Mr. Speaker, I rise today on Bill C-21, an act respecting not for profit corporations and other corporations without share capital.
The not for profit sector in this country is made up of approximately 18,000 not for profit organizations that collectively have over $100 billion in revenue, which is a significant part of the third pillar of our economy and something that this bill addresses but not without major flaws.
I want to speak to four aspects of this bill, some of which are good and some bad. Those four aspects concern the streamlined incorporation process, improved financial accountability, the rights and responsibilities of directors and officers, and the ability for members to appeal or seek redress for actions that a board has taken.
In terms of the streamlined incorporation process, the government has done a good job in replacing the letters patent system of incorporation by an incorporation as of right system. That will allow many not for profit corporations to more easily incorporate than in the previous process. It eliminates the current requirement for ministerial review of applications and replaces it with the standard filing specified forms and the payment of a fee. If this system were also implemented via an online form, it would also be advantageous.
However, the second element of this bill that I want to speak to is the improved financial accountability, which creates too many different classes of not for profit corporations to regulate themselves in terms of financial reporting requirements. There are five different classes: first, a low revenue soliciting corporation; second, a medium revenue soliciting corporation; third, a high revenue soliciting corporation; fourth, a low revenue non-soliciting corporation; and fifth, a high revenue non-soliciting corporation.
I think there are far too many levels of categories for these not for profit corporations to determine what their reporting requirements are and as one not for profit moves from year to year into one category and the next, it is going to create a lot of confusion as to what category they are in and what level of reporting they require.
For many larger soliciting corporations, the threshold for not reporting a review engagement, in other words, for them not to have to file with Industry Canada a review engagement, is the consent of all their members. In this particular situation, for these not for profit corporations, that have a significant number of members, this may be too onerous a threshold for them to forgo the review engagement that in some cases can cost upwards of $1,000, which may be a lot of money for a corporation that does not have a lot of revenue.
The third area which creates an onerous burden on not for profit corporations is the rights and responsibilities of directors and officers. The government has said that it wants to create a framework under this act to ensure that not for profit corporations can more easily go about their business, especially with regard to the standard of care that must be taken into consideration by the board of directors.
This is something that many not for profit corporations will find difficult to deal with because many of them do not pay their board of directors. Many not for profit corporations approach people of stature in the community to see if they are willing to lend their names, to sit on a board of directors, and to lend their expertise. Most community leaders are more than willing to lend their names and time to a not for profit corporation because they know that the standard of care is not the same that applies to corporations engaged in normal for profit business.
This bill creates a standard of care that is significantly higher than the existing standard of care that private enterprises are obligated to follow. This is going to do two things. It is going to make many people seriously reconsider whether or not they want to take on the liability of sitting on a board of directors for a not for profit. Also, it is going to lead to increased costs for the not for profits because many of the boards will now elect to take out directors liability insurance. That adds another burden on the not for profits, many of which are without a great deal of revenue.
The fourth area I want to speak to, and one which I think is onerous for the not for profits, is the provision in the bill that allows members to enforce their rights and to appeal to a court. The bill allows members to seek relief from a court if they believe their rights have been oppressed.
In this case the bill does allow religious organizations an exemption based on a tenet of faith. In other words, if the organization made a decision based on a tenet of faith, the members could not appeal to the courts to seek redress for whatever action the corporation had taken.
However, this tenet of faith is not clearly defined in the bill. My worry is that this will potentially infringe on religious freedom when appeals are made because the bill is not clear as to what exactly is a tenet of faith. For that reason also, I think this bill should be opposed.
Most important, this bill should be opposed simply because it is a travesty. It has been five years since the government engaged in the voluntary sector initiative, and this is all it has come up with. In 1999 the government announced the initiative as a result of its commitments in the Speech from the Throne.
This voluntary sector initiative at the time was announced as a five year action plan at a cost of $94.6 million. It was to examine the regulatory framework of the voluntary sector, to examine capacity building measures, relationship building measures, and to do this in strong and in-depth consultation with the voluntary sector.
One of the commitments made in this voluntary sector initiative was to clarify the guidelines on allowable expenses. It was to streamline the process and make the process more transparent for the regulation of charities under the Income Tax Act. It was to make more transparent the method by which charities receive their charitable status, and to possibly examine whether or not the rules that are currently in place and which have been in place for centuries dating back to Elizabethan law, should be broadened for charities. In other words, it was to see whether or not the rules for which charities should be recognized should be broadened to include not just those religious organizations and those organizations whose intent is to educate, but also to broaden it to advocacy work and other areas.
However, the bill is absolutely silent on that aspect. The government has fallen far short of what the voluntary sector was expecting. For that reason I oppose sending the bill to committee before second reading.