Industry Committee on March 5th, 2009

[Wayne Lennon]

I'll just say that the act is not intended to have a direct impact on the day-to-day operations of any given corporation. It's a framework law. It sets the broadest parameters for their organization, the relationships between the officers, the directors, their members; a number of other contingent issues; a few filing requirements. And then it leaves to the corporation the ability to choose how they best deliver their services to whoever their client base is.

The directors' liability provisions are probably the ones that would impact most on directors, especially of small corporations. And I know corporations are concerned. They're having trouble getting and retaining directors because of the fear of liability. This act gives them more than a basic level of protection and lets them do their jobs.

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

That's good.

I think that a liability issue is something that I've heard people comment on. The reality is that people don't really understand how it all works. There's almost a fear there or a hesitation. I think the default for people who want to contribute in that way on a board or as a director in some cases is to not do it because they don't want to put themselves and their families in situations that would hurt them.

Further to the simplification, this question may be a bit out in left field, but I believe Chris was talking about technology a little. One of the initiatives you've put forward as the minister for small business is the work on this BusPAL system that has been just fantastic in terms of reducing paper burden. Is there such a system? Is there a system that is more of an online type of system that helps not-for-profit organizations do the things they do?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

What Mike is talking about is the one-stop permit and licence window for businesses starting up or expanding. They can go to this portal and find out exactly what permits and licences they'll need without having to run around and stand at the door at city hall.

There is the Canada Business Network.

Are not-for-profit organizations on the CBN? Does anybody know?

[Mike Lake, Conservative, Edmonton—Mill Woods—Beaumont, AB]

It might be interesting to know.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

The Canada Business Network is the portal into government and it would certainly direct people to the act, to the forms. I'll have to check to see how much about the not-for-profit organizations is actually on the CBN. That's where I would expect it to be. We're having a major upgrading of the Canada Business Network portal to make it more user friendly. That would be a place where these good sample forms that Siobhan and Pat want and that Coleen talked about could be put. A good, clear link to those would be very helpful.

[The Chair, Conservative, Michael Chong]

Thank you, Minister.

Mr. Vincent.

[Robert Vincent, Bloc, Shefford, QC]

Thank you, Mr. Chairman.

Welcome to the witnesses.

I have a number of questions to ask, so I would like rather brief answers, otherwise I won't have enough time to ask all of them.

Madam Minister, earlier on, you referred to a $25,000 amount which would be exempt from auditing, and then Ms. Kirby referred to $50,000. Was that $25,000 or $50,000?

[Coleen Kirby]

It's $50,000 for a soliciting corporation and $1 million for a non-soliciting corporation.

[Robert Vincent, Bloc, Shefford, QC]

So $25,000 was correct, and not $50,000.

[Coleen Kirby]

Yes.

[Robert Vincent, Bloc, Shefford, QC]

Very well.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

It's the other way around.

[Robert Vincent, Bloc, Shefford, QC]

According to section 154 of the current act, an organization must have some set purpose. But clause 4 in the bill does not specify any set purpose. Let's assume I want a not-for-profit organization under the new constitution and the new act. I could incorporate a not-for-profit organization without a name, without a purpose nor anything else. Is that correct?

[Roger Charland]

No. The bill does provide some requirements. It calls for the filing of documents pursuant to certain clauses.

[Robert Vincent, Bloc, Shefford, QC]

For instance, you have to specify who will be the director, etc.

Assuming I'm the director and I do not need financing. So, for an amount under $25,000 there would be no auditing of my books. Is that correct?

[Coleen Kirby]

The way we've structured it is if you are a soliciting company with less than--

[Robert Vincent, Bloc, Shefford, QC]

There is no fund raising, otherwise it would be one million dollars. Here, we're looking at $25,000.

[Coleen Kirby]

You are required to have a review engagement. The members can choose to have no review. There's been some confusion, I think, on how the financial levels work.

[Robert Vincent, Bloc, Shefford, QC]

Does it need to be a maximum or minimum number of members to create a not-for-profit organization?

[Roger Charland]

No.

[Robert Vincent, Bloc, Shefford, QC]

So, if I decide to establish a not-for-profit organization and put down $25,000 from an unknown source, there would be no audit.

[Roger Charland]

With respect to incorporation?

[Robert Vincent, Bloc, Shefford, QC]

With respect to the money within the corporation.

[Roger Charland]

With respect to incorporation, in other words the establishing of the company, this bill does not specify any rules. However, there are other measures within the banking system. The system provides other checks and balances, but under the current legislation, to incorporate the company...

[Robert Vincent, Bloc, Shefford, QC]

I am not referring to incorporation. Let's say I simply want to register with the Government of Canada as a not-for-profit organization. In response to other questions, you stated that it is sufficient, that I could register right away and that the not-for-profit organization would thus be established.

Let's assume I find $25,000 some place, which I invest in this organization and no audit is ever done because it falls within the $25,000 limit. If I decide to dissolve this not-for-profit organization, what do I do with the $25,000? Should I withdraw the money, pocket it and walk away? No one is going to check.