Evidence of meeting #6 for Industry, Science and Technology in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was organizations.
A recording is available from Parliament.
Senior Project Leader, Corporate and Insolvency Law Policy and Internal Trade Directorate, Department of Industry
There will be model articles provided, model bylaws. The Corporations Canada website, which Coleen can better speak to than I, will be a useful tool for any corporations that are going to be transitioning into this bill.
Conservative
The Chair Conservative Michael Chong
Thank you very much.
Madam Kirby, do you have any comments to add?
Manager, Policy Section, Corporations Canada, Department of Industry
The plan right now with respect to the transition is that brochures and pamphlets will be drafted aimed very much at the small guys. Model articles and model bylaws will be done. We've had discussions with Sports Canada, because of the number of sports organizations; with Fisheries and Oceans; with CRA. Our aim will be to try to feed through as many of those organizations as we can. And a number of the large national organizations, which are often umbrella groups, have agreed to work with us, trying to get to the small ones.
The large ones that already have in-house legal counsel aren't the issue. It is the small guys, trying to get the information to them. We know we're going to have to have staff who are going to have to talk these guys through some of this material. But again, a lot of the model bylaws, the model articles, will make it fairly easy for them to shift over. They need to make a few very specific decisions, such as how they want to give notice of meetings to their members, but the general provisions are already there.
Conservative
The Chair Conservative Michael Chong
Thank you.
Thank you very much, Mr. Masse, for raising those concerns.
Thank you very much, Madam Kirby.
Mr. Rota.
Liberal
Anthony Rota Liberal Nipissing—Timiskaming, ON
Thank you, Chair.
Thank you, Minister, for coming to see us today.
Bill C-4is obviously long overdue, and contains some changes that I think will be welcome, not only to government workers, but especially to the not-for-profit sector. Clause 282 of Bill C-4, however, concerns me, and it has to do with the appointment of a director. It states that the minister can appoint a director or one or more directors.
Can you clarify or comment on what criteria or what guidelines there are or how the minister decides who to pick and who to put in that position?
Conservative
Diane Ablonczy Conservative Calgary Nose Hill, AB
The thing is you're talking about a very specific instance, but I think I'll let the officials outline when that would occur.
Manager, Policy Section, Corporations Canada, Department of Industry
Currently, under both the Canada Cooperatives Act and the Canada Business Corporations Act, there are these positions of both director and deputy director. The people already exist. The heads of Corporations Canada are just that: they're government officials who have been put in place to administer the act. It is anticipated that under this act it will be folded into the other two acts. It will be one office that is administering it, and the director and deputy directors, because there are two at the moment, under this act will be the same as under the other two.
Liberal
Anthony Rota Liberal Nipissing—Timiskaming, ON
Just to clarify, would that be a senior bureaucrat or a member of the industry ministry?
Manager, Policy Section, Corporations Canada, Department of Industry
At the moment, the director, under the Canada Business Corporations Act, is a director general within the department. The two deputy directors are directors within the department. They are government officials who, as I said, are operating with essentially the same powers and the same administrative role under two other statutes already.
Liberal
Anthony Rota Liberal Nipissing—Timiskaming, ON
Very good. So there's no danger of the minister deciding that he would choose a director from outside the public service?
Manager, Policy Section, Corporations Canada, Department of Industry
Right now you have a director in place who already has the whole administrative role in place—the computer system, the files, everything else. It would be difficult for any other office to start it up. You'd be starting at square one and having to set up a whole new administrative office.
Liberal
Manager, Policy Section, Corporations Canada, Department of Industry
It would not be impossible if the minister was appointing somebody. As with any position within the government, it's up to the minister and the hiring process to determine who's going to get a particular position.
Liberal
Anthony Rota Liberal Nipissing—Timiskaming, ON
And that position reports directly to the minister, then? Or what is the process of getting the information to Parliament?
Manager, Policy Section, Corporations Canada, Department of Industry
The director has certain powers under the act, but he's also a director general in the department, and therefore feeds into an ADM, who feeds to the DM, who feeds to the minister. For the Industry Canada annual report, performance reports, reports on plans, it's the same thing. All the Corporations Canada material is in there and comes to Parliament through that way. We come in with respect to the main estimates the same way.
Liberal
Anthony Rota Liberal Nipissing—Timiskaming, ON
Very good.
I believe my colleague Ms. Coady has a few more questions. I'll let her take it from here.
Liberal
Siobhan Coady Liberal St. John's South—Mount Pearl, NL
Thank you very much.
Just to your point, Mr. Masse, we did discuss the complexity of this bill and the transition. There is a concern. The CRA have done some changes to the way they're implementing some of their changes, and perhaps the minister will have the consideration of putting in robust assistance for that transition and training. So I think there's some work to be done there.
As we all know, it's taken a long time to get this act changed. Acts generally are in place for quite lengthy periods of time before they are changed. My question goes to the length of time it will take to make some revisions to this, and the fact that we would probably want to see some things in a regulatory environment rather than in the act itself.
I'm asking the minister a question on one thing, and that's the voting rights of members. Right now in the act it talks about a very broad and comprehensive “one member, one vote” kind of concept in this particular bill. And while that works as a general problem, in some organizations that may not be the right and proper method to do it. In your considerations of trying to streamline, and given the fact that this will probably not be reviewed for quite some time, did you consider taking out some of these things and putting in regulation? What was your rationale for keeping as much as you have in the act?
Conservative
Manager, Policy Section, Corporations Canada, Department of Industry
The basic idea behind the act and the regulations was that any fundamental principle has to be in the act. Anything that would be considered a detail should be done in a regulation, and if it doesn't have to be spelled out as a law, it's done under the director's control with respect to a policy.
So with respect to voting rights, the requirement is that each corporation has to decide what voting rights will exist for their members. That is done between a combination of the articles and their bylaws. We've put in place a mechanism where they can change that, but the act itself does not specify how many votes, who votes, who doesn't vote. You could set up a membership structure where you have one class of members who vote and another class of members who don't. You could have everybody vote, you could have nobody vote, you could structure it yourself.
We know that national sports associations are going to take one approach, whereas a national charity is going to take quite a different approach. A local community association is going to give everybody one vote, one class, everybody's the same.
Again, this comes back to the flexibility. Let the corporations choose what works for them, provided they spell it out so that everybody knows in advance when they get involved what their rights are, what the responsibilities are.
Manager, Policy Section, Corporations Canada, Department of Industry
They can change. If they want to change it manually, they can go ahead and do it.
Conservative
Mike Lake Conservative Edmonton—Mill Woods—Beaumont, AB
Thank you very much for coming here before us today on this important issue.
I just want to start by talking about how before the end of the last break, we had the opportunity to go and do a tour in Edmonton of some of the homeless facilities, some of the facilities that deal with addiction issues and some of the other challenges there. And in one of the places I went to I talked with one of the employees there who just really expressed very passionately the ability of these faith-based organizations—but not just faith-based organizations, any NGOs—to deliver things in a different way than government, I guess in a sense. And this was at the Hope Mission that I was touring and they do some tremendous work.
As we think of the challenges faced by so many organizations, the issue of simplification comes up. People shouldn't have to be lawyers to serve on boards and contribute to the community, and I think oftentimes the feeling is that things are so complicated you almost have to be a lawyer just to be able to contribute.
So if you could speak to the simplification, how will life be simpler for organizations if we pass this act?
Conservative
Diane Ablonczy Conservative Calgary Nose Hill, AB
Yes. It has been an issue for not-for-profits because most of them have volunteer members. But right now those volunteer directors for not-for-profits basically have unlimited liability because they're not under the more modern regime where there are some defences to a liability action.
The new act will make a clear statement of directors' duties, and basically it says that directors must always act in the best interest of the corporation. That doesn't give them blanket immunity, but what it does is provide a due diligence defence, which of course modern statutes allow. But the old act, the one we're hoping to change, doesn't allow that yet. But the defence will say that as long as a director has acted with due diligence, they can escape liability. So they have that protection of if they acted reasonably with due diligence, they then would be protected from a liability action.
Right now they don't have that protection for not-for-profits to that extent, and some directors for not-for-profits are pretty worried about that. And that's one of the reasons why there has been so much pressure to finally get this act passed and the new regime put into place.
Does anybody want to add anything about that?