening the independence requirements will ensure a high degree of harmonization across jurisdictions while maintaining high standards of competency and ethics.

Copies of our proposed amendments have been provided to the clerk.

Thank you and I would be pleased to answer your questions.

[The Chair, Conservative, Michael Chong]

Good afternoon, members of the committee.

Good afternoon to our two groups of witnesses.

Today we're studying Bill C-4, An Act respecting not-for-profit corporations and certain other corporations. We're pleased to have witnesses from two organizations in front of us.

We have Madam Carole Presseault, vice-president of government and regulatory affairs, Certified General Accountants Association of Canada. We have Madam Tamra Thomson, director of legislation and law reform at the Canadian Bar Association. We have Mr. Wayne Gray, a member of the national business law section of the CBA. Finally, we have Mr. David Stevens, who's a member of the national charities and not-for-profit law section of the Canadian Bar Association.

Welcome to all of you.

We'll have about 10 minutes of introductory statements from each organization, and we'll begin with the Certified General Accountants Association of Canada.

Ms. Presseault.

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

Yes. I have a question for Mr. Reid from the Red Cross.

Mr. Reid, as you said, the Red Cross has a presence in many communities across Canada and in all provinces, as well as internationally. Your organization's purpose is to improve the situation of the vulnerable.

Do you have any reservations about Bill C-4 applying to co-operatives given that you work in humanitarian aid?

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

There was an attempt, I think, in this new bill, Bill C-4, to define soliciting versus non-soliciting. In my mind, it seemed to be--perhaps I misunderstood--that a soliciting corporation went out and got funds from the public, from government, or from outside, as opposed to there being strictly contributions by members.

[Mike Wallace, Conservative, Burlington, ON]

Compared to the act that has existed for a hundred years, Bill C-4, as presented to us today, is simpler than it was in the past. Is that an accurate statement?

[Alan Reid, General Counsel, Canadian Red Cross Society]

Thank you, Pam.

Good afternoon, Mr. Chair and members of the committee.

I think the gist of our message is that the Canadian Red Cross recognizes the need for new legislation governing not-for-profit corporations in Canada. I want to underscore that; I think just about everybody would be in support of that. The Canadian Red Cross participated in consultations organized by Industry Canada in, I think, 2002. We recognize that those consultations have influenced, in many respects, the form and content of Bill C-4. In fact, those consultations went on over a significantly longer period than that.

In 2005 the Canadian Red Cross appeared before the committee to express its support of Bill C-21, a forerunner to Bill C-4, as well as to make some general observations that we believe still largely apply. At that time and again today, I want to mention a few particulars of the legislation that we consider to be important and things that will help us in our operations.

They include specific authority for telephone and electronic meetings and voting; the authority to make binding, unanimous resolutions without actually having to come together for a meeting; tighter conflict of interest requirements; the broadening of indemnification authority, including indemnity advances, which may become increasingly relevant given the current public appetite for enforcing government's accountability; and, overall, the increased deference Bill C-4 extends to corporate bylaws on many issues that were formally regulated by the Canada Corporations Act and ministry policy directives.

While we support the “as of right” approach to incorporation, and welcome the fact that the new corporate model will eliminate upfront government regulation—for example, there will no longer be ministerial approval of articles of incorporation or bylaws—we do note that the new corporate model places a large emphasis on self-regulation and on checks and balances resting upon enhanced legal rights and access to courts.

Bill C-4 is detailed and difficult legislation and will be complemented by lengthy regulations. It will pose compliance challenges, not just for small not-for-profits that operate without legal departments and/or sizable legal budgets but even for large organizations, such as the Canadian Red Cross, with easier access to legal assistance. In that respect, I am sympathetic with the points that have been made by Imagine Canada with respect to the voluntary sector and the difficulties some organizations will have adjusting to this.

However, every new comprehensive piece of legislation presents interpretive and operational issues and Bill C-4 is no exception. It calls upon not-for-profits to address many new challenges: systems for tracking and allowing access to a large and changing membership, especially in the case of an organization such as ours, which has a large membership and growing; procedures to meet enhanced accountability thresholds; adjustments to new financial procedures; and the redoing of bylaws, all of which will require careful efforts to ensure that governance provisions and practices measure up to the new legislative standards.

Because there is a lot of room for error and dispute in adapting to this new model, we encourage the government to support and build upon current Industry Canada initiatives to educate the not-for-profit sector—in particular, the voluntary sector—through publications, websites, model bylaws, workshops, and non-binding administrative opinions on key issues, all of which will assist not-for-profits, both large and small, in their due diligence and other compliance efforts.

While it is noted in the accompanying explanatory text that the bill provides directors with an express due diligence defence against potential liability, we also note that the bill equally promises to enhance and protect members' rights and gives members additional power to enforce their rights and to oversee the activities of their organizations as well as to monitor the director's activities. Finding ways of satisfying due diligence will become even more challenging and critical for directors than it is today. Arguably, this bill may heighten tension between membership and directors, increasing the risk of liability rather than reducing it.

While we have no doubt that well-qualified directors will continue to come forward to serve the not-for-profit and charitable sectors, it will be interesting to see how insurance underwriters will assess the balance of risk and rights and what impact this legislation will have on already steep premiums for liability insurance for directors and officers.

In part, this question may be influenced by the extent to which the new corporate model stimulates resorting to courts to resolve corporate governance issues. Given our concern that enhanced members' rights, coupled with broader judicial remedies, could elevate dispute resolution costs for not-for-profits and charitable organizations, we would have preferred to see overt legislative encouragement of administrative process and alternative dispute resolution mechanisms in the legislation.

Clause 293 gives the director authority to “make inquiries of any person relating to compliance with this Act”, but for the most part the director, like everyone else in the new model, may feel compelled to rely on courts to enforce compliance. We hope that the legislative model will prove flexible enough to allow for less formal and less costly means of resolving member/board/management tensions, as well as compliance issues raised by the director. We would encourage the government to create and finance a mandate for Industry Canada to assist not-for-profits in developing efficient and humanitarian approaches to resolving compliance issues, in lieu of engaging the courts.

The Canadian Red Cross, in preparing for this presentation, has chosen not to single out particular sections and clauses of Bill C-4 for specific criticism. Doubtless there are sections that might be improved, but a lot of work has gone into this bill over many years by many experts in the field. We choose not to repeat before this committee comments we may have made in the reform process that have not found their way into Bill C-4.

Notwithstanding small concerns that we may have about some of the details of certain provisions of the bill, our primary message to the committee today is that we view Bill C-4 as an important legislative initiative, and we support the change that it will bring. We will undoubtedly gain a deeper understanding of its complexities as we work through our governance and financial procedures in an effort to bring the society into compliance with the new regime.

The bottom line is that we would like to see the bill move through the legislative process as quickly as possible. We've watched it die too many times on the order paper. Reform of this area has been a long time in coming, and we are anxious to get on with the task of adjusting to the new regime.

Thank you once again for inviting us to appear before you. Merci beaucoup.

[The Chair, Conservative, Michael Chong]

Good afternoon, everyone.

We're here pursuant to the order of reference made on Wednesday, December 2, 2008, to study Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

I'd like to welcome our four witnesses today. From Imagine Canada, we have Madam Cathy Barr, vice-president of operations. We have Madame Susan Manwaring, a partner at Miller Thomson LLP. From the Canadian Red Cross Society, we have Madam Pam Aung Thin, who is the national director of public affairs and government relations, and Mr. Alan Reid, general counsel. Welcome to all of you.

I want to let members of the committee know that you've been given two documents, in both official languages. The first is a submission from Imagine Canada, and the second is a very in-depth comparison of the various iterations of this bill in front of us from previous Parliaments, which our analyst has prepared for us.

Thank you very much for that work.

She's also indicated that you will get an electronic copy at your office at some future time.

Without further ado, we'll start with Imagine Canada. You have 10 minutes for your opening statement.

[Anthony Rota, Liberal, Nipissing—Timiskaming, ON]

Thank you, Chair.

Thank you, Minister, for coming to see us today.

Bill C-4is obviously long overdue, and contains some changes that I think will be welcome, not only to government workers, but especially to the not-for-profit sector. Clause 282 of Bill C-4, however, concerns me, and it has to do with the appointment of a director. It states that the minister can appoint a director or one or more directors.

Can you clarify or comment on what criteria or what guidelines there are or how the minister decides who to pick and who to put in that position?

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

Thank you, Mr. Chair.

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

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

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

[Diane Ablonczy, Conservative, Minister of State (Small Business and Tourism)]

Thank you, Mr. Chair and colleagues.

This is actually my very first time, as a junior minister, or any other kind of minister, appearing before a parliamentary committee. I'm very pleased that it's with you all. I'm also very pleased that it's about a bill we very much want to finally get into law. So thank you for this opportunity to address you on Bill C-4.

Bill C-4 has a gripping title. I know that you're going to be on the edge of your seats. It's an act respecting not-for-profit corporations and certain other corporations. We can say that this is a bill whose time has definitely come. It represents the eighth time, colleagues, the third time in the past year alone, that a Canadian government has attempted to reform a statute. This statute was first brought into law in 1917, and of course you can appreciate that it no longer serves the needs of its principal stakeholders.

As I said when the bill was introduced in the House, not-for-profit organizations are a crucial part of Canada's economic structure. There are more than 160,000 not-for-profits, of which some 19,000 are federally incorporated. They accounted for over $136 billion in revenues in 2003 and employed some two million people.

So this is what the core of Bill C-4 is about. We have before us an opportunity to update and modernize an important marketplace framework statute that has not been substantially amended in over 90 years, which is older than any of us, fortunately. In that time, the world in which not-for-profit corporations operate has changed dramatically. In 1917, when the concept of a not-for-profit corporation was added to the general corporations statute, most such corporations were very small, self-financing entities that provided much-needed local services and that operated in a non-electronic world. Such small local organizations still exist, of course, but they share the landscape with huge national, even international, organizations with annual budgets in the hundreds of millions of dollars.

The trick in modernizing legislation of this kind is to balance the needs of the small with the large, the local with the national, the member-financed mutual aid society with the organization that solicits public money. That is not easy. Business corporations typically have interests that are largely homogenous: consistent profits, good public relations, keeping shareholders and other stakeholders happy. Not-for-profit corporations and other corporations without share capital, by contrast, have the most divergent interests imaginable.

The proposed legislation would apply to churches and other religious organizations, industry associations, charities, foundations, special interest groups, political parties, and sporting organizations, to name a few. What the proposed act does, then, is establish broad rules for setting up a not-for-profit corporation, or one without share capital, to ensure that it operates in a fair and transparent manner before its members and the public and to allow for an orderly dissolution of the corporation if circumstances warrant.

The proposed act definitely does not address the granting of charitable status or taxation policy of any kind. That is the role of the Canada Revenue Agency. Nor does it deal with the question of funding for federal not-for-profit corporations. This is a bill that simply proposes broad ground rules for modern not-for-profit corporations. That is all it does and all it is intended to do.

One area I want to deal with right at the outset is the apparent size and complexity of the proposed legislation. I can easily imagine how anyone looking at a 170-page bill with some 373 sections could question how this could possibly make life easier for not-for-profit corporations. In fact, the bill does exactly that. Let me explain in detail.

What the new statute proposes is to clarify areas that are not now currently addressed in the federal not-for-profit law. It would do so without imposing any significant burden on small or medium-sized corporations while at the same time ensuring that they are covered by a modern corporate governance framework.

For most not-for-profit corporations, the regulatory burden will be minimal. At the initial incorporation stage, an applicant will have to fill out relatively simple forms, file their articles, and pay the incorporation fee. That's it.

Annually, most corporations will have to complete financial statements, which they would have to do anyway for tax purposes, and send that financial information to members. Soliciting corporations, those that receive money from governments or the public, will also have to file these with Corporations Canada.

Additionally, corporations will be required to convene an annual meeting and file an annual return. This is not new. Corporations are required to do this now. But the new act will allow almost unlimited flexibility in how corporations do this. They will be able to communicate, hold meetings, and file documents with Corporations Canada electronically if they so choose. This represents a significant reduction in the regulatory and paper burden. The new audit requirements represent a potential further reduction of the regulatory and paper burden on smaller corporations.

Under the current statute, all corporations are required to have their financial statements audited. As members well know, this can cost several thousand dollars, potentially representing a sizeable portion of the budget of small corporations. The new provisions provide a graduated audit requirement based on the source of a corporation's funding, whether it's from members or whether from the public or governments, and the amount of its gross annual revenue. Under the new rules, soliciting corporations, those that derive their revenue from donations or government grants, that have revenues of less than $25,000 can dispense with audits entirely. This is also the case with non-soliciting corporations with revenues of less than $1 million. Of course, this represents an immediate and very substantial cost saving, especially for small soliciting corporations operating on shoestring budgets.

Most of the rest of the proposed act establishes rules of good corporation governance or provisions that address contingent situations. The corporate governance rules include provisions dealing with areas such as directors' liabilities, members' rights, and responsibilities of directors, officers, and the auditor. These are all areas familiar to the legal and professional communities, and the principles in the bill are just good, modern corporate business practice. I know that the not-for-profit sector will welcome clear and understandable corporate governance standards. Charities and other soliciting corporations that compete for limited donor dollars will find them especially useful.

Finally, there are the provisions that deal with the contingent situations, which for most corporations will probably never arise. These include, for example, provisions for corporate reorganizations. Most corporations will never amalgamate with another corporation, but it is incumbent upon the government to provide clear, fair, and transparent rules for those corporations that choose to do so.

What these contingent rules do is establish procedures, in some cases by filling in holes that exist in the current law. For example, an amalgamation of two or more corporations under the current act can actually take years with untold legal and accounting costs. Under the proposed statute, a short-form amalgamation would take days at most, with minimal costs. While as I said, most corporations will never amalgamate, this represents real streamlining for those that will.

The flexibility and clarity built into the act is why we decided that a classification scheme under the act was necessary; that is, we chose not to regulate different types of corporations differently. Rather, we chose to provide a framework that will allow corporations the maximum flexibility to organize themselves in a manner that works best for them.

A classification system establishing different rules for different categories of corporations would cause an admittedly complex piece of legislation to be even more complicated. By necessity, some rules, such as those related to directors' liability, would have to apply to all corporations, while other rules would apply to only one corporation. Added to this would be the difficulties in classifying some corporations. There are some organizations that would easily fit within several categories. For example, a corporation could be a mutual benefits society, such as a religion-based community club, but it could also collect funds for sending children to summer camp, operate a shelter for homeless individuals, and also engage in family counselling. So what classification is it? What rules would apply if there was a conflict in interpretation?

Instead, much like the Canada Business Corporations Act, this act provides for a system of self-regulation and self-enforcement. This is done by allowing corporations the maximum flexibility in writing their own articles and bylaws, and providing for civil remedies in the event of internal disputes. This would allow federal not-for-profit corporations to devote their time, energies, and money to fulfilling the purpose for which they organized in the first place.

Members of the committee, it is time that this bill be examined and passed as expeditiously as possible. Not-for-profit corporations have been waiting for a new governing statute for literally years, and they have been extremely disappointed every time it has died on the order paper.

Let me close by saying that I'm happy to have had the opportunity to be here with you today, and I also want to introduce the Industry Canada officials here today: Roger Charland is a senior director for the corporate and insolvency law policy and internal trade directorate--I think he gets paid by the words in his title. Also we have Wayne Lennon, who is a senior project leader on the not-for-profit file, and he's done all the heavy lifting on this bill. And Coleen Kirby is here; she's the manager of the policy section at Corporations Canada, and is especially knowledgeable about all the regulations.

We look forward to responding to any questions or concerns you may have about this bill.

Thank you very much, Mr. Chairman.

Canada Not-for-profit Corporations Act

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, I would first like to congratulate my colleague for her heartfelt and relevant speech. I would like to ask her a question since she is very involved with these community organizations and not-for-profit organizations.

In July 2000, Industry Canada published a consultation document entitled “Reform of the Canada Corporations Act: The Federal Not-for-Profit Framework Law”. After releasing this document, the department held a series of round tables in cities across the country to look at the ideas in the document. And so Bill C-4 was born.

Given that she is involved with these community organizations, I would like to know if she was kept up-to-date on or knew if any round tables took place in her area. If so, does she know if the organizations were allowed to participate and bring their ideas to flesh out, in the most ideal way possible, this legislation that concerns them? And knowing this, does she think it would be relevant to not only have the bill studied in committee, but to also consult community organizations of all sizes, so that the bill would be adaptable to any situation?

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

Madam Speaker, today we are talking about Bill C-4, An Act respecting not-for-profit corporations and certain other corporations. It is clear that, on the surface, this bill seems to be a good one. The Bloc Québécois will vote in favour of the principle underlying this bill.

I listened to the preceding comments. This bill provides a framework for organizations and helps them get organized. It updates an archaic law. Our community organizations need more money, but we do not recognize their true value any more than we do that of not-for-profit organizations. If every not-for-profit organization and every volunteer ceased operations or quit tomorrow, our society would crumble. They keep our social fabric intact. That is why it is a good idea to update the legislation governing them.

This bill is at second reading. I hope that it will get to the committee stage so that the members who are on committees can study it in great detail to ensure that, on the one hand, directors of not-for-profit organizations can enjoy a certain degree of flexibility and openness, and that, on the other hand, the administration of these organizations is transparent.

Bill C-4 modernizes the current Canada Corporations Act. It will consider the financial means and the size of the organization in determining management standards. As the minister said, it will also provide a flexible framework for financial reporting and the establishment of internal bylaws for the organizations it governs.

Not-for-profit organizations need to be more efficient and transparent. We also have to consider the fact that, when a not-for-profit organization asks the minister to be recognized as such, there is a great deal of discretionary power. It looks like this bill eliminates the minister's discretionary power, and that is something we really need.

There is a reason the new Bill C-4 was drafted. Over the past few years, many not-for-profit organizations, as well as the Canadian Bar Association, have examined the problems the archaic law created for not-for-profit organizations. They wanted legislation that was more consistent with the needs of modern not-for-profit organizations. They asked the government to rewrite the legislation, so now we have Bill C-4.

The goal of this bill, according to the minister, is to establish a more modern and transparent framework for these organizations. The operational framework for not-for-profit corporations would be similar to corporate governance under the Canada Business Corporations Act. That is not a bad thing. Quite often, having an archaic piece of legislation regarding not-for-profit organizations means that we have not listened to their requests and priorities.

In more concrete terms, this bill will simplify the incorporation of not-for-profit organizations; clarify the rights and responsibilities of directors, which is an excellent thing itself; and will establish defences for officers and directors in the event of liability. Today, directors, who are quite often also the employers in not-for-profit organizations, are subject to all sorts of grievances and to all sorts of laws that employees or suppliers can use to get them into serious trouble. It is good that they can have more solid defences.

The bill will provide members with increased rights to contribute to the governance of their organization. Perhaps the committee should focus more on this point. That would respond to the requests from some of my colleagues who have said that organizations and their members must have a little more power. The bill will establish a better mechanism to oversee the organization's accounts, leading to transparency.

However, and I would like to draw the House's attention to this point, according to the Canadian Constitution, management of the social economy, volunteerism and community activities fall under provincial jurisdiction. It is important to note that the federal government only has jurisdiction over organizations that do not have provincial purposes. The committee must examine this aspect in order to discern if this bill oversteps its area of jurisdiction and infringes on provincial jurisdictions, namely those of Quebec. At present, the section of the Canada Corporations Act states that the federal minister may grant a charter of incorporation if the corporation thereby created pursues objects of a national, patriotic, religious, philanthropic, charitable, scientific, artistic, social, professional or sporting character, or other. However, these activities must be under the authority of the Parliament of Canada.

We note that clause 4 of the new act does not require a non-profit to state its intended purpose in its articles of incorporation. Thus, it is important that the non-profit's purpose and specific mandate be clearly identified in its articles of incorporation in order to ascertain whether the organization is involved in the jurisdictions of Quebec or of other provinces. It is extremely important and the committee will have to examine that issue.

I am only going to discuss a few clauses of the bill, those that, in my mind, apply to the day-to-day operations of community organizations.

First, part 1 of the bill provides for the incorporation of organizations without share capital for the purposes of carrying on legal activities. That is what the current law permits; there is not much difference. It defines the concept of a soliciting organization as one that solicits funds from the public or a government or any organization that receives private donations or government grants. That is found in part 1.

Part 4 requires organizations to prepare and maintain accounting records. That is very important. I was saying earlier that this bill provides a clear framework for managing a non-profit organization.

Quite often, not-for-profit corporations that have been established for many years must suddenly hold an annual general meeting and change directors. Then the director wants to change certain aspects of the organization's mandate and objectives. The bill establishes a framework in which books must be kept, directors named, and membership lists made available. Thus, there is an obligation for transparency.

With this, transparency is mandatory. First of all, books must be kept, along with a list of the members and directors, and people must be able to access those documents. Quite often, in a not-for-profit corporation, such as an MS society, for example, people are overseen by directors who themselves have MS. Sooner or later, however, their strength will decline. The organization will have to change directors or will no longer have a director. Then what will happen?

The members of such organizations must be known, so that they can be called upon and consulted when it is time for someone else to take up the torch.

Part 5 permits organizations to borrow funds, issue debt obligations and make investments as they see fit. Some not-for-profit organizations have money for research and other purposes. For instance, if a fundraising event is organized for a spinal cord foundation and $200,000 is raised, can that foundation take that money and invest it in research? This gives them a guarantee. It opens a door for them. It gives them both transparency and freedom.

Part 9 stipulates that the organizations must have at least one director and, in the case of soliciting corporations, three directors. That is the minimum. That ensures honesty within the organization and also gives people who support the cause and give money to the organization much greater confidence in the directors. As a result, people will know that there is not just one individual who knows the books and could pocket the corporation's money.

The bill also clearly sets out the obligations of directors and organizations as well as the due diligence defence. I mentioned that earlier. Due diligence clearly states the duties, obligations and responsibilities of the general directors of a not-for-profit foundation or organization. It also gives them a safety net. At present, anyone could suddenly accuse directors of lining their pockets. Directors are not protected from that. And it could just as easily be either true or false. Imagine the ordeal those people have to go through if it is false. They cannot defend themselves; that opportunity does not exist. This measure will afford them a certain amount of security.

Directors and officers of NPOs are currently exposed to numerous liabilities under the provisions of certain pieces of legislation including liability for environmental damages, liability for unpaid salaries, fiduciary duty, and liability for their own negligent actions.

There are many kinds of not-for-profit organizations. Some of them demand huge numbers of hours, huge amounts of energy and listening skills from their volunteers, officers and directors. Quite often, these people are tired and are subject to all sorts of weaknesses and they can be subjected to all sorts of allegations.

Often they work with people who are ill, as well, so they need an established or set management framework for their own protection. As well, not-for-profit organizations cannot always afford lawyers to help or advise them in certain cases. A framework gives them some security.

Another extremely important aspect of this bill is part 10, which provides that an organization's by-laws must set out the conditions of membership. I am talking not just about all the rules for being a member of a not-for-profit organization, but also the rules for holding meetings of the membership.

As I said, often, these people work in difficult environments, and they are not as procedurally oriented as we are here in this House, so they need some guidance. They want to do everything they can, but they do not always have accountants or lawyers to help them. Part 10 lays some ground rules, which are good to have.

Part 11 provides that an organization must make its financial statements available to its members. This is extremely important. When organizations are transparent and open and make their books available, they are less likely to be criticized, and people often have questions about an organization's financial situation, whether there is money to carry on or invest, or simply what the organization is doing. It is only natural that organizations, especially NPOs, should disclose what they have.

In my opinion, part 12, which pertains to financial reviews, has to do with to confidence in the directors. Small not-for-profit organizations cannot afford to pay an auditor, so they will often work with accountants who provide their services free of charge as a way of giving to the organization. It is their way of helping the organization. Of course, large organizations like the United Way—which raises $8 million, $10 million, $15 million, $20 million or $100 million, I would imagine—must be audited, but their situation is different.

Part 14 describes the process for liquidation and dissolution of a corporation incorporated under this legislation. That is very important. Once, in my little corner of the world, in my region, a local organization had to close its doors when a regional organization took over. What is to be done in a situation like that? I should point out that not-for-profit organizations do not necessarily have the means, the physical resources, or the staff needed to liquidate or dissolve the corporation. This bill provides guidelines for that process.

Part 16 covers protection and security. It sets out the offences and penalties imposed in case of an infraction, particularly with respect to false and misleading statements and the misuse of information from a list of members or other register kept by the organization. Every NPO administrator must inform the organization's members, administrators or shareholders, as the case may be, of this provision. Members' names must not be given to other organizations, such as businesses, that might misuse them.

This bill is very important. The committee will have to examine this matter as well as the constitutional issue with respect to encroachment on provincial jurisdiction.

The committee will have to examine whether this bill provides enough flexibility and permissiveness to not-for-profit organizations to allow them to grow transparently and accountably in the best interest of the people who use the services.

[Glenn Thibeault, NDP, Sudbury, ON]

Madam Speaker, I agree wholeheartedly with what the member is saying.

As I mentioned earlier, I had the opportunity to be the executive director of the United Way in Sudbury for five years. Every time government programs or government funding was cut, the request to the United Way increased dramatically. There was a direct correlation. We always used to say that if the government only knew how this would impact the not-for-profit sector, when it makes these decisions, that we could move forward and make the positive changes it needed.

When I heard of Bill C-4, I truly was excited at the opportunity of knowing that we could make some great changes to help the organizations that are doing the work that is so important to so many of us. What ends up happening? We give them more regulation and more hoops to jump through, and that is not helping.

We recognize that we are in this economic downturn and we hear about stimulus packages and all of these great things, but ultimately the not-for-profit and charitable organizations are the ones that will be supporting the individuals who need the help the most during this downturn. What are we doing? We continue to handcuff them. That is not right. I say shame.

We need to move forward, make the right choices in this legislation, get some consultation from these organizations, and then present the bill to ensure that it moves us in the right direction.

[Glenn Thibeault, NDP, Sudbury, ON]

Madam Speaker, I first want to thank the hon. member for Niagara West—Glanbrook for sharing his desk with me. It makes my life a little easier to speak today.

I stand here today to speak to Bill C-4. It is important to note that I oppose this legislation, as do all New Democrats, as it appears today. We need to recognize the work that not-for-profit organizations and charities do. It is something that we all benefit from.

This legislation ensures that our country's not-for-profits and charities, organizations that look after our most vulnerable, help educate our children, support our seniors and help the disabled, will become bogged down with legislation rather than doing the work they are there to do.

Regulatory reform would be a minor improvement for the not-for-profit sector. This is certainly not its main priority. The bill only addresses one aspect of many that were raised during the voluntary sector initiative through consultations with not-for-profit organizations over the last decade. Special attention should also be paid to strengthening the privacy of members' information and lists and minimizing the regulatory burden imposed on not-for-profits by the copious amounts of legislation.

Canada's voluntary sector was not hoping for 170 pages of legislation of Robert's Rules of Order. Over years of consultations, this sector hoped there would be more important issues like securing stable, long term financing, clarifying and improving the charitable status process and advocacy needs that would be addressed.

I believe that if the government had been willing to spend as much time dealing with issues important to this sector as they have on regulating it, we could have had a stronger voluntary sector. This bill would tend to exclude lay people from starting or running not-for-profits.

I had the distinct honour and privilege of working for the United Way Centraide in Sudbury and district for five years. This year, with great volunteers like Jim Thompson, chair of the campaign, and Paul Gomirato, Abbas Homayed and Robert Keetch, just to name a few, and the staff, Michael Cullen, Vicky Lafond, Tiffany Sutton Taylor and others at that office, they raised a staggering $2.43 million this year. A huge congratulations needs to go out to the United Way of Sudbury because that $2.43 million is a new record. It is continuing to help fund programs in Sudbury. Over 60 programs were funded last year and I am sure it will be funding more programs in my community this year.

However, it is legislation like this that will inhibit the great work of organizations like the United Way Centraide in my riding. It would inhibit the great work of the YMCA in Sudbury and the efforts of John Schmitt, the executive director there. He, along with his staff, created a great program called “Building Strong Kids”. It identifies the programs that children need and puts them into those specific programs to ensure they get the services they need. They can do this thanks to the United Way and the work that the United Way board of directors can do through their its campaign chair and volunteers to offer services to people in my riding. By doing that, they are able to help thousands in my community, which is great news for us in Sudbury.

However, what is worrisome about this legislation is that it will take people away from doing what they are very good at doing, which is raising the funds my community needs. Once they are able to raise the funds, the money is put into these great programs. If we are bogged down in legislation and having to jump through loopholes and red tape, it will slow down the work that organizations like the United Way can do.

It would also inhibit the great work that the CNIB and Paul Belair, the executive director in Sudbury, are doing to help vision impaired people in my riding. I can keep going with Maison Vale Inco Hospice and Leo Therien; the Human League; the Red Cross; The Corner Clinic; Big Brothers Big Sisters; and Elizabeth Fry. All of those organizations are doing great work but there is some fear that legislation imposed by Bill C-4 will slow them down in doing what they are best at doing, and that is providing the services to the people in my riding.

This legislation would also inhibit the great work of the Social Planning Council of Sudbury. Janet Gasparini, its executive director, has provided great progress in providing reports on poverty reduction. We have done such a great job in Sudbury. We have identified the poverty reduction strategy. It has been endorsed by my Chamber of Commerce which is something I am very proud of. It has also been endorsed by the health unit. It has seen the importance of creating a poverty reduction strategy and the work we are putting forward into this through the not-for-profits and charities. Again, there is some fear that Bill C-4 would not help it address the needs it is talking about.

This legislation does nothing but provide a minor improvement in regulatory reform, but at a time when charities and not-for-profits need to focus on staying afloat in this economic downturn, they are being hit with new regulations. We have heard about the unfortunate layoffs at Xstrata over the last few days. This happened on Monday. Xstrata has been a great contributor to my community through the United Way, at the YMCA, and many other charitable organizations and many other not-for-profits. Its employees and the union, CAW Mine Mill, have actively been involved in the community.

The loss of 700 jobs in my community through Xstrata will actually inhibit the company and the union from providing the donations to many of these organizations that provide the services that they now will actually need. So, it is a Catch-22 in that sense, they are going to be using the services of the United Way and other organizations but at the same time these organizations are going to be struggling for dollars.

What does this mean for great organizations like the United Way and the YMCA? Regulations will not help recruit new board members. It will just scare them away from the copious amounts of legislation they must learn just to volunteer. One of the great things that the United Way does in Sudbury is it offers what is called a leadership development program. This program takes individuals between the ages of 18-29 and teaches them about the rules and regulations and about being a member on a board. We know that we need young people on more boards of directors across the country, especially in my riding. When we can train young people and give them the skills necessary to sit on a board of directors and become a member of a board of directors after one year, that is something we all should be embracing.

Right now this new legislation could inhibit this great program. It will actually have to reformat its whole way of teaching this legislation to its students. This program has done such a great job that it expanded into what we call community leaders on board. So now it is open to everyone of all ages within the community to get engaged in the voluntary sector, into not-for-profits, into charities to make sure that we have enough people, to ensure that the work that needs to be done in our community is getting done through the not-for-profit sector.

We have more regulations in this legislation for not-for-profits regarding transparency than is required by huge industry and big business. That is a shame. The increased regulatory requirements for not-for-profits are likely to result in higher costs for not-for-profits and the federal regulator alike. Despite assurances to the contrary, with no plan or assistance to help not-for-profits or charities in the bill, I do not see how we can continue to support this.

If this is now going to committee, it is important to look at what we can do to ensure we are actually going to make this a better bill. The legislation regarding not-for-profits and the charitable organizations right across the country needs to ensure that we can continue to help the most vulnerable, to help our seniors. But not-for-profits do more than just help our most vulnerable. I know our colleges and universities are not-for-profits. We have airport authorities that are not-for-profits, our Legions. We cannot let the same legislation guide an airport and then guide a Legion.

It is time that we oppose this legislation. We want to ensure that we put the right legislation in place to help these organizations in the future.

[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]

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 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.

Business of the House

[Jay Hill, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, I welcome those questions from the opposition House leader.

In a few moments we will be voting on the second reading stage of Bill C-10, the budget implementation act. Also, the House will approve supplementary estimates (B).

I would like to take this time to thank all members for their cooperation in accelerating the consideration and approval of supplementary estimates (B) including and especially my cabinet colleagues who responded with little notice to invitations from the various committees to study these estimates.

After the votes, we will continue with the debate on Bill C-4, not-for-profit legislation; followed by Bill C-9, transportation of dangerous goods; Bill C-5, Indian oil and gas; Bill C-11, an act to promote safety and security with respect to human pathogens and toxins; and Bill C-3, Arctic waters. All these bills are at second reading.

Next week is a constituency week when the House will be adjourned.

As the House is also aware President Barack Obama will be visiting Canada next week. Since the House will not be sitting, I would like to take this opportunity, on behalf of all members of the House, to welcome the President to Canada. We hope he has a productive and enjoyable visit here in our nation's capital.

When the House returns from the break, we will continue with the list of business I mentioned earlier and in addition to these bills Tuesday, February 24 and Thursday, February 26 will be designated as opposition days.

Canada Not-for-profit Corporations Act

[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.

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

Madam Speaker, in a former life, I also worked with not-for-profit organizations, because for several years I was recreation director for the City of Chicoutimi. I can say that I saw many organizations where, as the member mentioned, one member had control over a corporation.

Bill C-4 is designed to modernize the legislation. The current legislation is out of date, and I believe there is a need for transparency in the operation of an organization and with regard to its membership. Organizations must also be accountable to the people when they solicit funds from them. There is also a need for transparency with regard to the people. I believe that Bill C-4 will be an improvement.

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

Madam Speaker, my colleague from Sherbrooke is absolutely correct. We feel that the issue of classification is a flaw in Bill C-4. And so we need to clarify this aspect of the bill. As my colleague mentioned, the Canadian Bar Association has raised this issue and sees it as a flaw.

The Bloc Québécois wants to debate the issue of classification and improve this part of the bill.

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

Madam Speaker, for several years, a number of representatives of not-for-profit corporations have been pressing to have the Canada Corporations Act modernized. In the past decade, numerous people have taken part in consultations, while others have made written submissions to Industry Canada calling for amendments to the Canada Corporations Act.

Since 2002, both Liberal and Conservative governments have tried introducing various bills, but they all died on the order paper. In spite of everything, it is quite clear that there is a common desire on both sides of the House to modernize the Canada Corporations Act, especially since the bills introduced by previous governments have all been very similar.

To briefly summarize Bill C-4, its primary aim is to propose new legislation on not-for-profit corporations that would establish a more modern and transparent framework for such organizations. The operational framework for not-for-profit corporations would be similar to corporate governance under the Canada Business Corporations Act. The new act would gradually repeal the Canada Corporations Act and would replace parts II, III and IV of that act. Although the bill is complex, the new framework that will govern not-for-profit corporations should considerably simplify and clarify the role of these corporations in our society, both for their members and directors and for the general public.

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

The Bloc Québécois supports this bill for a number of reasons. First of all, the process for establishing a not-for-profit will be considerably streamlined and much more transparent. The act currently requires not-for-profit corporations to keep detailed accounts of their activities but does not require disclosure of these accounts. Bill C-4 requires not-for-profits to make their financial records available to their members, directors and officers, as well as to the Director.

This will permit directors and officers to better manage and supervise the corporation, and allow members to monitor the financial situation of the organization between annual meetings and ensure that funds are used only in the pursuit of the stated goals and objectives.

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

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

I would also like to take this opportunity to point out the main issues the Bloc Québécois and many representatives of not-for-profit organizations have with Bill C-4. Currently, the Canada Corporations Act does not have a classification system for NPOs. Bill C-4 does not contain a mechanism to change that.

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

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

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

It seems that clause 4 of the new legislation would not require a not-for-profit organization to include in its statutes the objects it intends to pursue, thus sidestepping the whole notion of specifying what action an organization can take in accordance with its goals. Since we know that the federal Parliament has jurisdiction only over organizations that do not have provincial goals, this raises the following question: Why does the bill not include some provision to oversee what falls under federal jurisdiction? The Bloc Québécois feels that this question should be studied in committee as well.

These are legitimate issues that the Bloc Québécois is trying to defend. Under section 92 of the Constitution, managing the social economy, volunteering and community activities falls within provincial jurisdiction. As set out in that section, all matters of a “merely local or private nature” fall under Quebec's exclusive jurisdiction.

It is important to note that the federal Parliament has jurisdiction only over those organizations not pursuing provincial objects. Subsection 92(11) of the Constitution Act, 1867, grants the “incorporation of companies with provincial objects” specifically to the provinces.

Accordingly, there seems to be a serious flaw in the bill and it must be carefully examined to avoid any potential conflict between the provinces and the federal government.

At the beginning of my speech, I said that, for some time now, representatives of not-for-profit corporations have been calling for amendments to bring the Canada Corporations Act up to date. For reasons of transparency, efficiency and fairness, the Bloc Québécois believes that these amendments are legitimate and essential. However, certain points need to be clarified in committee. Whether on matters of classification or the jurisdictions of each level of government, we believe that the committee must provide clear answers.

The House resumed from February 6, 2009 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.

CANADA NOT-FOR-PROFIT CORPORATIONS ACT

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Madam Speaker, I am very happy to have a few minutes to speak to the bill, because it has such a bearing, as members have heard, on all the communities we represent.

As members of Parliament, we work every day with the non-profit community and with the voluntary sector. We know how important volunteers are to the provision of services in our communities, and we know just how important it is to have a strong working relationship between the non-profit sector and government and parliamentary representation.

Many colleagues have heard how vital the non-profit sector is in our ridings, and my riding is no different. In fact, without the non-profit sector, very many vital services and commitments would not be fulfilled, because government is just not doing its job in some very key areas.

The contribution made to the economy by thousands and thousands of volunteers in this country has been mentioned over and over again. It has been estimated that the voluntary sector accounts for about 8% of GDP. We could imagine that the House should be gripped with the very notion of supporting the non-profit sector, and perhaps Bill C-4 is one way of doing it.

However, I would question the priority of the government in proceeding with Bill C-4 without looking at the very important relationship between the Government of Canada and the non-profit sector.

Where is the relationship? What is the relationship? Where is the minister responsible? Where is the money set aside for building that relationship? Whatever happened to the 2001 accord, an accord between the Government of Canada and the voluntary sector? It was an accord that set out very clear requirements for government and the voluntary sector to build a relationship, to build a common approach to supporting the voluntary non-profit sector to nourish the values of cooperation, collaboration and transparency.

Perhaps some parts of Bill C-4 are very much in line with what the voluntary sector has requested, but I do not believe they expected this to be done in the absence of real support for the non-profit sector. I do not believe they thought they would be doing it on their own.

We are in a time of economic crisis. All our communities are struggling at a time when the non-profit community is in deep trouble because people do not have the resources, the time or the energy to contribute to the non-profit and voluntary sector as they have in the past.

We are at a critical moment. More than ever, we need the Government of Canada to work hand in hand with the voluntary sector, with the volunteers who slug it out, day in and day out, in their communities right across this country. They do not need rhetorical statements about support. They need real, substantive action.

At one time there was the beginning of a relationship between the non-profit sector and the Government of Canada. At one point, not too many years ago, a sum of $150 million was set aside for building that relationship, for ensuring that there was collaboration between all government departments and the non-profit sector, and my Liberal colleagues should remember it because they were part of the government at the time.

There was in fact the beginning of a system through which each department and each minister would have some capacity for reaching out and nurturing, nourishing and building the non-profit community. Where is that? Have we heard? Where is the money? Where is the commitment? Who is the minister responsible? Is there a minister responsible who believes in this? Is there a minister who actually gets it, in terms of the notions of cooperation and collaboration with the non-profit sector? Is there someone working there to ensure that we build capacity, that we support volunteer groups, that we encourage volunteerism in our society without leaving them high and dry?

I think the opposite is happening. At the very time that our charitable sector is under pressure because people just do not have the same kind of money to make donations, the government is cutting back in all areas of the volunteer and non-profit sector, areas where they have made a huge difference in terms of helping people through the worst of times and the best of times.

All I need to do is look at the budget and know the impact of the government's direction on the non-profit voluntary sector. In the Department of Health alone, we are looking at departmental cutbacks of $42.7 million in this fiscal year, $52.9 million in the next year and $72.2 million after that. Where do we think that will come from? What will that mean in terms of support for the non-profit sector? What will that mean for services no longer provided by either the government or the non-profit sector?

We have been through this before many times. We have seen the government attempt to slash, hack and burn the literacy program. With much pressure and support from community groups, the Conservatives put back some of that, but we have seen the pattern and we know what is likely to come unless we are vigilant.

We have seen it with the HIV-AIDS community and all of the prevention program cuts. We know that valued women's health programs are possibly on the chopping block and many other programs that work with communities in terms of providing vital services, linking up with government to ensure that government programs are delivered in the most effective way and in fact building capacity so that people become less and less reliant upon government in some instances.

I fear that this approach is tantamount to telling the non-profit sector that it is on its own, without the support of government. There is no real relationship between the government and the voluntary sector.

Perhaps a member of the government could tell us where the 2001 accord is, which was the result of months and months of consultation between the government and the voluntary sector. We ended up with an accord that enunciated the vision of the voluntary sector and made a commitment between the two parties, the government and the non-profit sector, to work together to develop the framework for an ongoing partnership, a permanent relationship, and to put in place proper processes.

We are left with these questions. Where is the accord? Where is the money that helps build the relationship? Where is the minister responsible? Where is there a focus in every department for doing just this? How can we believe that Bill C-4 will enhance and support the non-profit sector if we do not have any kind of indication from the government that it is prepared to put some money where its mouth is, especially at a time when it appears to be reaching deep into departmental spending lines and cutting where it hurts the most in terms of our voluntary, non-profit sector?

We have seen time and time again examples of that. Every day that we deal with constituents, we know that groups are hamstrung by the fact that they are either being cut back or are trying to get charitable status but cannot because the government has some notion that the very notion of advocacy is political, that it is bad and that if we advocate for and work with our constituents to help them help themselves to build capacity, that is bad, wrong and no good.

In fact, that is one of the issues in the bill that needs to be addressed. How is it that even with the 10% rule in terms of advocacy, the government still continues to question groups that meet that 10% bar but are still accused of not doing strictly charitable work because it borders too much on helping people to speak up, advocating for others and working with communities so they cooperate on big projects in order to overcome some very deep-rooted systemic issues, whether we are talking about economic or social issues, or we are talking about the ability of a community to practise its traditions according to its heritage and with all the cultural celebration that is part of it.

I have yet to hear in this debate any commitment from the government to the non-profit sector. Before we go any further with the bill, I would like to see the government come forward with a plan that tells us exactly what happened to the 2001 accord. Is it just gathering dust somewhere? Is there some plan to bring it forward, to rekindle the relationship between government and the non-profit sector, to restore some sense of confidence that in fact the government believes in people who have spent hours donating their time and their money but are faced with a government and a political climate where there is just not that faith or belief in the non-profit voluntary sector?

What is key is the sense from government that what volunteers do matters, that it matters when people use their free time, money and other resources to contribute to the life of a community, whether it is economic, social, cultural, educational or spiritual. We can address every one of those topics in the context of Bill C-4 and yet we have not heard one word from the government on how it intends to instill the feeling in our communities that what they do matters, that they are part of the economy; 8% of the GDP. Can members imagine?

At a time of economic crisis, when we want to stimulate and kick-start the economy, is it not important for community groups to have the necessary resources to provide the voluntary services that they are so good at, that saves government money in the long run, that has enormous spinoffs in terms of the creation of jobs and economic activity, in terms of purchase power and in terms of the feeling of confidence and self-worth where one can go out into the community and play a solid role and give back one's talents?

I think it is awfully strange that, in this time of economic crisis, we do not have a government with a vision on this front. We need that vision. We do not just need a bill that says that we will put in place some rules to ensure there is tough transparency and regulation and to ensure everything is above board and there are no problems.

Ironically, we are talking about getting tough with the non-profit voluntary sector while the government sits back and does nothing about the excesses of the for-profit sector. Why is there no initiative on the part of the government like President Obama is doing in the United States to crack down on corporations and corporate CEOs' salaries and perks? Why are we not doing something that actually makes a difference in terms of sending a message to Canadians? Why are the profits of bank managers and CEOs so high at a time when they are refusing to pass on the savings to consumers that the government gives them through reduced interest rates? Why are we not starting to look at what is really fair in society today? What is fair is, in fact, to support the non-profit sector while cracking down on the excesses of the for-profit community.

[Megan Leslie, NDP, Halifax, NS]

Madam Speaker, I wish to thank the member for Mississauga South for shedding some light on some of the issues to which we should be alert, regarding the reform of legislation governing not-for-profits.

I am happy to also join the debate today on Bill C-4, an act respecting not-for-profit corporations and certain other corporations. As others have pointed out, this bill is very similar to a bill introduced in 2004 that sought to streamline and reform the regulatory framework of federally incorporated not-for-profits. It seems to me that many of the concerns at that time remain and for that reason I think this bill needs some careful examination.

With job losses growing on a daily basis and our social support networks struggling, the work of non-profit organizations is needed now more than ever. Non-profits in my riding of Halifax provide front line services, advocate for those in need, research new ideas, and protect and promote local culture. It is worth noting that smaller provinces like Nova Scotia actually have higher numbers of non-profits relative to their populations.

I would like to take a moment to highlight some of the work that these organizations are doing to make this point really clear. Canada's non-profit and voluntary sector is the second largest in the world after the Netherlands. There are an estimated 161,000 non-profits and charities in Canada, and half of these are run entirely by volunteers. About 19,000 of those not-for-profits are incorporated under federal law. Two million people in Canada are employed by not-for-profits, making this sector one of the largest employers in Canada. The non-profit sector represents 7.8% of our GDP, which is larger than the auto and manufacturing sectors.

Legislative measures that seek to make it easier for these organizations to work are welcome. However, when looking at the proposals in Bill C-4, we have to ensure that any reforms help rather than hinder this vital sector. I have worked with a lot of non-profits in the past and when they have encountered problems with their governance structures, it hurts these organizations and can hurt them for years to come, but it can also devastate the local communities relying on those organizations.

Canadians can be proud about our place internationally. We have literally thousands of volunteers and workers running services in this country that we have all come to know well. The minister herself put it best when she was introducing this bill earlier in the week. She said:

There is widespread recognition of the importance of strengthening Canada's not-for-profit sector, including the social purpose enterprises that form its backbone. These organizations are an important pillar of the economy as a whole. There are approximately 160,000 not-for-profit organizations operating in Canada. When universities, colleges and hospitals are included, the 2003 revenues of the sector were over $136 billion, up from $86 billion in 1997, a decade ago.

I applaud the minister for pointing this out.

However, when we take this bill to committee, we need to ensure that we consider this legislation with an eye to the diversity of non-profits across Canada. I applaud any attempt to respond to this sector's request to reform legislation, but let us ensure that we consider the impacts that any changes will have on any federally incorporated non-profit.

While we all share an appreciation of the work of these organizations, we would do well to remember that non-profit organizations are constantly faced with funding shortages. I hope that while we debate this bill, and this sector gains some attention in the House, that we keep funding top of mind. The bill, as presented, seeks to apply blunt regulatory reforms on all federally regulated non-profits. What is not present in the bill is accommodation for the diversity in both size and scope of the organizations in question.

While from a law-making standpoint a one-size-fits-all approach might seem a lot easier, it is not always in the best interests of the sectors affected. In consultations, representatives from the sector have outlined a number of regulatory concerns. This bill only deals with a narrow band of those issues. At the top of that list was securing long-term, stable financing, something that is not dealt with by Bill C-4.

Many parliamentarians have been members of boards and non-profits, whether federally or provincially incorporated. Therefore, I am sure the need for stability is clear to them.

When non-profits can see that they will be funded consistently over a set number of years, their program can be more comprehensive and their financial planning can be less ad hoc and more accountable. This accountability is exactly what members of government have been pointing out as the major intention of Bill C-4. I am hopeful that this aspect will be considered appropriately.

It is worth pointing out that, whether it is an arts organization or a front line anti-poverty service provider, when funding is unpredictable or regulations are too complicated, they can put the work done in jeopardy. That in turn has a serious impact on the communities that are clients of the organization. In places like Halifax we cannot afford to have the work of these organizations hindered.

I would like to take the opportunity to pay tribute to some of these non-profit organizations that are doing great work in my riding and highlight the need for continued sustainable funding. The Ecology Action Centre has acted as a voice for Nova Scotia's environment for 35 years. In 1971 the EAC began working to build a healthier, more sustainable Nova Scotia. Today it has over a thousand members, 250 volunteers and staff, and 7 active teams and committees. Some of the amazing successes it has had included the launching of the first recycling program in Nova Scotia. Now Nova Scotia has a waste diversion rate higher than any industrialized nation.

The EAC has also successfully advocated for the protection of 25,000 acres of wilderness since 2004. It initiated and now delivers the HRM by-law restrictions on the cosmetic use of pesticides, reducing restrictive pesticide permits by 80% since 2004.

It has also created Nova Scotia's first working demonstration of a green office renovation and it recycled more than 125 pre-1995 cars through the steer clean program, thus helping to reduce air pollution by removing high polluting vehicles from the roads in Nova Scotia.

From the environment we move on to the issue of poverty. We have many amazing not-for-profit poverty organizations in the riding like Adsum for Women & Children, a non-profit community based organization that has been active since 1983 in the entire Halifax region. Currently, there are three facilities run by Adsum. It operates Adsum House, which is an emergency shelter for women and children, and it has serviced about 12,000 women and their children since 1983.

It also has Adsum Court which is a 24-unit apartment complex located in Dartmouth which is actually across the harbour from the Halifax riding. Adsum Court is a way to respond to the lack of safe and affordable housing in the community.

Finally, there is also Adsum Centre which is stage two supportive housing for women who are looking to achieve their personal independent living goals. I have done quite a bit of work with Adsum, with both the staff and the women at Adsum House and Adsum Centre. I have seen firsthand their amazing work which represents their values, that dignity, worth and potential of everyone is important.

We also have quite a few organizations working on the issue of housing, like the Metro Non-Profit Housing Association. Metro Non-Profit Housing Association assists single adults who have been homeless or are at risk of homelessness. It helps these adults create and maintain their homes. It does not just consider these homes a place to live. It wants it to be a place to call home so it strives to create housing units that are safe, secure and comfortable, a place where its tenants can feel at ease and feel at home. It actually supports the Shining Lights Choir, which is an amazing choir in Halifax made up of people who are homeless or who have experienced homelessness. It sings at quite a few different events and it is just an outstanding choir in the community.

Metro Non-Profit Housing Association actually talks about how some of its tenants have moved on to become entrepreneurs and some have even graduated from university. Another form of achievement, on move-in, about 65% of its tenants relied on social assistance but now only 25% because so many of its tenants have actually moved into the workforce once they achieved affordable, stable housing.

We are also very strong in arts in Halifax. I will raise the non-profit Halifax Dance as an example. It is firmly dedicated to the development of dance and movement through arts, education, performance and community development in an environment that values the diversity and potential of all individuals. Halifax Dance is amazing. It logs its volunteer hours. It actually calculated that last year its volunteers logged in over 2,000 volunteer hours. This year is its 35th anniversary and it is very excited because on February 21 it is having a black tie event with a very special guest, Karen Kain.

If you have ever been to Halifax, Madam Speaker, and you have driven past our Citadel, you may have been stopped by a line of horses crossing the street right in downtown Halifax, and if you looked to your right you would have actually seen a set of stables. This the Halifax Junior Bengal Lancers and it was founded as a non-profit in 1936. It brought life and character to central Halifax through its stables and horseback riding arenas on Bell Road.

This area has been designated a heritage site recently. While the facilities are home to 30 horses and about 100 children and adults who take part in the horseback riding programs, they are also an integral part to Halifax's prime tourist area which includes the public gardens and Citadel Hill. We are proud of the fact that we actually have horses coming along the streets in downtown Halifax. It is really something.

Every fall in Halifax we also anxiously await the printing of one particular catalogue. This is a catalogue of movies featured in the upcoming Atlantic Film Festival. The festival is organized by the Atlantic Film Festival Association which is a not-for-profit organization. Members are committed to promoting and building a strong film industry in Atlantic Canada and presenting the best films from the region and from around the world to our local community.

Under the umbrella of the non-profit association there are four main entities: the Atlantic Film Festival itself; Strategic Partners co-production conference; Viewfinders, which is an international film festival for youth and it is outstanding, if I do say so myself; and alFresco Film Festival, which is an outdoor film festival where movies are projected onto a large building at the waterfront. It is an extraordinary experience to sit by Halifax Harbour and watch movies outside under the light of the moon.

Some of the work that I have done in Nova Scotia with our non-profits has included work with NSRAP, the Nova Scotia Rainbow Action Project. This non-profit society was formed in 2000, and it strives to provide a coherent voice for gay, lesbian, bisexual, two-spirited, transsexual and transgender people, a group that it refers to as the rainbow community, throughout Nova Scotia. It is pan-Nova Scotian, but its main office is located in Halifax.

NSRAP, and its early iterations, has been working since 1995 throughout Nova Scotia as a voice for the rainbow community and its work is varied. It does political lobbying and legal work, and it does community building and research. It also tries to play a role as the public voice for the rainbow community in the media. I have had the opportunity to do quite a bit of work with its transgender committee, fighting for the rights of transgendered individuals in Nova Scotia and across Canada.

We are also the proud home of a strong and proud Black Nova Scotian community in Halifax and many communities around Nova Scotia. Many non-profits have formed over time to support and promote African-Nova Scotian issues, history and culture. One such organization is the Black Educators Association which was founded in 1969 to assist African-Nova Scotian communities develop strategies toward an equitable education system.

Demonstrating a strong commitment as a grassroots organization, the BEA also coordinates its efforts with government departments, community groups, parent associations, school boards and other educational bodies. It has been involved in establishing many different projects and programs which include a bursary fund, regional educators program, advocates for black teachers, adult education and cultural academic enrichment programs.

Some of our non-profit work in Halifax also focuses on theatre and great literary works like the non-profit organization Shakespeare by the Sea. It is actually like a dream that has become a reality. It provides accessible, informative, spicy, edgy, thought-provoking productions of the works of William Shakespeare. It was started in 1994 when a group of artists were invited to perform in Point Pleasant Park on a volunteer basis and with no publicity, just word of mouth, these performances attracted an audience of over 2,500 in just one weekend. So with resounding support from the community and excellent critical notices the Shakespeare by the Sea Theatre Society was incorporated in 1994.

Many of these performances are held in Point Pleasant Park, right on the banks of the harbour, but are also held on barges that float in the harbour. It has been really innovative in its performances.

It has pioneered a walk-about theatre on the east coast, with landmark productions in the Martello Tower. It has done Martello Tower Hamlet and Martello Tower MacBeth. It did at Sandford Fleming Tower and Henry V and King Lear at the Halifax Citadel. It has been able to work with national landmarks in Halifax to showcase its performances. I have had the opportunity to see several of the performances over the years, and I applaud the work it does.

The riding of Halifax is not just the city of Halifax. It includes many other communities, like Sambro or Ketch Harbour. It also includes a very large community called Spryfield, which is home to several non-profit organizations that do great work, like the Boys and Girls Club of Spryfield, which was started because of a need for more programs for children and youth in the Spryfield community. It is a non-profit community based organization. It provides social recreational and educational programming for children and youth. The programs are identified and brought forward by community.

Also in Spryfield is the Urban Farm Museum Society. This society works to celebrate and promote the agricultural heritage of the community, which is now like a suburb of Halifax. It promotes rural traditions in urban places. The society has established a working farm in Spryfield, right in urban Halifax. It continues the agricultural tradition of this area.

The farm operates on three acres of old Kidston family fields. Through a variety of interpretative programs, hands-on workshops, demonstrations and school programs, the society produces food, offers a teaching venue and promotes local foods that are in season. It also does things like clearing pastures, rejuvenating the orchard and reconstructing old farm buildings. It is quite a feat considering this farm is in downtown Halifax.

What do all of these organizations have in common? They all need funding. They work hand to mouth. Sometimes they get funding from the federal government, sometimes from the provincial government. They rely on donations. They are going from season to season to see if they can manage to cobble together some programs to meet the needs of the communities they are trying to serve.

The lack of commitment to stable funding for non-profit organizations applies whether these organizations are provincially or federally incorporated. Bill C-4 does not address the issue of funding, but it is important to always have this in mind when we speak in the House and it is important to raise a discussion about sustainable funding for these organizations.

With regard to Bill C-4, the one-size-fits-all nature of the federal regulatory reforms could pose a significant problem for federally regulated non-profit organizations. Smaller organizations simply do not have the resources to comply with some of the reforms outlined. It is obvious that a smaller federally regulated organization cannot maintain membership lists in the same way a major organization like the United Way can.

I would like to express my agreement that regulatory changes are needed for this sector. However, any discussion of changes must consider the lack of stable funding with which these groups are faced. I trust the bill will be thoroughly examined at committee and that we can pass a bill that will be in the best interest of this truly Canadian sector.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, certainly there are examples in our legislative framework and some of the programs, and even the taxation models that we have, that take into account that one size does not fit all. I think that applies to the not-for-profit sector. There are some organizations that are very large, some that are very powerful, in terms of their influence not only on their own community but on the country as a whole. There are other organizations, however, that are very small and, as I indicated, they do not have the resources to do things. When I think of something like the GST, there are different methods to file a GST return which take into account the size or the volume of the business.

With regard to Bill C-4, I do not know whether there can be provisos. I think we should ask about it. There could be some exemptions. They may have to fall under the act. However, with regard to the reporting requirements, maybe there could be a quick method or maybe the smaller not-for-profit organizations could have some way of mitigating the increased costs that organizations inevitably would face.

[Mario Silva, Liberal, Davenport, ON]

Madam Speaker, I want to congratulate my hon. colleague on his fine remarks. He outlined quite well some of the issues of concern with Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

All of us have not-for-profit organizations within our own ridings. In my riding of Davenport there are excellent organizations such as the Working Women Community Centre, the Abrigo Centre and the Working Skills Centre. These not-for-profit agencies deal mainly with immigrants and refugees, and help the vulnerable and those in need in our city. I congratulate them on all their fine work. I am sure the hon. member has many organizations in his own riding that he can also comment upon and thank.

Not-for-profit organizations are essential in our communities. They are the ones that deliver the real services. They are doing a tremendous amount of work for very low pay. They have difficulty raising money and it is not always easy to get funding from different levels of government, but they are doing incredible work. Certainly cities like Toronto would not be liveable and we would not have a country like we do have at the moment if it were not for these agencies.We have to do everything possible to help them out.

I share the comments of my colleague about whether this legislation is going to add to the burden of the not-for-profit agencies, whether it is going to add more red tape in terms of not streamlining the processes.

Maybe my hon. colleague could comment further on his concerns, which I share and are valid, about not burdening the not-for-profit organizations because they are doing tremendous work for Canada.

[Paul Szabo, Liberal, Mississauga South, ON]

Madam Speaker, I have a few comments with regard to Bill C-4.

Prior to becoming a member of Parliament, I, as a chartered accountant, had the opportunity to have a number of not-for-profit organizations as clients. As well, in my work in one of the corporate employs that I had in my early career, I was actually involved in the work which introduced the Canada Business Corporations Act and moved it from the Canada Corporations Act and all the continuance provisions.

I am sure all members will look at the bill and wonder how they will put their minds around the document. I took the opportunity to look at the details. I suspect that if I were to cross out everything that was boilerplate, mirroring the rules, the provisions and the features of the bill that are required under the Canada Business Corporations Act for for-profit corporations, the bill would be about quarter of the size that it is.

The bill also contains a number of interesting provisions, and one in which I will take specific interest and hope to be involved in at committee stage is with regard to regulations. I will comment on that in a brief moment.

For the record, I would like to indicate that I will be supporting the bill, as I would most bills in the nature of building on an existing foundation of corporate governance, whether it be share capital or non-share capital, profit or not-for-profit.

This is a very important bill that we move forward to committee. I very much doubt that the members themselves at this point will be able to speak in very much detail to the risks, the rewards, the benefits or the pitfalls that may exist in the bill without hearing from the experts and the stakeholders in all sectors across the governance model.

However, it is at second reading where all hon. members get an opportunity to raise specific issues or maybe to recommend to the committee that these are areas of interest or of concern. I hope the committee will bring forward the appropriate witnesses so that the questions or the issues can be elaborated on, not only by the government and by departmental officials, but also have the higher level interventions of experts and representatives across the governance spectre to ensure t there are no hidden or unintended consequences.

That is always the problem when we get bills which are substantively omnibus bills to the extend that they do have consequential amendments to a large number of other existing legislation in Canada.

If we were to take all of the bills that this particular bill touches, we would probably have a very large pile of reading to do, because some of the changes that occur in here cannot be understood in terms of the amendment being proposed in the bill to another bill. That amendment needs to be read in the context of the bill which it is amending. We need to know, if this is plugged in to some other piece legislation, whether it make sense.

These are the kinds of things we rely on: the departmental officials to give us the assurance. We have the responsibility for the legislation but we second that responsibility to a great extent in bills like this to the departmental officials and to the experts. We also seek the input of other witnesses, which helps us to discharge that responsibility for the legislation without being the experts ourselves.

We cannot be experts in all things but we can ask reasonable, fair questions so it can be explained to us. In some cases I like to ask the experts in committee to explain it to me so that my grandmother would understand. I want the explanation in plain and simple language because, if our legislation is not in plain and simple language, when people involved in a broad range of not-for-profit organizations see this, their first reaction will be to wonder whether they will be swamped with more paperwork from government requirements. They will want to know whether it will be cost-effective, whether they will need to hire lawyers to help guide them through the pitfalls in which they may find themselves, whether their organization will be put at risk if they have to come under the rules, whether it will affect the way they do business, and whether they will be subject to other exposures to risk from other stakeholders without knowing who they are.

All hon. members have a wealth of opportunity to maybe find a little nugget within legislation such as this to consult with not-for-profit organizations in their own community, to ask whether they are even aware of this or if they have an advocacy group on behalf of all the groups across the country in the same or similar businesses that will be there, and to encourage them to come out to the committee or to have representation at the committee, and to let them know that it will not be at no cost to them. For us to do a good job and for us to have them there, we pay the cost to bring them here to ensure they have an opportunity to express the views, concerns or even the questions of these various groups and organizations.

My intervention is maybe an invitation to all hon. members to not be reluctant to open this document and to determine whether there is a nugget in which they can champion or encourage groups and organizations with which they are familiar or with which they have had some undertakings.

One of the areas I will be looking is the responsibilities of directors and officers. This is an important aspect of governance life in Canada. The corporate sector at large has had a lot of difficulty with conflicts of interest, fraud, embezzlement and the benefits to people as a consequence of their role in an organization.

Bill C-4 also addresses the whole area of directors and officers. I think all hon. members would agree that the accountability, the transparency and the openness are important aspects. Part 9 of the bill outlines the duty for directors and officers to manage and supervise management . It addresses the number of directors needed. Sometimes there are closed shops and sometimes there are too many and the work does not get done. The qualifications are extremely important, and members may want to look at that.

For directors in the not-for-profits, there are guidelines and things for notice to directors ceasing to hold office, removal of directors, statements of directors, how to fill a vacancy, changing the number, et cetera. The list is very long. The bill addresses those kinds of issues. It would give organizations the opportunity to realize the extent to which they have a responsibility. Each organization under this governance model would provide, if they follow and comply with the legislation, a comfort level to all Canadians from the standpoint of being able to understand that the organization has rules to follow, that they can trust the organization to follow the rules and that there is a compliance mechanism in place to ensure that happens.

The other aspect is bylaws and members. In my role as a member and currently the chair of the Standing Committee on Access to Information, Privacy and Ethics, it does cover the bylaws and members. It basically deals with information about who the members are, what their involvement is and a variety of other things. This is a very important aspect. I am very interested in this from the standpoint of potential privacy issues, potential cyber crime, identity theft, et cetera.

Finally, I simply want to make a comment with regard to the regulations. There is a section in the bill on regulations which has to do with the coming into force of the legislation. It comes after the very last part of the bill.

Members probably know that a bill will either say it comes into force upon receiving royal assent or it will say that it comes into force on the date designated by order in council. Usually when a bill requires regulations it will state on a date specified by order in council.

After we have dealt with a bill in the House of Commons at second reading, it goes to committee where committee members hear from experts and witnesses and departmental officials. The bill may be amended there. After the bill is voted on in committee, it comes back to the House for report stage where more amendments may be proposed by members who were not involved in the process at the committee stage. A vote is then held at that stage. A debate is held at third reading and another vote takes place. The bill will go to the Senate where it will go through virtually the same process.

One thing that is not done in the entire process of reviewing a piece of legislation like this bill is that we do not see the regulations. We do not see the regulations when we have to vote to make the bill law. The regulations are the details necessary to supplement or amplify the intent of the bill. Every regulation must be enabled, authorized, in the bill itself.

Members will find that in this legislation there are a substantial number of regulations required which may take six months or a year to be implemented. I know of a bill where three years after its passage, the regulations still have not been fully implemented. The bill as we passed it in this place is not fully functional.

In the past I was chair of the joint Senate and Commons committee on the scrutiny of regulations, but I continue to be a member of that committee in this current Parliament.

I want to follow this particular bill. Even though the bill provides a whole section on definitions to guide the understanding of the bill, one of the requirements is that the governor in council define terms used in the bill which have not been defined in the bill. If something is in the bill and it might require a definition, I do not understand why the definition would not be put in the bill and then the regulation would not be needed.

I want to particularly follow that one because it is the first time I have ever seen it. I want to understand why it is that someone thinks something has to be defined in the regulations so that the bill is clear. When we already anticipate today that it may be a problem, why not just put it in the bill? I look through some of these things as a member of Parliament.

As I indicated, I will be supporting the bill. However, I need more answers as a legislator before I can enthusiastically endorse every aspect of it. Quite frankly, it is going to take some time before I become fully conversant in all of the nuances of the bill because there are many other pieces of legislation that I would have to ask the Library of Parliament to get for me so that I could look at this in context.

This is a situation which I would characterize as a mission impossible for members of Parliament by themselves and even by their caucuses. They need the experts and the officials. We need to make sure that they know that we are interested in having these matters explained to us, the raison d'être as it were, so that we can do a good job as parliamentarians.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Madam Speaker, I want to correct the hon. member. I was in the Liberal government for a year and a half, which was after I had been on his side for 10 years, but he might not have been around at that time.

On the issue of Bill C-4, we compliment the government on bringing forward changes to the Canada Corporations Act. That act went back to 1917. However, we want to make sure that the legislation contains changes that will liberate the NGOs and enable them to do the wonderful work that they do, and that it is not a Gordian knot that introduces numerous other administrative hurdles and obstacles that costs them a lot of money. We will move this legislation forward but we want to make sure that it contains the effective solutions to liberate the not-for-profit sector, not administrative requirements that would hamper their ability to do their job, which would cause them to move at a glacial pace.

On the issue of first nations, it has been extremely frustrating for first nations communities to see many of the actions of the government. The Conservatives have done some good things and I give them credit for that, but the government has not done anything on some of the fundamental issues of investing in things that enable first nations communities to take care of themselves.

There was an example in the long list of solutions I was trying to give to the government in my speech. The 2% cap on first nations funding must be lifted. With inflation and with the population growth rate which is much higher than 2%, it is actually eroding the funding capabilities of first nations to help themselves.

I would ask my hon. colleague and his government to implement those solutions and the others in my speech.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Madam Speaker, it is a true pleasure to speak today to Bill C-4, a way to assist non-profit organizations.

I also want to compliment you, Madam Speaker, for being the Deputy Speaker. I know Victoria is very proud, being from a neighbouring riding.

Mahatma Gandhi said that poverty is one of the worst forms of violence. We know that it robs a person's soul, and sometimes robs the desire to live, particularly if there is no hope or see any way or opportunity to actually get out of a poverty trap. In response to that, we have some 161,000 Canadian not-for-profit organizations, and 19,000 of them are under federal jurisdiction.

I would also like to salute that this represents some 12 million volunteers. These volunteers donate some two billion hours of their time free of charge every year. That is a staggering testament to the courage and charitableness of Canadians from coast to coast. There are about two million full time equivalents of people who are hired and who work in the not-for-profit sector, which represents some 11% of our economic workforce.

The budget actually neglected this very important part of our economy. The fact of the matter is those volunteers, those NGOs have a huge duplicative effect. Where they have that duplicative effect is in helping those who are most underprivileged in our society, giving them a hand out, and enabling them to be able to elevate themselves.

They feed those who are hungry. They clothe those who do not have proper clothing. They care for those who are sick. They donate their time to enable our environmental and cultural heritage to live on into the future. They are Canadian heroes, unsung, quietly going about their work, day in and day out, week in and week out, year after year.

In this bill, and in the budget, it neglects to deal with some of the fundamental problems that the NGO community faces in Canada today. To showcase some of the great non-governmental organizations we have, I started up a website. It is called Canadaaid.ca. I would encourage viewers out there to check out Canadaaid.ca.

This website actually showcases people here at home who are doing work in Canada and abroad, people like Gerald and Nicole Hartwig, who are building schools abroad.

The Compassionate Resource Warehouse and Dell Wergeland, who you know, Madam Speaker, being from Victoria, do an extraordinary job. They have sent hundreds of millions of dollars worth of needed supplies to those who are most impoverished in the world. They have done it all with volunteers, many of whom are actually our veterans.

What charitable organizations face is an overweening and excessive degree of reporting. They all agree that fair and accountable reporting must occur. Imagine being part of a small NGO, a small group of volunteers working hard to help those who are impoverished. What happens is they often have to pay thousands and thousands of dollars that has to come from their donations to pay for the overweening administrative obligations that are placed upon them, much of which is unnecessary.

The fact of the matter is that the CRA, Revenue Canada, is disconnected from the NGO community. It has not sat down and listened to their needs and worked with them to enable them to have a proper structure that they can report fairly, openly and transparently as to what moneys they are receiving and how they use them.

I would strongly encourage the Minister of National Revenue to sit down and encourage the bureaucrats to work with the NGO community. This is absolutely essential, if we are not going to choke the ability of NGOs to work and help those who are most underprivileged.

Also, I do not think the Canadian public is aware of this, but Revenue Canada had cuts, particularly in the charities branch. What happened was, in response to that, Revenue Canada let go a lot of its employees and rehired people who had less professional capabilities. What happened as a result of that is burnout amongst the people who could not handle the work, and charities were not able to engage Revenue Canada in a meaningful way.

The other side of this is right now we have overzealous members of Revenue Canada fanning out across our country. They are going after charitable organizations tooth and nail. They are driving them into the ground so much that they will have to close their doors. In fact, some of them have had to pay hundreds of thousands of dollars in accounting and legal fees to simply answer the questions that Revenue Canada has asked, most of which are completely useless and unnecessary.

In their zealous desire to go after these charitable organizations, they do not see are the downstream effects. They are hurting the very people who help those in need. Charitable organizations do the lion's share to help those who are most needy. Governments are not going to do it, and in many cases it should not. However, what has filled the gap are these large numbers of charitable organizations, working with minimal amounts of funds to do great things and massively expand the care they provide to those who need it.

This has absolutely become a crisis. I know full well that charitable groups in my riding are about to close their doors. The impact on those who are most impoverished will be quite significant.

I strongly recommend that the government implement the solutions in this bill, which are necessary for a streamlined, effective way to ensure that transparency within the NGO community.

The other thing the government ought to do is enable people to donate more to charitable groups. Right now, during this time of great need, during this time of the economic turmoil across our country, there has never been a greater time to encourage donations to the NGOs, which help those most in need. Right now for charitable donations up to $200, we receive a 15% tax credit. For donations over $200, it is 29%. It makes more sense, and I have a motion is this regard, to ensure that charitable organizations receive the same tax benefits as political parties. Donations to political parties receive much higher tax benefits than those given to charitable organizations. Why not make them equivalent?

Alternatively, the government could allow Canadians to donate up to $15,000 to charitable groups and receive a 50% tax credit. Anything above $15,000 would go back to the 29% tax credit, which is in effect now, for donating more than $200. This would inject adrenalin into the charitable donations. In fact, when we asked Canadians, and there were some interesting studies on this, if they were able to get a higher tax credit, would they donate more, 53% said yes. Why does the government not do this? It would provide a significant benefit, at minimal cost, with a huge multiplier effect for those most in need.

The other thing that could be done, and my colleague mentioned it before, is allow foundations in Canada to develop in a more fruitful way. The United States has much larger foundations, with more money. We could do that in our country. This would provide a huge benefit for the civil society sector to utilize funds to help those most in need and it would also to invest in the cultural and environmental legacy in our great nation, which would be beneficial for all of us.

Do members not find it an affront to common decency that people who make less than $20,000 a year pay tax? How do people survive on less than $20,000 a year? They cannot and as a result they get caught in the poverty trap. Why do we not amend the tax code? I know we could this because I spoke to our finance critic about it when we were in government. I have a private member's bill called the “Canadian low-income supplement”. The bill would ensure that people would get a $2,000 rebate, cash in hand, if they made less than $20,000 a year. That number would decline to zero at $40,000. This would put real money into the hands of those most in need. I strongly encourage the government to pursue that course of action.

On EI, my colleagues have provided solutions to increase EI benefits and decrease the amount of time that one has to work. I also encourage the following.

For those who have lost their jobs, we do not know whether the government will provide EI benefits for them. Just because those people lost their jobs before the budget went through, does it not make sense that those people, who have been victims of the global economic tsunami, should have the same economic benefit changes in the budget? We would like to see the government come clean on that. We think it is an act of fundamental fairness. Whether people lose their jobs next month or lost them two months ago, these people need help. They do not have money to survive.

My colleagues have introduced some very sensible changes, for a two year period of time. Those changes would help those most in need, and those people spend the money. They need to put food on the table. They need medications when they are ill. They need to pay rent. They need a roof over their heads. They need to pay their mortgages.

Furthermore, if people have houses and have lost their jobs, why are they ineligible to receive EI? They have mortgage payments. What are they going to do? Sell their house, and go where? Are they going to go on the street? Are they going to find a place to rent in our community, as an example, where the available rental units are less than one per cent? They cannot do it.

Our objective is to enable people to maintain as much of a reasonable standard of living as they possibly can during this economic turmoil so they will not be hurt, and hurt they can be, hurt they are.

On the issue of first nations, I have five first nations communities in my riding. In some of those communities, in which they have some really superb first nations leadership, the conditions in which those people live is frankly inhumane. Whether it is the Pacheedaht reserve or some others, in Sooke or Beecher Bay, we have some great leaders. Those people need to be encouraged, yet they are not, in part because of the following.

First, the government put a two per cent cap on funding for first nations communities. Does that make sense when the population of first nations communities is growing by more than two per cent? That does not even take into consideration the increase cost of our standard of living. It does not account for inflation. In effect, because of this cap, they are going backward.

Inflation alone is tearing away at that. Increased population growths will also tear away at that, so there is less money today than there was five, six or seven years ago. That makes no sense whatsoever. It is fundamentally important that the government release that two per cent cap and give the moneys needed, with a multiplier that is congruent with inflation plus population increases.

The implication of not doing this is the following.

Do members know that aboriginals families, and this is particularly offensive, receive between $2,000 and $9,000 less per child than non-aboriginal families? Why? What does that mean? It means that those children cannot have books. They cannot get computers. They do not get other school supplies. They cannot hire teachers. The schools are overcrowded. The infrastructure collapses. Some of the schools are toxic. We would not want to see any child trying to study in those schools. Frequently there are not even enough schools to train the kids. How can these children, many of whom are living in impoverished circumstances, get out of that poverty trap?They cannot.

I would also like to see the government look at the Indian Act and work with the AFN and other groups to modify the Indian Act, which is a racist document and a rock around the neck of aboriginal communities in their desire to develop. How can they possibly develop if we have that type of act? They have many more hurdles to overcome in order to develop, so how can they take care of themselves?

There is fabulous leadership in Chief Gordon Planes in Sooke and Chief Russ Chipps in Beecher Bay. They have some great initiatives that they would like to pursue, but they cannot because of the Indian Act and the obstacles it presents to them.

I was on the Pacheedaht reserve in my riding a little while ago. I could put my fist through the walls. There is mould, they are toxic and falling apart. This is in our Canada. Canadians often do not see this because we have to take a bit of a detour to look at it. I ask them to please look at this. See what is in our neighbourhoods and communities. Look at what we have in our country. They will find conditions rival to that in third world nations half a world away.

This is our Canada and it is a pox on our houses that this is allowed to continue. This cannot be allowed to continue. It must be addressed as issues of fundamental fairness and basic humanity. I would like to see the Minister of Indian Affairs go to these schools and clinics, take a look at the conditions in which these people live. I would like him to say that this cannot continue and work with first nations leaders to resolve this. Many of these reserves have extraordinary natural resources that can be developed, but it must be allowed to happen.

On the schooling issue, while there was some money for infrastructure for schools, which I complement the government on, they also need money for soft costs such as for the teachers, books, computers and access to schools. The children in the Pacheedaht reserve have to travel hours into soup to go to school, which means they cannot avail themselves of normal child activities and programs such as music, physical education and team sports that help to build them as they go through life.

It is fundamentally important for the government to grasp this. We are willing to work. We have some great people in the Liberal Party, and in all parties, who are very willing to work with the government to implement the solutions to address these issues, which are human and critical and which must be resolved as an act of basic humanity.

The public expects us to come in here and do things quickly, which we would all love to do. The frustration that I think all of us in the House feel comes from the desire and our willingness to address the concerns of our citizens, meeting the glacial pace in which things move around here. In fact, they move somewhere between glacial and full stop. That is how fast things move. However, the implication of that is the failure to address some very critical things. In 1998 the House passed a resolution for a head start program for children. This is the most fundamental and easiest way to have an important impact on our children.

In the last minute and a half I have, I want to talk about international affairs.

There are some wonderful people at CIDA. However, the government needs to resolve an internal issue in coordination. The treasury board needs to change in order to liberate CIDA so it may work on the necessary international development projects. Our government needs to look outside of itself and understand that Canadians have the willingness, desire and ability to deal with our fundamental and large international challenges, rooted, in part, in the millennium development goals and those objectives that we signed onto.

The three Cs, corruption, conflict and a lack of capacity, are not dealt with adequately internationally for many reasons. The failure to do that causes impoverished countries to continue in their poverty tracts. We have an opportunity to tap into Canada's capacity and the willingness of Canadians to donate their services to build up capacity in developing countries. We need to develop integrated plans such as building up primary health care systems in developing countries. Rather than looking at HIV-AIDS, tuberculosis and malaria, we need to work on building an integrated public health care strategy. We know the simple things have the most effective bang for the buck in development and improving population health. Corruption has to be dealt with by improving the public service. We have the ability to transform and translate our public service abilities to these countries.

In closing, we have a great ability within this House and our country to deal with the fundamental challenge of poverty here at home and abroad. I strongly encourage the government to work with the rest of us to tackle this inscrutable enemy of humankind.

[Libby Davies, NDP, Vancouver East, BC]

Madam Speaker, it is very nice to see you in the Chair. I know the people of Victoria are very proud of you being our Assistant Deputy Speaker.

Before question period I was talking about this massive bill of about 170 pages, Bill C-4, that deals with the regulation of not-for-profit corporations. In my comments I was talking about advocacy.

One of the problems we have with the bill is that it does not address the core issues and the critical issues that are facing non-profit organizations in this country. One of those issues is the need to deal with advocacy. I find it very interesting that somehow this has become almost a taboo thing because of restrictions from Revenue Canada because of the charitable status.

I do not know why it is that the notion of advocacy has taken on this very partisan, politicized meaning from the government's point of view. I am someone who has worked in the non-profit sector for many years before I was elected as a city councillor and then as an MP, so I am very familiar with the non-profit sector and how important it is in community development and building healthy communities. Advocacy is very much a part of that.

Even when organizations have charitable status, they should be able to do advocacy. There is nothing wrong with advocating for the people we represent and for whom we are working. This is particularly true in my riding of Vancouver East where we have many people who are very vulnerable and at risk, whether they are homeless, living far below the poverty line or drug users who have been very marginalized by our health care system and by criminal enforcement. Many organizations do incredible work right on the front line in helping people, not only with their daily needs of surviving and going up against the system, but also in advocating for people's rights.

To me, this is a very important function and a very important responsibility that is part of our civil society. It is part of our non-profit structure and part of the history that we have in the way not-for-profits work in this country.

Some not-for-profits simply deliver service and programs, which is exemplary and, of course, needs to be done. However, as I said in my earlier remarks, they and all groups lack stable, long-term and core funding. It is so hard for so many organizations now to survive. People are relying on whatever private donations they can get.

It is interesting to note that in the United States there is a much bigger system of private foundations that do provide huge support to charitable and not-for-profit organizations. In Canada, we have had more of a history of different levels of government recognizing the importance and value of non-profit organizations and actually providing public funding to them. That is a very legitimate thing and it is a very wise use of taxpayer dollars.

However, since the 1990s, every group we talk to, and I could talk to any number of groups in my community, whether it is women's organizations, housing organizations or people involved in legal services, they have all faced unbelievable cutbacks over the years. The erosion of government funding, particularly core funding, has had a very dramatic impact on the non-profit sector. It has left people scrambling to find little bits and pieces of money from this foundation or that foundation. Sometimes it is a matter of $5,000 or $10,000 to keep themselves going.

I wanted to raise that issue during the debate on the bill because it seems to me that the bill is so focused on the regulatory approach for non-profits that it is missing the huge issue of what we need to be addressing for the non-profit sector in Canada.

I think it is very unfortunate that we are debating this bill that was first introduced in 2004. It has certainly had a long history. Here we are debating this bill that lays out this mega-regime of Robert's Rules of Order and says that everybody is going to come under this regime.

What we should be discussing and what we should be doing, particularly in these economic times when so many people are falling behind and so many people who previously did not rely on organizations like food banks, legal aid or organizations that do advocacy, is helping those people who are now having to turn to those organizations to get the help that they need.

We are certainly now entering a very critical period in Canadian society where the economic recession is having this incredible impact on communities, people and families where before perhaps they were completely self-sufficient and they did not require the help and assistance.

One of the problems that we are facing in our community is the cuts in legal aid. There are a number of non-profit organizations that deliver legal aid services. In the best of times their parameters were fairly restrictive. There is money that goes from the federal government to the provinces for legal aid. This is very much a part of our judicial system and all Canadians should be guaranteed the right to access and opportunity to legal representation.

However, as these cutbacks have just come wave after wave, we are now facing a situation in B.C. where low income communities are being hit particularly hard. The organizations that are there, whether it is the UBC Law Student's Society that provides legal aid or the legal aid system itself, they are now under severe pressure trying to meet the demand as more and more people, who may have previously had their own resources to deal with the judicial system, are now unable to do so. That is a very serious situation.

In looking at this bill I know that other colleagues of mine in the NDP are very concerned about this bill. We are concerned about the scope of the bill. We are concerned about how far reaching it is and how it may dampen enthusiasm and the involvement of people. When we read the bill, the things that are required of people individually, as well as the organization in question if it falls under the mandate of this bill, are quite incredible.

We have a lot of concern about how broad a net this bill casts in terms of creating a system where organizations basically have very little choice to perform in a way that maybe they have evolved over the years. It seems to me that this idea that there is only one standard to uphold accountability or transparency is really quite false.

The fact is the vast majority of non-profit organizations are very democratic. They are transparent. They are accountable. It is in their very nature to do that because their very reason for being is based on community service. It is based on service to society.

Therefore, these organizations tend to be very open and straightforward about what they are doing. They have nothing to hide. It is not like there is some big multinational corporation that is involved in goodness knows what kind of financial transactions and trying to skim and move money, such as what we see in this financial crisis that we have before us now. Non-profit organizations are not really in that kind of game. They are in service to the community. Even the large organizations, whether they be the Red Cross or others, have a different kind of mandate.

One of the concerns that we have is that it may be necessary for us to see a framework of regulations that would ensure better accountability for some of these large organizations that do engage in business opportunities. It seems that this is now being cast over every organization that falls within the scope and the mandate of the bill, so we have a problem with that.

I did want to express the concerns that we have about the bill, but most of all I want to thank the incredible non-profit organizations in my community that provide an amazing service. I do not think I could do the job that I do if they were not doing what they do. We work in very close partnership with each other. We all need to recognize these organizations and what they do in our communities.

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.

Canada Not-for-profit Corporations Act

[Libby Davies, NDP, Vancouver East, BC]

Mr. Speaker, I am very pleased to speak to second reading of Bill C-4, which deals with not-for-profit organizations. I would note first that the bill first surfaced in the House in 2004 under the then Liberal government. It was never dealt with and it came back as Bill C-262 in 2008 and here it is again. It has been about five years that the bill in various forms has been before the House of Commons.

I want to begin by speaking about the not-for-profit sector. I am very fortunate to represent a riding, Vancouver East, that has a whole diversity of absolutely incredible and amazing not-for-profit organizations, some of which would be under these federal regulations. They perform the most valuable service not only in our local community but nationally.

As we debate the bill we need to pay tribute and acknowledge the incredible value that the not-for-profit sector provides in this country. There has been a very long history in Canada of not-for-profit work. Whether it is in housing, cooperatives, delivery of services, volunteer work, or advocacy, there is a tremendous history in this country of voluntary organizations where people give their all and are literally on the front line delivering services and providing information to the citizens of Canada in many diverse communities.

It is very important for parliamentarians to recognize that if we ever put a price tag on the work that is being done in the voluntary sector we would be talking about billions of dollars. Certainly if these services and programs were being delivered directly by government, we would be talking about billions of dollars. We should recognize that the work that is done by not-for-profits in our communities is something that we benefit from. It is part of a strong civil society. It is part of a strong democratic society. Over the years the biggest struggle and challenge that not-for-profits have had is the struggle to stay in existence, not from a legal point of view, but from a financial point of view. Government funding has been withdrawn and we have seen government programs cut back, federally and provincially, and sometimes even locally, although most often it has been the local government that has had to pick up the slack.

The not-for-profit sector and our non-profit organizations have had to rely more and more on voluntary contributions and donations. They are always scrambling for money. The biggest issue facing the voluntary sector is not 170 pages of Robert's Rules of Order and a regime of putting everyone under one size fits all, it is the question of stable long-term funding. Long gone are the days when non-profit organizations could rely on core funding to continue with their core operations and then expand to whatever programs they were doing. Now every organization, I dare to say, spends probably one-quarter or more of its time writing grant applications, chasing down every small bit of money that they can in order to develop their programs.

In my riding of Vancouver East there are organizations that are literally on the front line. They are literally dealing with life and death situations. These organizations are democratic. They are transparent. Everything that they do is out there for people to see and to become involved in.

In looking at the bill, I have some very serious questions as to why we are so focused on a regulatory regime for not-for-profits when we are completely missing the point of what is the real crux of the issue for non-profits in this country. The NDP, in going through this 170 page bill clause by clause and looking at the incredibly detailed micromanagement requirements that are in there, these organizations will now have to go through various hoops and there are processes and regulations involving a lot of paperwork and reporting requirements. It is absolutely incredible. It is 170 pages of things they have to note and make sure are followed up.

I certainly have a concern that the bill in its current form will make it very difficult to attract new directors and volunteers in the not-for-profit sector. Anybody faced with this massive regulation would say, “I came here to do good work. I came here to make a contribution to my community. I came here to make good decisions. I came here to help people,” and all of a sudden that person is faced with having to deal with a massive bureaucratic regime, where one size fits all right across the country.

We have to seriously question whether or not the bill, if it is adopted in its current form, would have a counter-effect. Maybe it is being put forward from the point of view of transparency and accountability, but it may have the effect of turning people right off and asking why on earth they would get involved in doing this work when there are so many requirements and responsibilities.

I listened to the Conservative member say that the bill is about being transparent and more accountable. That leads one to believe that the status quo is not transparent and is not accountable. There are non-profit organizations that run into trouble. Any group in society from time to time may face difficulties. There are sometimes instances where there are criminal activities taking place. There are all kinds of legislation, measures and protections to deal with that, but the sense that somehow not-for-profit organizations are not transparent and accountable is a very false premise. I certainly want to put that to rest.

Another concern that we have about the bill is that it does not address the relationship between charity status, Revenue Canada and the issue of advocacy. This has been a long-standing debate. There are organizations that are very concerned about the severe limits that are put on them to do advocacy work. Somehow advocacy has become a negative word. It has become a negative component to the work that is done. However, what I see in my community is that the advocacy work, which does not mean that it is partisan, to uphold people's rights, whether it is in legal aid, housing or groups that have been very marginalized, is very important for the not-for-profit sector. This issue has not been dealt with at all.

Mr. Speaker, I see that you are getting up to tell me that the time is up and we are going to statements, so I will continue my remarks after question period.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I would first like to thank my colleague from the Bloc Québécois for his speech about Bill C-4. I have a question to ask him about the future of not-for-profit organizations. Clearly, in this economic crisis, the voluntary sector must overcome many difficulties in order to survive and grow.

I would simply like to know if the bill would strengthen the voluntary sector or if it would hold the sector back in terms of reaching its important goals. This is very important, especially in the current political climate. The voluntary sector has been dealt many blows by the Conservative government. It is critical that we have some ways of strengthening this sector.

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, I would like to thank my colleague from Alfred-Pellan for his very pertinent question. He saw the relevance of this file and of Bill C-4, which is no minor bill. Not-for-profit organizations have asked us to change and amend many points for the past 10 years because the current legislation no longer meets their needs. It must be updated. Today's reality is not the same as yesterday's.

My colleague is wondering if every point and type of organization must have a concrete goal and definition, be it in terms of heritage, sports or something else. These goals must be consolidated so that we are not all over the map as we have been and as we continue to be because the legislation has not been amended. I can assure my colleague from Alfred-Pellan that we will study his point carefully and specifically in committee.

[Robert Vincent, Bloc, Shefford, QC]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

That is covered in subsection 37(1).

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

That is covered in subsection 149(1)

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

This is found in clause 150.1.

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

These provisions are found in clauses 151.1 and 151.5.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The House resumed from February 4 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.

Business of the House

[Jay Hill, Conservative, Leader of the Government in the House of Commons]

Mr. Speaker, we will continue with the opposition motion today concerning the possibility of growing trade protectionism in the United States.

Tomorrow we will carry on with the remaining legislation that the government scheduled for this week, Bill C-4, An Act respecting not-for-profit corporations and certain other corporations, and Bill C-5, An Act to amend the Indian Oil and Gas Act.

Next week we shall begin and, hopefully, conclude debate at second reading of the budget bill. Following the budget bill, we will call Bill C-9, An Act to amend the Transportation of Dangerous Goods Act, 1992, and any legislation that is not completed this week.

Thursday, February 12, a week from now, shall be an allotted day.

Before I conclude my remarks, I would like to take a moment to thank all the opposition House leaders, whips and leaders for their patience, flexibility and cooperation while dealing with the budget bill. Although we do not see eye to eye on all of its contents, I appreciate the cooperation when dealing with the somewhat complicated process to bring such a measure before the House.

It does not benefit anyone to get bogged down on process but there is a benefit to the public when we can get to the substantive policy debate that the budget bill will offer and, ultimately, to ensure the timely disbursements of the benefits it intends to provide Canadians during these difficult times.

Despite the daily partisanship of questions period, this is clear evidence that if all of us work with the best interests of Canadians in mind, Parliament can work the way that Canadians deserve and expect it to.

Canada Not-for-profit Corporations Act

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

Madam Speaker, Bill C-4 does not include a classification system. The framework is permissive and flexible, allowing organizations to choose how to apply the relevant provisions.

Does the minister consider the lack of a general classification system to be a flaw?

[Diane Ablonczy, Conservative, Minister of State (Small Business and Tourism)]

moved 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.

Madam Speaker, I am pleased to have this opportunity to speak to Bill C-4. This legislation will establish a new Canada not-for-profit corporations act. It will also transfer 11 corporations established in years gone by by special acts of Parliament to the Canada Business Corporations Act. It will then allow for the repeal of the outdated Canada Corporations Act.

This is a bill that touches all of us. I suspect that all members are active participating members, if not board members, of at least one not-for-profit corporation. Passage of this bill will result in the modernization of one of Canada's most important framework statutes. A new federal not-for-profit statute would act as the main 21st century vehicle for federal incorporation of not-for-profit corporations and other corporations without share capital. It would ensure that federally incorporated not-for-profit enterprises are governed by an up-to-date legislative framework that is flexible enough to meet the needs of both small and large organizations while providing the accountability and transparency necessary to meet the expectations of the Canadian public.

There is widespread recognition of the importance of strengthening Canada's not-for-profit sector, including the social purpose enterprises that form its backbone. These organizations are an important pillar of the economy as a whole. There are approximately 160,000 not-for-profit organizations operating in Canada. When universities, colleges and hospitals are included, the 2003 revenues of the sector were over $136 billion, up from $86 billion in 1997, a decade ago.

The not-for-profit sector is one of the country's largest employers, employing more than two million people who are supplemented by over twelve million volunteers. Of those 160,000 plus not-for-profit organizations, approximately 19,000 are incorporated under federal law. They range from community associations with just a few volunteers to national organizations run by professionals with multi-million dollar budgets. They will all benefit from the provisions of Bill C-4, the Canada not-for-profit corporations act.

Right now, these organizations unfortunately are not well served by the current law, the Canada Corporations Act, or CCA. The CCA has not been substantially amended for more than 90 years. The corporate world, even for the not-for-profit organizations, has dramatically changed over nine decades. Advances in corporate governance, communications technology and financial reporting demand that framework laws meet the exacting standards expected by the public and the corporations themselves.

The not-for-profit sector has repeatedly said that the current statute no longer meets its needs. For example, under the current statute, the incorporation process is slow and cumbersome. There are no provisions for amalgamating two or more corporations. There are no provisions for modern communications technologies. Financial accountability and transparency is inadequate. Directors do not have adequate defences against unwarranted liabilities. Members have few rights, and the list goes on.

Passage of this bill will in large part address these inadequacies and demonstrate the government's commitment to strengthening the sector. The Canada not-for-profit corporations act proposed in this bill has been modelled after the Canada Business Corporations Act, which is a modern legislative framework based upon 21st century principles and practices. The new NFP act will help to ensure a vibrant not-for-profit sector that supports Canada's economy.

Make no mistake, this is definitely a bill whose time has come. Stakeholders strongly supported proposals for a new statute during a consultation process that included three rounds of national consultations in the fall of 2000, the spring of 2002, and the fall of 2005.

Bill C-4 will bring about major improvements. Although it is not possible to list them all in 20 minutes, I would like to briefly review the main features of this reform.

First of all, the bill provides for the long-awaited modernization of the incorporation process. Currently the only way for a not-for-profit organization to be federally incorporated is through the issue of letters patent by the Minister of Industry. This process, which is mandated by the statute itself, is burdensome, lengthy and potentially expensive.

Bill C-4 will allow incorporation status to be granted quickly to any organization that has submitted the required forms, including articles of incorporation and fees. The act will allow corporations broad discretion in setting themselves up and conducting their day-to-day affairs. In particular, they will be able to tailor their bylaws to suit their individual needs.

Under the current statute, there are many prescriptive sections about how an organization must conduct its affairs. The new statute will allow them to focus on what they do best.

A second modernizing feature of the bill is the area of electronic communications to facilitate member participation in corporate activities. Electronic communications is one of the most essential tools of the modern corporation. It speeds up the ability to gather information, make decisions and ensure those decisions are implemented.

In the context of not-for-profit corporations, it can cement the relationship between the corporation and its members, many of whom may be hundreds or even thousands of miles away. As a result, the bill will allow electronic communications between the corporation and its members, including the ability of the corporation to hold meetings entirely by electronic means if members wish.

In recent years, the need for business enterprises to be transparent and financially accountable has increased. This need exists in the not-for-profit sector as well, because they must establish and maintain a high level of public confidence in order to succeed. Bill C-4 addresses the need for financial responsibility with the introduction of a flexible set of rules that can be tailored to meet the needs of individual corporations.

Canadians expect that corporations that benefit from government grants or public generosity should be more transparent. Thus corporations funded by public donations or government grants must adhere to more rigorous requirements respecting the review and disclosure of financial statements.

In addition to making their financial statements available to their members, a requirement for all corporations under this bill, publicly funded corporations would be required to submit their statements to the government, which in turn will make them available to the public.

Another issue that has been addressed in this bill is the question of the liability of directors and officers. The present act contains unclear and inadequate standards for the rights, duties and responsibilities of directors and executives of non-profit corporations. That is a major source of concern for the non-profit sector.

Bill C-4 provides clear, objective standards of diligence based on modern concepts of corporate law. Under Bill C-4, directors and officers will have an explicit duty to act honestly and in good faith in carrying out their duties.

They will also have a clear defence against undue liabilities, including a due diligence defence. This defence, which is well known by the legal community and the courts, is a standard feature of other modern corporate statutes. In essence it states that if a director or officer acts with the care, diligence and skill that a reasonably prudent person would exercise under like circumstances, he or she would have a defence against a liability claim.

The bill would also allow corporations to pay defence costs when a director is accused and would allow for the purchase of liability insurance.

These measures are of particular importance. Not-for-profit corporations have been saying for years that because of liability concerns, they often have difficulties in attracting and retaining good directors, who are often volunteers. This bill will go a long way toward alleviating their concerns.

Bill C-4 provides members with a number of remedies in the event of a dispute with the management or directors of a corporation. These are well known to corporate law practitioners, as they are found in most other corporate statutes, including the Canada Business Corporations Act. They include court-ordered investigations to look into possible corporate malfeasance, including fraud and environmental issues among others.

The new act also introduces to the not-for-profit world the concepts of an oppression remedy and a derivative action.

The bill recognizes, however, that because many voluntary and non-profit corporations active in Canada are faith-based, it is vital that the courts not become a battleground where their tenets of faith can be challenged. Accordingly, the bill excludes the use of the oppression remedy and a derivative action when the court is of the opinion that the action being challenged is based on a tenet of faith.

This bill does not deal only with not-for-profit corporations. There is one other important component of Bill C-4: the transfer of jurisdiction of 11 special-act-of-Parliament business corporations from part IV of the Canada Corporations Act to the Canada Business Corporations Act, or CBCA. Bill C-4 therefore also benefits those few profit-generating corporations that are subject to the Canada Corporations Act.

Similar to the sections of the CCA that deal with not-for-profit corporations, this part of the act dealing with special-act business corporations lacks modern corporate governance features. The corporations subject to these provisions should be given the opportunity to operate more efficiently and effectively in today's global marketplace. By moving these 11 special-act business corporations into the CBCA, the bill gives them that opportunity. The CBCA is the main statute governing business corporations existing under the federal laws of Canada. It is a state-of-the-art statute that provides a proper accountability framework by defining the rights and responsibilities of directors, officers and shareholders. The CBCA also contains provisions relating to corporate finance, trust indentures, insider trading, financial disclosure and other forms of corporate transactions. With the passage of this bill, these modern corporate governance features will now be available to all these special act business corporations.

In closing, I want to emphasize that Bill C-4 is good for the Canadian economy. It will allow not-for-profit corporations to be more efficient and effective in the modern Canadian economy. Bill C-4 will also reduce the regulatory burden on these corporations. The new not-for-profit act is far less burdensome.

Once Bill C-4 becomes law, and after a three-year transition period, it will be possible to repeal the entire outdated Canada Corporations Act.

Bill C-4 springs from the need to replace an 18th century piece of legislation with a modern framework that reflects the imperatives of the Canadian economy's diversity and the changes that have come about in recent years. It directly addresses these issues, and what is more, provides a solid basis on which healthy, dynamic, well-run not-for-profit corporations may flourish.

I urge all members to support this important legislation.

[Diane Ablonczy, Conservative, Minister of State (Small Business and Tourism)]

moved for leave to introduce Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

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

Canada Not-for-Profit Corporations Act

[Diane Ablonczy, Conservative, Minister of State (Small Business and Tourism)]

moved for leave to introduce Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

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