Evidence of meeting #7 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 corporation.
A recording is available from Parliament.
Partner, Miller Thomson LLP, Imagine Canada
--which is questioned, partially from the point of complexity. Because as was also said by Mr. Reid, many organizations that use this act will not have legal counsel, will not have the sophistication to....
It is suggested that it adds complexity when there is no demonstrable benefit.
Conservative
Mike Wallace Conservative Burlington, ON
Compared to the act that has existed for a hundred years, Bill C-4, as presented to us today, is simpler than it was in the past. Is that an accurate statement?
Partner, Miller Thomson LLP, Imagine Canada
To the extent that it gets into parts dealing with debts and trust indentures and various other entities, I'm not sure I could reach a conclusion on that.
It is easier to get incorporated and it doesn't require approval of bylaws, so to that extent it may be simpler. But I would not suggest the statute as a whole is simpler. I couldn't say that.
NDP
Glenn Thibeault NDP Sudbury, ON
Thank you, Mr. Chair.
Welcome to our guests. I want to welcome both organizations. In the five years prior to being elected, I was the executive director of the United Way in Sudbury, so I know both organizations quite well.
I want to talk initially to Imagine Canada. There was an initial excitement--because you can take the guy out of the United Way, but you can't take the United Way out of the guy--when I went through the bill. And yes, there is a need for revitalizing and getting this new regulation into place because it is so old. But the first thing I thought of was the 60-some organizations we were funding in Sudbury--and one of them is the Red Cross, I might add--and I can see these three-person shops, with an executive director and part-time staff and a volunteer, who have been doing this great work for our community, and we're going to drop these new regulations on them.
If we do anything to inhibit the great work of these organizations, are they going to be able to provide the services? Before I get to the next part of that question, maybe you can comment on that.
Vice-President, Operations, Imagine Canada
Well, it's certainly true. Your own experience is obviously very representative of the non-profit sector. The vast majority of these organizations are very small. Over half of them have no staff at all; another big chunk, about a quarter, have less than five staff. When they do have staff, they tend to be generalists, people with a wide variety of skills, who maybe have been promoted up through the ranks to become executive director, etc. So anything that adds red tape and paper, or things like that, to their lives is time they're not going to be spending delivering the services they really want to deliver.
Also, for many of these organizations, their funding does not actually provide them with any time to do this sort of thing either. So it is very difficult.
When we were looking at the act, and our task force was looking at the act, although its stated aim was to make things simpler and to reduce red tape, we weren't so sure it was going to accomplish that. In fact, it wasn't likely to reduce it, and maybe it would, as Susan was saying, in some of its sections, actually add to the red tape, or make it more complicated. A lot of that stuff doesn't apply to a lot of organizations, but they have to spend time figuring out that it doesn't apply to them. So that's definitely a challenge.
Susan, did you have anything to add?
Partner, Miller Thomson LLP, Imagine Canada
Sure.
I would agree in that there are parts of the act where certain amendments to a bylaw only require director approval, but other amendments require director and member approval. That's the kind of complexity that somebody has to be able to spell out really clearly for organizations in small-town Canada that don't have the resources to spend on lawyers, that don't want to have to spend their resources on lawyers. They want to know that they're doing it right.
NDP
Glenn Thibeault NDP Sudbury, ON
That goes to my next question, and I'll direct it towards the Red Cross.
We're talking about the small shops here, and this legislation wants to help all not-for-profits and charities, from a small three-person shop to international airports, which are not-for-profits.
The Red Cross would be in a little better shape—though I don't want to make an assumption—than some of these smaller shops, because you do have the resources to be able to move forward on a lot of the things outlined here.
Is there any consideration, when you're talking about moving forward on this with the smaller branches of the Red Cross—or even some of the smaller organizations who work with the Red Cross—on how you're going to be able to implement a lot of this information in the act, when we're talking about the fact that all you're going to get is a brochure and to be told that you're on your own to implement this?
General Counsel, Canadian Red Cross Society
Speaking for the Red Cross, we are a national organization that is incorporated under the Canada Corporations Act. And although we have 300-odd branches and zones and regions, that's all internal organization. So we are one corporation, and we respond as one corporation to the act.
That said, we're a large not-for-profit organization. There are vast sections of the act that don't apply to us. It's a matter of sorting through and finding out what applies to us and what doesn't.
I think what's going on here is that Parliament is enacting a law that covers a very broad range of corporations. It's giving us the package and leaving this, potentially, to everybody by saying, “Sort out what applies to you, and do what you have to do under the act. What you don't have to do, don't do.”
I don't see an obvious solution to this at the legislative or parliamentary stage, but I do see—this is what we tried to emphasize in our brief—a tremendous role for education. I think with anything, or with any new policy you put out, education and training are vital components. We often fall down on that. I would like to see the government put some resources into Industry Canada and get them to help people with sorting this out. Industry Canada could help administratively in terms of parcelling this thing out so that people could work with it.
I also see roles for Imagine Canada, organizations like that, to help their constituents. I'm sorry to put that on you, but....
Vice-President, Operations, Imagine Canada
Oh, if only we had the money for that.
General Counsel, Canadian Red Cross Society
I mean, that's the nature of the world today. Information, and helping people to manage that information, is really what it's all about.
I don't see any solution by saying, “Send it back to the drafters to tell them to come up with something that's going to be simpler.” I'm not convinced that's possible; it's a complex world we live in. On my part, I would rather see the resources put into education and support. Maybe they can give you more money, so you can....
There are a lot of ways to approach this kind of issue. Ultimately, it seems to me, it's a matter of education and training and letting people know what they have to do. I think once people find out what they have to do, it's probably not that complicated. It's just that you look at a 200-page bill and say, “What am I supposed to do with this? What applies to me and what doesn't? We don't have any lawyers.”
Yes, it's a problem, and the question is, how do we get over that? But I don't think the secret is in redrafting the legislation because it's a complex topic and it covers such a broad range.
But that's life. That's what we have to deal with--sorry, Cathy.
Liberal
Marc Garneau Liberal Westmount—Ville-Marie, QC
Thank you, Mr. Chair.
I have a question for Imagine Canada and also one for the Red Cross.
For Imagine Canada, my first reaction in reading your brief was, wow, this is very good, because it's going to simplify what is, after all, a very complicated document. I'm not a lawyer. I'm not an auditor. I'm not an accountant. I'm a simple engineer, and--
Liberal
Marc Garneau Liberal Westmount—Ville-Marie, QC
--being a new MP, I have not yet mastered the skill of speaking before I think. My questions are probably very basic and perhaps you've explained them already, but it's number two that I wanted to focus on. Just for our information, what roughly is the percentage of non-soliciting corporations versus soliciting?
Vice-President, Operations, Imagine Canada
It's not even a term that is really used in the non-profit sector, so I couldn't tell you exactly. However, the way the definition is provided in the bill, it looks like very few non-profit corporations would actually qualify as non-soliciting. The vast majority, under these definitions, would be classified as soliciting, but that itself is part of the complexity of the bill.
We figure that many non-profit corporations are going to sit around trying to figure out which they qualify as, because it isn't a term that's commonly used. It's not a term that CRA uses. It's not a term that I've seen in any provincial legislation, etc.
Liberal
Marc Garneau Liberal Westmount—Ville-Marie, QC
There was an attempt, I think, in this new bill, Bill C-4, to define soliciting versus non-soliciting. In my mind, it seemed to be--perhaps I misunderstood--that a soliciting corporation went out and got funds from the public, from government, or from outside, as opposed to there being strictly contributions by members.
Vice-President, Operations, Imagine Canada
Yes, and that's going to be most non-profits and charities.
Liberal
Marc Garneau Liberal Westmount—Ville-Marie, QC
My assumption was that the reason for this sort of two-tiered approach had to do with greater accountability in terms of where you go and get your funds.
If I understand you correctly, you're suggesting that we really don't need to have this two-tiered system, and that we should have one system, but it should also be simpler. On the one hand, that sounds very, very appealing. Will it achieve that level of accountability, in your opinion, and at the same time not put a burden on the organizations that are the simplest organizations and that have virtually no resources? Can one find that “just middle”, in your opinion?
Vice-President, Operations, Imagine Canada
I think there are a lot of other pieces of legislation that cover the accountability piece or guidance. Right now, CRA is in the process of issuing lengthy guidance on fundraising for charities, which will require charities.... Already, charities, through their T3010 filings with the Canada Revenue Agency, are required to disclose vast amounts of information about their organizations. Also, there are other laws at the provincial level that require this kind of disclosure.
So I think our feeling is that it's just not needed in this act. Accountability is important and we value it as well. Imagine Canada runs ethical fundraising and has a financial accountability code that encourages transparency. It's something we're totally in favour of; it's just not something that we feel is important in this act. Indeed, in the way it's defined, because it's defined as getting money from other charities, etc., we feel that most organizations are going to be classified as soliciting anyway. It's actually adding unneeded complexity to the bill.
Liberal
Marc Garneau Liberal Westmount—Ville-Marie, QC
Thank you.
Mr. Reid, you are concerned about the due diligence approach to directors' versus members' rights. If I understood you correctly, you were concerned that this may lead to more engagement of the courts than we would really wish for, if you like, and you believe there should be simpler mechanisms that don't go to that level. I didn't hear any specific ones, though, and again, not being a lawyer, I would ask if there are mechanisms that are simpler and can achieve the aims that you're suggesting.
General Counsel, Canadian Red Cross Society
I suppose the standard one would be some kind of mediation process that would help people sort out the dispute. That's something an organization can build in. That's something we can look at, as an organization ourselves, to try to forestall situations where members are going to take to the courts and enforce their rights under the law.
Maybe that's going to be a responsibility of organizations themselves, to provide for that or to set up their own internal systems.
I have no way of predicting whether this is going to happen or not. On the due diligence side, directors have always had due diligence responsibilities informally, and in law there would be a form of due diligence defence. In other words, they could establish that they did comply with, certainly, common law requirements of due diligence. Now it's in the statute. That's a positive step.
