This bill is from the 40th Parliament, 2nd session, which ended in December 2009.
Diane Ablonczy Conservative
This bill has received Royal Assent and is now law.
This is from the published bill. The Library of Parliament has also written a full legislative summary of the bill.
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.
All sorts of information on this bill is available at LEGISinfo, an excellent resource from Parliament. You can also read the full text of the bill.
Bill numbers are reused for different bills each new session. Perhaps you were looking for one of these other C-4s:
Glenn Thibeault NDP Sudbury, ON
Mr. Speaker, in committee we talked about how we could look at the not-for-profit act and how we could change that. I cannot give the member an answer for the government because it relates to some of its decisions.
What I can say is the government was looking at ways of making things easier for the small organizations to ensure that if they wanted to go through the process of becoming a registered charity, those avenues would be there. Some of the organizations raised that couple of times.
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.
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.
Keith Martin Liberal Esquimalt—Juan de Fuca, BC
Mr. Speaker, I would like to ask the member a couple of questions about how we can actually improve on this bill. I think the government needs to hold a public stakeholder meeting to deal with the non-profits. They labour and struggle. They serve the most underprivileged and some of the most desperate people in our country because of the failure of our social programs in many cases. They pick up the pieces. Many of them are run by volunteers who give hundreds, if not thousands, of hours every single year in service to their neighbour. I think the government may want to do a better job of honouring those Canadians from coast to coast who are donating their time, efforts, skills and talents to serve some of the most needy people in our country.
However, apropos to this particular bill, I would like to ask my hon. friend whether he thinks the government ought to again have a public round-table meeting, that it make the tax deductible donations to non-profits equivalent to the tax donations to political parties and that it facilitate the way in which groups can actually get tax charitable status.
For example, the Hospital for Sick Children, with its HealthyKids international program, which is an amazing program, is having real trouble in trying to get tax-free status. It is an absurd situation. I really encourage the Minister of National Revenue to get on that, and that is a message more for the Minister of National Revenue than my colleague.
Guy André Bloc Berthier—Maskinongé, QC
Mr. Speaker, I want to thank my colleague for his excellent question. The financing of not-for-profit organizations is a major concern, particularly those that help people in distress, as my colleague mentioned.
Should there be a tax credit? Should it be easier to obtain charity status so that these organizations can get a tax credit? Indeed, in 1984 and 1985 the Conservatives tightened the eligibility criteria that allow not-for-profits to get charity status. This status is often denied to organizations that are not strictly charitable in nature. This is a way to get charity status or a tax credit, which is important.
Since being elected not so long ago, the Conservative government has cut many programs that provided funds for not-for-profit organizations, such as programs for the voluntary sector, women's programs and literacy programs. When people are declared ineligible for EI benefits, the population becomes poorer, which increases the need for not-for-profit organizations. The government should therefore make it easier to help these people.
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 thank my colleague for his question. I know that in his own region, he worked in recreational activities, and so he also met many volunteers. He is also aware of the importance of transparency in volunteer organizations.
As I said earlier in my remarks, when we give money to these organizations, it is normal, since this is public and private money, that they are accountable for the money they receive and spend to carry out their missions.
I think this bill strengthens somewhat the moral and legal requirement that these organizations should make their financial statements available to their members. That is one of the reasons we support this bill.
Jean Dorion Bloc Longueuil—Pierre-Boucher, QC
Mr. Speaker, first I would like also to congratulate my colleague for Berthier—Maskinongé on his remarks. He showed his command of the content of this bill, but there is a point on which he could elaborate further, and that is the issue of democracy. I would ask him to comment more on this.
We live in communities where anonymity is prevalent. People want to protect their private life. They do not give their names and addresses to many people, but they do disclose them to the associations they belong to.
Does my colleague think that the provisions of this bill, which require the organization to give its membership list to all members who ask for it, are a step forward democratically, compared to the situation that prevailed in the past?
Guy André Bloc Berthier—Maskinongé, QC
Mr. Speaker, it is indeed important that the ability of not-for-profit organizations to send their membership list to all members be written into this bill. It is important first so that the association knows who its members are; but it is equally important that other members of the association also know who the members are.
Ethics, governance and democracy are now back in vogue. This is as it should be because, more and more, people want transparency and ethics to be part of democracy. These are concepts that must be 100% enforceable, and this bill makes that possible.
Roger Pomerleau Bloc Drummond, QC
Mr. Speaker, my thanks also go to the hon. member fromBerthier—Maskinongé for his overview of the bill that is before us today. As he described, not-for-profit organizations have always faced a number of problems, such as raising funds, finding directors, having countless forms to fill out.
Now it has been decided to update the act. The Bloc Québécois is going to vote for the bill in order to make the act more transparent and to improve governance and make the sector easier to manage.
The hon. member points out that, given the increasing poverty and the increasing age of the population, this is urgent. We know that it is good in theory, but, given that he has worked with organizations on many occasions, what exactly does he think of it in practice?
Canada Not-for-profit Corporations ActGovernment Orders
Guy André Bloc Berthier—Maskinongé, QC
Mr. Speaker, there is still a long way to go in the funding of not-for-profit organizations. The same goes for knowing what information to provide to members working in these organizations about their roles, responsibilities and duties as members. There is also a long way to go in providing more protection for their involvement.
All in all, there is a lot to be done and a lot that could be improved in this bill. Nevertheless, we are going to vote for the bill because it is a step forward for these 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 39th 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 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, I would like to thank my colleague for his excellent question.
The elimination of the minister's discretionary power is an important element. We all know how much the Conservatives like to interfere in everything.
The example I have in mind is the Social Sciences and Humanities Research Council. The Conservatives want to make sure that everyone knows they are funding SSHRC grants, but the grants are exclusively for the study of business and the economy. As I said at the beginning of my speech, scientists, great thinkers, a lot of them from Quebec, are relocating to the United States. Right now, the Université de Montréal is losing a lot of scientists to the United States.
Considering how the Conservatives have been acting for years, I have to say that I am very happy about the elimination of the minister's discretionary power. At least we will have one area in which the Conservatives do not run the whole show. They usually try to control everything. Imagine if the Conservative government had won a majority. Thank goodness the Bloc Québécois was there to prevent a Conservative majority. This is the beginning of a great victory because the Conservatives will not be able to interfere in this area, take control, and impose their own ideology and dogmatism.
