Evidence of meeting #8 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 provincial.
A recording is available from Parliament.
Conservative
Member, National Business Law Section, Canadian Bar Association
Directors don't generally join organizations to commit misfeasance. They join in good faith, trying to do their best, as we all know. Really, the question at a macro level is about how you get the best directors, the best governance, of the not-for-profit sector, and that is to develop the biggest pool of potential directors and officers. You do that by removing some of their fears and some of their concerns--legitimate concerns--about unlimited personal liability for doing a volunteer role.
This immunity from liability was recommended by the Panel on Accountability and Governance in the Voluntary Sector, under the Honourable Ed Broadbent, in 1999. That was based on extensive consultations across Canada on the feeling about and what people really thought in regard to that delicate balance, which, as you quite rightly say, is an open question. But people who have looked at this question have also felt that, on balance, this would be a positive thing.
Conservative
NDP
Jim Maloway NDP Elmwood—Transcona, MB
Thank you, Mr. Chair.
I'd like to follow up on that question, too, by asking the member if he's done any research as to how much of a drop in liability insurance premiums non-profits would have to pay for by taking this approach. If the risk is cut in half, then the premiums should be cut in half, and $20,000 should become $10,000. Would that be a fair assessment?
Member, National Charities and Not-for-Profit Law Section, Canadian Bar Association
I don't have any--
NDP
Jim Maloway NDP Elmwood—Transcona, MB
Well, there is a reason for Saskatchewan bringing it about in the first place. Presumably it was that costs for court cases and liability insurance rates were going through the roof. It was that kind of an environment, right? Presumably, if doing this calmed down the insurance markets, then it would have.... There's an element of cost that you can attribute to doing this.
Member, National Business Law Section, Canadian Bar Association
There has to be a correlation between the risk and the cost and the premiums. Obviously, there is that correlation. Also, a lot of the insurance companies base it on U.S. experience, which is actually quite different from the Canadian experience in terms of directors' and officers' liability. We actually may be overpaying for insurance costs. Again, I think it's another reason to remove this as a liability.
NDP
Jim Maloway NDP Elmwood—Transcona, MB
I have a question that follows up on Mr. Wallace's and Mr. Lake's questions about accountants. I personally would like to see the broadest definition of accountant in the act and not define it so that only a very select group of accountants who are governed by a certain set of rules can be accountants. I think that was their concern, too, in that they just want to open it up as broadly as possible to the accountant community. As long as you have some sort of recognized designation, you should be able to perform these functions.
To deal with the Bloc's issue about the money-laundering issue, compliance issues are covered under FINTRAC. I know that the real estate industry was brought under the umbrella--last July 1, I believe it was--and I think even the lawyers are now almost under it.
Are you under it now or are you getting under it?
Director, Legislation and Law Reform, Canadian Bar Association
No. We're exempt.
NDP
Director, Legislation and Law Reform, Canadian Bar Association
However, the law societies, our governing bodies, have brought in the special regulations in terms of dealing with only small amounts of cash from clients and with special rules to identify your clients that are more stringent than the reporting requirements, in order to avoid the money laundering through lawyers' offices.
NDP
Jim Maloway NDP Elmwood—Transcona, MB
So how and when did this happen? Because last July, when the real estate industry was brought under, the lawyers were supposed to come under in September or whatever and then something happened to....
Member, National Business Law Section, Canadian Bar Association
It was January 1 in Ontario and B.C.
Director, Legislation and Law Reform, Canadian Bar Association
Yes. Those were the client identification rules.
NDP
Jim Maloway NDP Elmwood—Transcona, MB
Oh, okay.
Now, dealing with the non-profits, though, is there any contemplation that they would be covered under FINTRAC's rules? Because that's what the questions say, I believe, of the members....
Member, National Business Law Section, Canadian Bar Association
That's a question for the FINTRAC legislation, not for this legislation.
NDP
Jim Maloway NDP Elmwood—Transcona, MB
Absolutely; I just wondered whether you were aware of any kinds of rules that were contemplated by them. They're obviously not in exposure there if they're not contemplating rules.
Conservative
The Chair Conservative Michael Chong
Mr. Maloway, I think the witnesses came prepared to talk about Bill C-4. I don't think FINTRAC relates to this particular piece of legislation in front of us.
Did you have another question?
NDP
Jim Maloway NDP Elmwood—Transcona, MB
I would simply like to say, as has been observed by other people, that I think we should do this legislation right the first time.
It's probably time to get legislation in place, but if we're going to strangle these organizations with compliance costs and liability insurance costs, and if it's true that very few of them even know that such legislation is coming in, I think it's time for us to go back one more time, do a proper consultation from the ground up, and then proceed with the legislation.
Could I ask you to comment on that?
Conservative
Vice-President, Government and Regulatory Affairs, Certified General Accountants Association of Canada
Mr. Maloway, I just want to clear something up. Our recommendations would unlikely provide rights to our members that they do not have currently. It's about ensuring that members, those who are providing public accounting services, are qualified and are indeed professional accountants.
One thing that is interesting in terms of the issue around compliance cost and the cost of reporting is that in fact many of our members would provide these services without a fee, pro bono. If you provide public accounting services under the fee, there is no legislative requirement to do so, but because they are indeed members and professional accountants, they will have to comply with the requirements of the professional association.
Conservative