Bill C-4 (Historical)

Canada Not-for-profit Corporations Act

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

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

Canada Not-for-profit Corporations Act

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, I thank my colleague for his question. He is absolutely right to raise these points because, when examining the provisions of the act, the committee will have to study 20 points.

In addition, he is perfectly right to say that the latitude of the governor in council is too great with respect to this bill.

When the bill is studied in committee, we will make some recommendations to the government. Therefore, I believe that the government should bend to stakeholders.

[Robert Carrier, Bloc, Alfred-Pellan, QC]

Mr. Speaker, I wish to congratulate my colleague from Shefford for his presentation, which has given us a solid understanding of the bill's intent. A Liberal colleague mentioned earlier that the bill was tabled about ten years ago but never adopted. My colleague raised the fact that the bill in question applies to organizations with a national, patriotic, religious or other purpose. They may be of all sorts. However, the bill does not require these organizations to reveal their reason for being.

It is somewhat illogical for a bill to define the objects of these organizations but then to not require the organization to state the reason for incorporation. We come across inconsistencies and duplication in Quebec's and Canada's jurisdictions all the time. In our ridings, not-for-profits are mostly local organizations. Thus, it is quite rare to find organizations working in several provinces or throughout Canada.

I wonder if my colleague examined this issue. Does he see that it is very important to clarify this bill?

[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.

[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 thank my hon. colleague from the NDP. She is quite right. This bill will help the voluntary sector. Part of this bill provides greater protection for directors. In the past, directors were not keen on the idea of being held liable for the organization. New measures would make them a little less liable and would help them defend themselves. These measures did not exist in the past and, as a result, some volunteers did not want to take on the role of director or chair of these organizations.

Furthermore, many members complained that they did not have enough information. They did not know how the organization spent its money. With this bill, people will know what organizations goals are and how the money is being spent. The names of the people who work for the organization will also be protected. They will not be disclosed right and left. I believe that amending this bill will encourage many more volunteers to become involved.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Speaker, I would like to suggest also for the member from the NDP that this bill will allow not-for-profit organizations to become more transparent and more accountable. This will feed out to the people in our communities who support non-profit organizations with their donations and assistance and as such, this bill will allow Canadians to have more confidence in non-profit organizations.

Does the member think that the increased accountability and transparency would serve to make organizations stronger by building more confidence in the people in our society who would support them?

[Robert Vincent, Bloc, Shefford, QC]

Mr. Speaker, my hon. colleague is quite right, and that is what I was saying to my hon. colleague from the NDP.

Strengthening the act in this way will give volunteers greater confidence in the organization, because it will also tighten up the rules and procedures.

People will not feel constrained by these organizations. Some people said that not-for-profit organizations were not accountable to their members. Now, because this act will ensure greater transparency, once a month or on a quarterly basis, members will be able to consult all the books, statements of accounts, expenses and payrolls. This transparency will satisfy all volunteers. Volunteers will therefore have greater confidence in these organizations.

[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.

[The Speaker, Peter Milliken]

I want to thank the hon. member for Vancouver East. There will be 12 minutes remaining in the time allotted for her remarks when debate resumes on this matter. It is now time to proceed with statements by members.

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.

[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.

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, despite the clarity of my colleague's presentation, I would still like to ask a question.

With respect to developing regulations, the possibilities are wide-ranging, given that there really is no classification within not-for-profit organizations. Conflicts can arise concerning the goals of not-for-profit organizations because, as my colleague said earlier, there are corporations that are charitable and there are others that are mutualist.

Basically, the goal of charitable organizations is to provide services to people other than members and administrators, whereas mutualist organizations provide services directly to members. At some point there must be a regulation or a classification that would change how the act is applied in different situations. The Canadian Bar Association has also expressed its views, and it is important that this go back to committee so that it can be discussed.

I would like to hear my colleague's thoughts on this, since he sits on the Standing Committee on Industry, Science and Technology. How does he feel that we should proceed?

[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.

[Serge Cardin, Bloc, Sherbrooke, QC]

Madam Speaker, as you can see, I am enjoying this dialogue with my colleague through you.

I imagine that there have been a number of not-for-profit organizations in his riding with all kinds of situations at various points in time. The new legislation says that there can be a member on the board of directors, and other organizations can have several if they solicit funds.

I was once an accountant, and I sometimes encountered not-for-profit organizations that had one person in charge of absolutely everything, including solicitation and the investment of funds collected from donors.

I would say that, in some cases, it was relatively easy for organizations to get their certificates under the Canada Corporations Act. In many cases, they did not act in accordance with their stated objectives and sometimes even abused them. We have to consider the importance of protecting the public and the community in terms of assets because there are often tax breaks associated with that.

I would like to ask my colleague a question. In general, even if the bill seems to meet organizations' expectations and appears to have received unanimous support in nearly every respect, without regulations governing classification, how are unclassified organizations supposed to operate, and what will the minister's responsibilities be when giving these organizations a certificate?

[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.