This bill was last introduced in the 40th Parliament, 2nd Session, which ended in December 2009.
This bill was previously introduced in the 40th Parliament, 1st Session.
Diane Ablonczy Conservative
This bill has received Royal Assent and is now law.
This is from the published 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 the Library of Parliament. You can also read the full text of the bill.
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.
The Acting Speaker Denise Savoie
There being no motions at report stage, the House will now proceed without debate to the putting of the question on the motion to concur in the bill at report stage.
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 Acting Speaker Denise Savoie
The question is on the motion. Is it the pleasure of the House to adopt the motion?
Some hon. members
Agreed.
Some hon. members
Agreed.
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 Martin Liberal Esquimalt—Juan de Fuca, BC
Madam Speaker, one of the big challenges facing the non-profits right now is the fact that the CCRA, Revenue Canada, is coming down on them like a ton of bricks. As we are all aware, this has been an outfall as a result of the Banyan Tree Foundation NGO issue. In the CCRA's zeal to try to find some malfeasance in the non-profit sector, it has spread a broad net and is tying up non-profits which are trying, with minimal resources, to do an enormous amount of good work.
I want to suggest two things for the member. First, that he ask the Minister of National Revenue to call off the attack dogs and start dealing more reasonably with non-profits. The government should listen to their concerns and develop a structure that would allow them to work effectively with the limited resources they have. The member should also bear in mind that our non-profit organizations do an extraordinary amount of work with volunteers across our country. I know the government is trying to do that with the bill but it inadvertently is causing non-profits enormous pain and suffering and comprising their ability to help the people in need who need help from non-profits due to the government's failure to do its job in many areas, from housing to other issues that are affecting those most in need.
Second, I would recommend that the member ask the Minister of Finance and the Minister of National Revenue to change the tax structure to allow foundations to occur in Canada in a similar fashion to what occurs in the United States. If the member were to do that, we would liberate a lot of money.
The last issue concerns the transferring of assets to non-profit organizations, such as real estate. The Canadian Real Estate Association has some very constructive solutions that would enable people to give their real estate assets to non-profits, which would be a huge boon for non-profit organizations to acquire assets that they could use for housing and to run the programs for those most in need.
I would ask the member if he has any views on that and if he is willing to take that to cabinet.
Gord Brown Conservative Leeds—Grenville, ON
Madam Speaker, as a board member of the United Way in Leeds—Grenville since the year 2000, I understand very well the challenges that the not-for-profit sector has to face.
The committee spent a great deal of time listening to witnesses who came before the committee. There were in excess of 300 clauses in the bill. I did address in my presentation that a great deal of time was spent going through the various challenges that the non-for-profit sector is facing.
Many of the things brought forward in the bill would help alleviate the very questions that the hon. member has asked in terms of making it much easier for not-for-profit corporations to operate, but also there would be far more accountability and it would instill more confidence in Canadians in what they do and, hopefully, will make them more generous in their contributions to these various not-for-profit corporations.
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, one of the problems with attracting directors to these not-for-profit corporations is the liability they may incur by sitting as directors of these corporations. What has been addressed in the bill is much more clear in terms of what their responsibilities are. From what we heard from the various witnesses, they are very happy, not only with the accountability but clearly laying out the responsibilities of directors.
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.