Mr. Speaker, I am pleased to add my voice in support of a new not for profit corporations act. Over the last few years corporate governance has become an issue that has attracted the attention of government, the press, business groups and indeed concerned Canadians. Most of the attention has been devoted to business corporations, but the basic principles of good governance and corporate governance apply and should apply to all corporations including not for profit corporations and other corporations without share capital.
The most important corporate governance features for corporations under this act are the new rules for financial review and disclosure. Financial disclosure, particularly for corporations who solicit money from the public or who receive grants from any level of government, is fundamental to ensuring public trust.
The financial disclosure requirements under this act strike the appropriate balance between ensuring that the public's trust in the not for profit sector is maintained and providing the necessary flexibility for corporations to adapt depending on their size and type.
For instance, it is essential to recognize that smaller corporations may not have the financial capability to undertake full audits. Likewise, corporations whose revenue is derived only from members do not have the same public profile than those corporations that solicit funds or receive government grants.
Under the old Canada Corporations Act, all corporations were required to place before their members an auditor's report, but there was no specific requirement that members had access to the financial statements of the corporation. There was certainly no requirement that these financial statements be made available to the public. Under this act, that would be changed. The new not for profit corporations act significantly improves the level of required disclosure and for the most part ensures that the broader public interest is served.
The act would provide extensive standards regarding the availability of financial statements to the membership and for soliciting corporations to other interested parties. These standards are in keeping with what are generally seen as best practices in modern corporate statutes. As well, the new act recognizes the distinction between corporations that exist only to meet the needs of their members and who are financed solely by those members and those whose activities are financed by the public or the government.
At each annual meeting the directors of all corporations must provide members with comparative financial statements for the year in question. The preceding year is reported to a public accountant if there is one and any relevant information as deemed appropriate. The corporation must also keep financial records at the corporate office where they are to be freely available to the members. Finally, all soliciting corporations will be required to file their financial statements with the director appointed under the act. This will ensure public access and scrutiny of this information.
Both non-soliciting and soliciting corporations will have graduated levels of financial review based on gross annual revenues. These annual revenue threshold levels, which at this time are only proposals, will be set by regulation once this bill is passed. There are two categories of non-soliciting corporations. The first category will be those with gross annual revenues of less than $1 million. These corporations must undertake a review engagement of their financial statements by a qualified person. However, if they wish, members could unanimously resolve not to undertake any form of outside review.
An example of this type of corporation would be a mutual benefit or a sporting club such as a curling club, for example, where no public interest is served by having the organization publicly disclose its financial information. In such cases, it should be up to the members themselves to determine the level of financial review that best serves their needs.
The second category is non-soliciting corporations with gross annual revenues of equal to or greater than $1 million. These large corporations must have their financial statements audited by a qualified person. Soliciting corporations would have three graduated levels of financial review based on gross annual revenues. The smallest soliciting corporations, those with gross annual revenues of less than $50,000 would be required to have a review engagement of their financial statements.
The members of these corporations could resolve, with the unanimous consent of all members, not to undertake any form of outside review. This is appropriate. Audits, even review engagements, are expensive undertakings.
There is little to be gained by requiring very small locally-based not for profit organizations to spend a considerable percentage of their revenues on a review of their books. This could severely diminish their capacity to fulfill their mission. To those who would suggest that there would therefore be no oversight at all of these corporations, the Canada Revenue Agency could always intervene should there be a suspicion of any financial wrongdoing. The second category of soliciting corporations would be those with gross annual revenues of more than $50,000 but less than $250,000. Such corporations would be required to have an audit of their financial statements. However, members of these corporations could resolve by a special resolution to undergo a review engagement instead.
Finally, soliciting corporations with gross annual revenues of more than $250,000 would be required to have an audit of their financial statements. These measures are responsible and fair. Corporations are given the flexibility they need and at the same time these measures ensure a degree of public transparency that does not exist at this time for not for profit corporations.
We all have an interest in ensuring that not for profit corporations and other corporations without share capital, who perform outstanding services in Canada and around the world, are not overburdened with regulations. We also have a responsibility to protect the public interest.
It is my contention that the bill meets both of these requirements. I urge all members to support the expeditious passage of Bill C-21. I think it is a good bill and deserves our support.