House of Commons Hansard #51 of the 40th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was organizations.

Topics

Canada Not-for-profit Corporations ActGovernment Orders

11:35 a.m.

NDP

Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON

Madam Speaker, my colleague has explained Bill C-4 but I want to mention that the organizations would have preferred to see changes to secure stable, long-term financing. They would also have liked to see some rules that would clarify and improve the charitable status process. We are concerned about charities.

Would my colleague agree that this bill may discourage people from establishing non-profit organizations? Does he think this bill could be costly for these organizations?

Canada Not-for-profit Corporations ActGovernment Orders

11:35 a.m.

Bloc

Robert Bouchard Bloc Chicoutimi—Le Fjord, QC

Madam Speaker, Bill C-4 creates legislation regulating and governing organizations incorporated across Canada. In my opinion, what may discourage both volunteers and non-profit organizations is not Bill C-4 but this government, which is cutting programs indiscriminately. That is what will discourage the voluntary sector and stifle new corporations at the local and provincial levels.

Canada Not-for-profit Corporations ActGovernment Orders

11:35 a.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Madam Speaker, I would like to ask my colleague a question following his excellent speech here in the House.

One of the things that the Bloc Québécois wanted to see in this bill was a better system for classifying organizations according to their missions and goals. Why did some members of the committees and some departmental officials say no to that? What impact does this lack of classification have? For example, what is the impact of that policy on an economic organization, which is not the same as a volunteer or charity organization?

Canada Not-for-profit Corporations ActGovernment Orders

11:35 a.m.

Bloc

Robert Bouchard Bloc Chicoutimi—Le Fjord, QC

Madam Speaker, we wanted a classification system. There are so many different kinds of organizations. Any organization that meets set criteria, whether it is charitable, political or social, is placed in the same category.

We think that it would have been easier to classify organizations according to type. For example, an organization involved in minor hockey in Canada would be in the sport category. It would be distinct. Sports-related organizations and charitable organizations would have different criteria.

Time will tell, but we think that this kind of classification would have been a good thing for organizations. Maybe there should be criteria enabling organizations to get recognition or to be granted a charter in their field.

Canada Not-for-profit Corporations ActGovernment Orders

11:35 a.m.

NDP

Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON

Madam Speaker, I do have some concerns with regard to this bill. I just want my colleague to explain this a little bit more.

This bill is not going to improve the way that voluntary sector organizations do their business. It may improve their accountability and transparency, which is, of course, important to members and the public. However, it does nothing to address the broad concerns of the sector, such as securing long-term, stable financing, clarifying and improving the terrible status process, and addressing advocacy needs.

Could he explain to me whether he has these same concerns? Maybe he can try to give me one point as to why I should be supporting this bill.

Canada Not-for-profit Corporations ActGovernment Orders

11:40 a.m.

Bloc

Robert Bouchard Bloc Chicoutimi—Le Fjord, QC

Madam Speaker, the main purpose of Bill C-4 is not to propose funding, but to modernize regulations governing rights of incorporation in Canada.

One good reason to make that happen is transparency. When an organization raises funds from members of the public, it is accountable to those providing the funds. Financial reports have to be made available. Any member belonging to a national corporation should have access to the list of members and, as a member, should be able to review the organization's financial information and management policies. The current act does not allow for such things.

Bill C-4 introduces transparency and a modern approach. Organizations should be accountable to those who contribute financially.

Canada Not-for-profit Corporations ActGovernment Orders

11:40 a.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Madam Speaker, I am very glad to be here today to discuss Bill C-4, an act to amend the not-for-profit corporations act. It is of importance for not-for-profits in our communities right across our great land.

I can offer some advice, as the former executive director of the United Way in Sudbury, that there were several initiatives we were involved with that caused us to slow down the process because of the bureaucracy, red tape and heavy paperwork involved. This amended legislation that we amended in committee would actually help us change some of that.

However, before I go into the discussion that took place at the industry committee in these past few weeks, let us first look at how we got to this point.

For five weeks in the spring of 2002, a team from Industry Canada crossed the country listening to the views of stakeholders on proposals for a new not-for-profit corporations act. Over 300 individuals participated in the consultation sessions, while others sent in briefs to the consultation website.

A preliminary round of consultations was held in the previous fiscal year, and feedback from those first consultations and commissioned research studies was incorporated into the two discussion papers circulated prior to this second round of consultations. Written in plain language, “Reform of the Canada Corporations Act: Draft Framework for a New Not-for-Profit Corporations Act” promotes a corporate governance structure grounded on the themes of transparency, accountability, fairness, and efficiency. The second volume, “Discussion Issues for a New Not-for-Profit Corporations Act” highlights some of the proposals in more detail.

What was determined by these consultations?

A number of stakeholders who had participated in the preliminary round of consultations thanked Industry Canada for incorporating many suggestions in the new framework proposal.

Participants were generally supportive of the various reform proposals, as well. Strong support was expressed for the proposals concerning: the due diligence defence, the standard of care and insurance, and limiting liabilities of directors and officers. There was a divergence of views among participants on issues such as: a classification system, the filing of by-laws, and audit requirements.

At the end of the consultations, participants had several overarching concerns. Co-ordination with other federal statutes and provincial legislation was imperative. Many participants were concerned with ensuring that new legislation would fit with other federal statutes and provincial legislation. In each venue, participants concluded that coordination and consistency at the federal and provincial levels was imperative.

There is ongoing confusion about the distinction between not-for-profit corporations and registered charities. Many issues that arose were tax specific and, as such, under the jurisdiction of the Canada Revenue Agency and the Ministry of Finance.

Discussion of many issues returned to the need for a classification system. Although participants were divided on the need for a classification system, discussion of many other issues returned to the question of whether to include a classification system in a new act.

I will now look at some of the structures within the act that caused some concern.

The first structure that was of concern was the classification system. Reaction about the merits of including a classification system in the new not-for-profit legislation was mixed across the country. However, participants returned to this issue time and again, often noting that other issues could not be resolved without deciding on the issue of a classification system.

Those opposed to the inclusion of a classification system felt it would unduly complicate matters. One of the reasons offered was that it would be difficult to classify some organizations because of the varied work that they do and/or the services that the provide. For example, the United Way that I used to be involved with offers leadership development services which provide support, governance training, fundraising training, training to all sorts of small not-for-profits and charities throughout the greater city of Sudbury and, at the same time, offers services to do people's taxes, to help people find shelter. Those are some of the services that we offer, as well as fundraising.

A number of participants were in favour of a classification system that was either based on levels of revenue or number of members or that distinguished between public benefit, mutual benefit, religious and, in some cases, political organizations.

Another area of concern was the filing of by-laws. There was general agreement that moving away from the archaic letters patent system was a positive step. With respect to the filing of by-laws, a number of participants expressed support for the simpler structure proposed; in fact, a minority of participants agreed that there should be no filing requirements at all.

There was a difference of opinion on whether by-laws and amendments should take effect immediately upon passage by members, or only when filing was complete.

Some did not see the benefit of filing at all if by-laws become effective when passed. Others noted that there could be problems if by-laws did not become effective at the moment when members passed them, particularly for organizations that do not meet frequently. One person predicted that with a filing requirement but no scrutiny, Industry Canada would end up with “the worst of both worlds”: organizations that are not in compliance with the law and filed by-laws that are inaccurate. Participants in a number of cities voiced concern about the possibility of an increased security risk without thorough scrutiny.

Recognizing that some organizations have rapid turnover and limited corporate memory, many participants supported the notion of the government acting as a central repository. There were several requests for Industry Canada to put by-laws online if it accepts the repository role.

Most participants agreed that model by-laws would be very helpful, and urged they be kept simple. Some asked for the creation of an easily updateable web interface, including secure access and summary reports.

Another area of concern was the disclosure and accountability. A majority of participants across the country were in favour of the framework proposal that organizations be required to make corporate financial statements available to members, directors, officers, and the director. However, not all agreed that members should be subject to a fee for copies of the financial statement, and many more disagreed with the proviso to allow exemptions to the requirement.

Those opposed to the requirement were concerned that a requirement to make financial statements available could be burdensome and expensive. A number of participants at one meeting objected strongly to the director having access to financial statements at any time. One suggested that the law be written in as narrow a context as possible, only granting the director a right to information for a specific purpose.

It was proposed that a clearer definition of “financial statement” be developed. A number of participants took exception to the notion that financial statements are presented to members “for their approval”. A suggestion was made to change the language on page 45 to read, “directors would be required to present the audited reports”, without mentioning approval or acceptance.

Several participants in Edmonton, Regina, and Toronto were very concerned about the proposal to allow exemptions from the disclosure requirements, arguing that issuing an exemption would place Industry Canada between the auditor of an organization and the organization itself. Exemptions were seen to contravene the principles of transparency and accountability, and should only be granted according to clearly articulated criteria.

Another issue was membership lists. A majority of participants agreed with the framework proposal that would allow members to obtain copies of the membership list of their organization, provided that the framework is narrowly defined and access is restricted. Several asked that the issue of selling lists be addressed. Some participants noted that it would be essential to ensure that the new act mesh with other federal legislation including the Personal Information Protection and Electronic Documents Act and the Anti-Terrorism Act.

In order to circumvent the release of membership lists that include names, addresses, and telephone numbers, it was suggested that an organization charge for undertaking mailings on behalf of members in order to ensure that the privacy of members is not breeched.

The definition of member was confusing to some and worrisome to others.

The definition of “member” was confusing to some and worrisome to others. Some organizations define members as anyone who receives services while others include donors. The statement on page 35 of the “Draft Framework for a New Not-for-Profit Corporations Act”, 'the act would contain a provision defining a member as anyone designated by the board of directors', alarmed some participants and elicited a promise to clarify the wording.

Some participants believed that signing an affidavit in order to obtain a membership list would be pointless. The cost, and the expense of tracking down individuals to sign the affidavit in the first place and pursuing legal action in the event of an infraction, was also seen as problematic.

In addition, the proposed timelines were questioned. The allotted 15 days for changes was seen as too short, and the requirement to maintain records for six years was viewed as “impossible” for many organizations.

Rather than the framework proposal that stipulates a prescribed amount as a threshold above which corporations would be required to have annual audits, most participants across the country favoured a graduated approach, or one based on classification or size.

Many supported the Saskatchewan model in which provincially incorporated not-for-profits with revenues of over $100,000 must be audited, those between $25,000 and $100,000 must have at least an internal review, and those with less than $25,000 have no audit requirements. Concurrent with this was widespread support for the adoption of a graduated standard such as a review engagement, which is less than an audit but satisfies an understanding of the costs involved.

Other suggestions included differentiating between organizations that receive public funding and those that do not, or basing it on classification. For example, if an organization is classified as political it should be required to have an audit regardless of its size, a charitable organization with tax benefits should be subject to a threshold, and mutual benefit organizations could determine their own thresholds.

Suggestions were made to adopt the Canadian Generally Accepted Accounting Principles rather than keeping separate books for protection against not-for-profit corporations using their tax benefits to subsidise for-profit activities, or to have separate statutes for charitable and noncharitable organizations.

Yet another issue was auditors. Representatives of the Canadian Institute of Chartered Accountants did not agree with the framework proposal as it pertains to auditor qualifications and proposed that the new act adopt the Canadian Business Corporations Act definition of “auditor”. The opposite view was conveyed by representatives of the Certified General Accountants, or CGAs), of Ontario. There were several calls to have audits not be restricted to either CGAs or CAs if made mandatory. Some agreed that a smaller organization should be able to agree to an internal review by a non-accountant, provided that individual had no ties to the board.

Two specific suggestions were made about the wording in the “Draft Framework for a New Not-for-Profit Corporations Act”: First, the last paragraph on page 46 be amended to read, “The auditor meets the standards of the auditing profession.” Second, on page 47, “Right to attend meetings,” would imply that the auditor’s expenses to attend all meetings would automatically be paid by the corporation, something that might be a burden for small organizations. It was suggested the wording could be changed to “the auditor is entitled to attend at the request of the board, and expenses will be paid.”

Something I know quite personally about is directors' liability. The vast majority of participants at the 10 consultations favoured the adoption of the framework proposal that specifies that every director or officer of a corporation would owe a duty of care to the corporation. This objective test would create a uniform standard of care for directors and officers, and is clearly understood by Canadian courts.

It was noted that there could be ambiguity in the notion of “acting in best interest.” As many organizations registered as not-for-profit corporations address a public good, one participant wondered about a potential conflict of interest when a director acts in the best interest of the entity as opposed to the community it was designed to serve.

Participants emphasized the need for consistency with other statutes such as the Canadian Human Rights Act, the Employment Standards Act, and the Income Tax Act, commenting that little can be changed in one without amendments to the others.

There was unanimous approval of the framework proposal that would include a due diligence defence for directors and officers of not-for-profit corporations. Participants saw this as a codification of common law and the right thing to do.d

A majority of participants favoured adoption of the framework proposal that would broaden the scope of situations to allow organizations to identify directors and officers, to provide mandatory review of directors and officers in specific circumstances and to allow corporations to purchase insurance. Many participants were concerned about insurance issues, and many supported advancement of defence costs. Many participants across the country were very concerned that the cost of insurance would be prohibitive for small organizations and impossible to obtain.

A majority of participants also agreed with the framework proposal that would place no statutory limit on liabilities for directors and officers and would encourage proper care and diligence in management of organizations. Participants who supported the framework proposal liked the idea of clarifying but not limiting liability. Some remedies were suggested for these concerns.

Mainly, the draft framework proposal does not make a recommendation with respect to the derivative remedy. The concept of including a derivative remedy received mixed reviews across the country. Those opposed to providing for derivative action said that its inclusion would be used to burden organizations with frivolous actions, or allow a third party to hijack the agenda of an organization.

Those who favoured the inclusion of this remedy felt its inclusion was necessary in order to ensure accountability and credibility. A number of other saw this mechanism of accountability as important and urged that it be included as a hallmark of modern statutes. Others suggested keeping derivative as a remedy, but limiting access so that small, special interest groups could not abuse it in clarifying the rules under which it could be used.

Participants were mixed in their reaction to the framework proposal, which does not provide for an oppression remedy. Those who agreed with its exclusion included a participant who argued that any one disgruntled member could use it to halt the workings of an organization. It was pointed out that the common law remedies were made for truly distressful situations.

Among those who argued in favour of including this remedy was one participant who contended that there were many disputes within not-for-profit organizations and therefore a real need for remedies. In Quebec a participant found this option redundant because such protection was already available under civil law.

A strong consensus emerged across the country for the proposition that the dissent right and appraisal remedy should not be included in the new act, but the corporation should be free to include similar provisions in its articles or bylaws.

The framework proposal includes no provisions respecting natural justice and fair procedures. The majority of participants from across the country agreed with the framework proposal. Many participants liked the fact that corporations would be free to include these provisions in their articles and bylaws, rather than enshrining them in the act.

Most participants in St. John's, Halifax, Winnipeg, Edmonton and Vancouver agreed with the framework proposal not to include a modified proportionate liability regime, while several participants in Montreal, Ottawa, Toronto and Regina did not agree with it. A number of the comments made during the consultations were actually points of clarification that reflected the highly technical nature of this subject area.

One participant saw no valid reason for including MPL in the statutes as not-for-profits were not the types of corporate organizations that needed it. Another disagreed and urged that MPL be included, stressing the importance of consistency in legal approaches. Secured creditors rely on audited statements and auditors would be liable to secured creditors, as would directors and officers. A suggestion was made to make the NFP statute consistent with the CBCA.

The CICA argued that the MPL should be included in the act for the sake of fairness. Accountants should be responsible for their own acts, but not the acts or omissions of others. A person who makes a relatively smaller, non-existent contribution to a wrongful act should not, in all fairness, have unlimited liability.

The framework proposal, which has no provision allowing for the creation of corporations sole, met with strong approval across the country. However, the provision to allow standard, not-for-profit corporations to be set up with only one director and one member was not enthusiastically embraced. Many participants in most cities preferred to see a minimum of three directors.

Bill C-4 is long overdue legislation for a very crucial, important part of Canadian society. I urge all members to support this amended and improved bill so the Canadian Parliament can improve the systematic framework for not-for-profits.

Canada Not-for-profit Corporations ActGovernment Orders

Noon

Bloc

Paul Crête Bloc Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC

Mr. Speaker, I congratulate my colleague on his speech. He informed us of the extensive consultations that were conducted. There was a great deal of collaboration amongst the various parties in order to adopt this bill.

It is appropriate at this time to acknowledge the extent to which non-profits in our society contribute to the quality of the social and economic life of Quebec and Canada.

However, I would like to make one comment. My colleagues who sat on the committee made suggestions that were not retained concerning a situation that may require the review of part of the law in a few years. I am referring to the classification system for non-profit organizations. I will give two examples. There are charitable organizations, that is organizations that provide services or benefits to individuals who are not members. For example, people collect money for a cause of some kind. There are also mutualist organizations, which provide benefits to their members.

The fact that there is no classification in the law to distinguish between these categories represents a problem that could grow in the future. In any event, that is the opinion of the Canadian Bar Association. Organizations with quite different purposes will all be in the same category. That is unsatisfactory.

What does my colleague think about that and why did the committee not retain this suggestion?

Canada Not-for-profit Corporations ActGovernment Orders

Noon

NDP

Glenn Thibeault NDP Sudbury, ON

Mr. Speaker, I, too, agree that there still needs to be more improvement in the bill, but most of the not-for-profits and organizations we met with talked about it being a step in the right direction.

At the start, we, too, had many concerns about the bill. Until it was amended, we were very concerned about some of the rules and regulations. I hope the organizations that the hon. member mentioned will continue to press the government to include this in the bill.

Canada Not-for-profit Corporations ActGovernment Orders

Noon

Liberal

Rob Oliphant Liberal Don Valley West, ON

Mr. Speaker, I want to ask the member a question around auditing and review engagements and the thresholds that are in the bill. I am speaking as someone who has spent 24 years working in not-for-profits, with a variety of levels of income and scope of business, from $50,000 to $80,000 a year up to over $1 million a year.

While there are differences, we have to protect our smaller not-for-profits from the exorbitant costs that auditors sometimes charge. I have a concern about review engagements actually protecting the integrity of smaller organizations. While we need to ensure those organizations continue in their not-for-profit business and do not have costs thrust upon them, I have a concern about the integrity of those organizations and their ability to keep public confidence.

Is the member convinced that those thresholds are the correct thresholds for audits and review engagements and the differences that are involved?

Canada Not-for-profit Corporations ActGovernment Orders

12:05 p.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Mr. Speaker, as a former executive director of an agency that gave out funds, I know of many instances where we provided $10,000 to organizations and it would then cost them $5,000 to get an audit. There was no point in giving them the $10,000 because they would have to spend it all on an auditor. The bill addresses that, but there still needs to be some accountability.

One way we were able to help organizations, specifically in Sudbury, was to create what we called leadership development services through the United Way. Volunteer accountants were more than willing to provide services to those organizations. The bill looks at creating some type of threshold to ensure that those audits continue to happen.

As for not-for-profits and charities across our great land, they always find ways to make things work so they can be, as the member mentioned, accountable and transparent to the public.

Canada Not-for-profit Corporations ActGovernment Orders

12:05 p.m.

NDP

Bill Siksay NDP Burnaby—Douglas, BC

Mr. Speaker, I thank my colleague for his review of the discussions that took place at committee. It was very helpful to know the work that went into this stage of the bill.

I want to ask him about some of the things that were not there, the concerns of the voluntary sector. One thing we often heard from voluntary sector people was that they had no opposition to being accountable and transparent in how they were operating their agencies. However, they were concerned about having the skills to do that kind of financial accountability, to get the support for the required financial management. Did the committee have any discussion on that?

Concerns were also raised about some of the complications around advocacy work. Many of the agencies saw this as important, but limitations were placed on their ability to do that. There were complications with the so-called 10% rule of activity that could go into political or advocacy kinds of work.

Concerns were also raised about the complications of establishing charitable status in the first place, how the process took so much time and the complication of that. Were there any discussions about simplifying that process?

Then there has always been the suggestion that volunteers should receive some kind of tax relief for the work they put into non-profit agencies. Did that issue came up in the committee discussions?

Canada Not-for-profit Corporations ActGovernment Orders

12:05 p.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Mr. Speaker, I wish the member had been at committee because there were some very good suggestions. There was some discussion relating the smaller not-for-profits, those that have a staff of one or two and base their who organization off the work of their volunteers. Therefore, it would be great if we could get those volunteers some tax relief.

However, we have to be very concerned when we create an act that will be 170 pages long and the ability of one person to review it. Through the committee process, we heard that loud and clear. Hopefully we will continue to bring this forward to the government so when it looks at instituting all of this, it will take that into consideration.

Canada Not-for-profit Corporations ActGovernment Orders

12:05 p.m.

NDP

Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON

Mr. Speaker, I have listened to my colleague. There are some good points about the bill, but then we still have some concerns about it.

The whole idea of trying to encourage non-profit organizations to come on board, to be profitable at times and to assist the needy in our communities is quite important.

Could he clarify how the government could advocate for better changes in either clarifying or improving the charitable status process? That is very important for us to know.

Canada Not-for-profit Corporations ActGovernment Orders

12:05 p.m.

NDP

Glenn Thibeault NDP Sudbury, ON

Mr. Speaker, in committee we talked about how we could look at the not-for-profit act and how we could change that. I cannot give the member an answer for the government because it relates to some of its decisions.

What I can say is the government was looking at ways of making things easier for the small organizations to ensure that if they wanted to go through the process of becoming a registered charity, those avenues would be there. Some of the organizations raised that couple of times.

Canada Not-for-profit Corporations ActGovernment Orders

May 5th, 2009 / 12:10 p.m.

Liberal

Siobhan Coady Liberal St. John's South—Mount Pearl, NL

Mr. Speaker, I am pleased to rise today to speak to Bill C-4, an act respecting not-for-profit corporations and certain other corporations.

The legislation has seen several incarnations since first being introduced by the Liberal government in 2004 and makes important modernizations to the regulations governing Canada's valuable not-for-profit sector. While provisions within this bill are modelled on those of the Canada Business Corporations Act, the creation of dedicated legislation governing Canada's voluntary sector will better respond to and address the needs of this country's charities, community organizations and other not-for-profit entities.

Canadians value volunteerism and charitable organizations. On average, each Canadian is a member of four non-profit or voluntary organizations and some 22 million people donated approximately $9 billion to such enterprises in 2004.

Among other things, Bill C-4 eases much of the regulatory burden on non-profit organizations in this country by allowing these organizations a heightened degree of flexibility in how they choose to operate. A major potential benefit under this new legislation enables non-profit corporations to hold meetings electronically as opposed to sometimes costly and less responsive face-to-face meetings currently required.

The new ability to file documents under Corporations Canada electronically may also serve to reduce strain by reducing paperwork and other regulatory burdens currently faced by non-profit entities. Given that the non-profit sector employs some two million people across the country working in some 160,000 not-for-profits, this flexibility to adapt bylaws based on the needs of the specific organization stands to benefit a significant portion of the population.

I am pleased to have had the opportunity to work with other members of the industry, science and technology committee to review this legislation and respond to some of the concerns put forth by stakeholders. Recognizing the importance of getting this long overdue legislative framework right for the nearly 19,000 federally incorporated not-for-profit organizations, it was necessary to ensure that those concerns were heard and addressed through our study of Bill C-4. In fact, a number of issues highlighted by witnesses appearing before the committee have been acted upon through amendments presented during a clause-by-clause review of the bill and have not been adopted and incorporated into this legislation.

Chief among the concerns raised by stakeholders, particularly by the Canadian Bar Association, was the need for clarity concerning important definitions within the legislation. The diversity of the non-profit sector in Canada is a great source of strength but it also poses challenges in balancing the needs of large organizations that solicit public funds with small sporting organizations or mutual aid societies for example, when it comes to setting a new legislative framework.

While there are few differences between how non-soliciting and soliciting corporations are treated under the act, there are rules governing the number of directors required, the filing of financial statements with government and agreements transferring powers within the organization. This is why I and other Liberal members of the committee made it a priority to ensure the distinction between soliciting and non-soliciting corporations was clearly and precisely laid out within the bill.

I am pleased the committee saw fit to adopt an amendment prescribing the test period for determining whether a not-for-profit corporation was soliciting to the corporation's most recent financial period. It was also vital to ensure newly minted soliciting corporations would have adequate time to make preparations for compliance with the more onerous regulations inherent in this classification.

As such, we brought forward a clarification ensuring the change in status would only take effect at the conclusion of the next ensuing annual meeting of the corporation. These changes would go a long way to ensuring non-profit corporations will be prepared for compliance should such a change in status occur.

A further issue of balance with this bill concerns the complexities of what I will call contingency sections of the act. The size and complexity of this bill are largely due to provisions contained in clauses 6 and 7 dealing with debt, trust indentures and receivership, which are situations that likely will never be faced by most of the non-profit organizations incorporated federally.

The inclusion of this complex regulatory road map fills in some of the gaps that currently exist but also enforces compliance on all non-profit corporations in the sector, whether they will ever need these provisions or not. This is a concern for me, as it seems to streamline a process for very few corporations at the expense of many smaller charities, community groups and foundations that will never require these clauses of the bill. The committee agreed that it would be better to offer clear direction to organizations that wished to proceed in this manner than to leave a further regulatory void.

Several organizations, including Imagine Canada, articulated concerns surrounding some rights of members being enshrined within the act itself as opposed to within individual bylaws or articles of non-profit corporations. Some stakeholders felt that the important issue of voting rights of members must be subject to periodic review and change as the mandate and nature of the organization changes, and should not be specified within the act itself.

Bill C-4 does require that each non-profit corporation determine what voting rights will exist for members but does not prescribe the mechanisms for doing so, and authorizes the creation of a class of non-voting members. Should a situation arise where fundamental changes to the corporation are possible, non-voting members would be given the right to vote under this legislation.

According to Industry Canada officials, non-voting members will have the right to vote when, for example, their membership is to be exchanged to another class or their class rights are to be changed; the corporation intends to amalgamate with another corporation; the corporation intends to continue into another jurisdiction; the corporation intends to sell off all or substantially all of its assets; and, if the corporation intends to dissolve. It would seem that these situations would likely be rare. and this is again the case of building in a contingency to ensure appropriate procedures are set out for organizations to follow.

Some concerns surrounding the liability of officers and directors were raised during hearings on the legislation. Boards of directors and officers from many of Canada's charities, foundations and other non-profit entities are often composed of volunteers who dedicate their time to ensuring important causes are furthered to improve the lives of Canadians. At times, some organizations can find the recruitment of these volunteers to be a challenge, as it often means taking on a degree of personal liability and responsibility for the actions of the organization.

Bill C-4 introduces provisions for the due diligence defence for directors and officers, which satisfies many of the concerns raised by organizations intervening on behalf of the non-profit sector.

I am pleased to support Bill C-4, which comes after many years of work and review undertaken by industry officials, advocates in Canada's voluntary sector and the many organizations that made presentations on this legislation.

Not-for-profit organizations provide many of the services cherished by Canadians. Universities, colleges and hospitals across this country provide vital services to their communities and are general regional employers.

In 2003, the non-profit sector accounted for some $112 billion in revenue. Thousands of organizations are supported by over 12 million volunteers, fully 45% of the Canadian population aged 15 and older, who contributed an average of 168 hours each. This totalled 2 billion hours, the equivalent of more than 1 million full time jobs in 2004 alone. Truly, there is no end to the value this sector offers to Canadians.

As a new member of Parliament, it is a pleasure for me to have taken part in the study of this bill. It was impressive to see the balanced approach taken by my colleagues on the industry, science and technology committee in reviewing the legislation. I thank all of my colleagues for their hard work on this matter, for those who intervened and for those who made presentations during the committee hearings. I look forward to seeing this long overdue legislation become law.

Canada Not-for-profit Corporations ActGovernment Orders

12:15 p.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, I am pleased to speak today to Bill C-4, An Act respecting not-for-profit corporations and certain other corporations.

I would like to start by saying that the Bloc Québécois is in favour of this bill. As several of my colleagues have already mentioned, the current act governing not-for-profit corporations is considered somewhat outdated. For the past few years, a number of representatives of community and economic organizations governed by that act have been calling on the government to update the Canada Corporations Act.

I would like to tell this House that before I became a member of Parliament, I worked regularly with several not-for-profit corporations that came under part III of the Companies Act of Quebec's Department of Financial Institutions and Cooperatives. I realized at the time that the people working in these not-for-profit organizations faced a number of challenges. They had to deal with issues such as funding for these organizations, which is a never-ending problem. Often, these people work in various areas of activity, whether it is with disadvantaged people, youth or women or in volunteer centres that provide street worker or mental health services. I am talking about areas with well-targeted clienteles. These people spent hours and hours working in often difficult financial circumstances.

These people were also managed by the administrators of these not-for-profit organizations, community volunteers who worked evenings and weekends and handled the organization's finances, managed staff and looked after community relations. This work is very demanding. I admire all the people who give of their time to help others. In my community, in Berthier—Maskinongé, all these organizations are made up of people with big hearts. That was the theme of this year's National Volunteer Week, and it is worth pointing that out today.

In summary, many people who work in these areas were aware that some provisions of the act were outdated and simply no longer addressed the increasingly complex and diverse demands of today's not-for-profit sector. The law in Quebec has been adjusted. The federal government is now following suit and, with this bill, is trying to make things easier for these not-for-profit organizations by providing a better framework for their actions.

Let us give a brief overview of the background to this bill. Following on a paper published by Industry Canada—my colleague from the Bloc Québécois sits on the Standing Committee on Industry, Science and Technology—titled “Reform of the Canada Corporations Act: the Federal Non-profit Framework Law”, the federal government held a series of round table discussions with a view to preparing the various possibilities for reforming the not-for-profit law.

After those round table discussions, the government felt it was time to make some concrete proposals for a reform of the legislation on not-for-profit organizations.

Since 2002, in fact, there have been a few attempts by the Conservative and Liberal governments to introduce bills, but these have all died on the order paper.

Finally, last January, a bill was at last introduced, the one we are debating today in this House.

In short, the underlying principle behind Bill C-4 is to propose a new Canadian legislation on not-for-profit organizations which would make their administration more effective and more transparent. Transparency and effectiveness are vital to these organizations, particularly the ones I am familiar with, because they are faced with increasing challenges. Day in and day out, they have to deal with the poverty and the ageing of their respective populations.

The underlying principle behind this new legislation would be to take into consideration the financial means, size and objectives of the organization as far as these management mechanisms are concerned.

With this new act these organizations will, I believe, and I am certain my colleagues share my opinion, be able to operate within a more flexible framework with respect to such things as presenting financial statements or setting up by-laws.

For example, the new legislation encompasses: voting procedures, by-laws regulating general meetings, special meetings, regular meetings, and notices of meetings, and quorum. The new provisions will be better suited to not-for-profit corporations in today's reality.

Another part of the bill talks about financial statements. It states that the corporation must make available to its members the financial statements and any report submitted by its public accountant. As we know, not all not-for-profit corporations are required to perform audits. It depends on the financial statements and on the money administered by these corporations. Some not-for-profit corporations manage very small amounts of money and, therefore, are not always required to do an audit. However, when a large amount of money is involved, it is normal for these corporations to have financial statements that meet the criteria of an audit.

That part of the bill provides that corporations must table a copy of their financial statements and of the report submitted by their public accountant to the director, who will then make these documents available to the public.

So, this bill sets more specific operating rules. To this end, the operational framework for NPOs would be similar to corporate governance under the Canada Business Corporations Act.

The new legislation would gradually repeal the Canada Corporations Act and would replace parts II, III and IV of that act.

In addition to significantly clarifying the role of these corporations in our society, both for their members and directors, the bill will also establish defences for officers and directors, in the event of liability.

We must protect the directors who serve on the board of these not-for-profit corporations and who, as we know, do so on a voluntary basis and often with little information on the responsibilities and duties that come with their role within these organizations. We must protect them from the sometime dubious practices that can be used by a member and which have the effect of laying responsibility on all members of these corporations.

I personally believe that the bill achieves that goal. In this regard, it would be important if, at some point, Parliament could look at another issue related to this legislation, namely how to better train the directors who sit on the boards of these not-for-profit corporations.

It is all very well to enact a law that defines the roles and responsibilities of members of organizations, but people are not always informed and do not always have the time to read a law that is 150 or 200 pages long before joining the board of a not-for-profit organization. Often, if we simply look at the mission and objectives of the organization and see a little of the everyday work that is involved in sitting on an organization’s board, they do not always have the time to learn about all the procedures that their role, responsibilities and duties involve, and the relevant laws.

It is the role of government to give the volunteer members who often sit on the boards of these not-for-profit organizations more information. Very little information is provided. I just wanted to point that out.

This bill will also give members of those organizations additional rights, and will thus allow them to participate fully in the governance of their organizations. As well, it will establish a better body to oversee the organization’s accounting, and this is very important. Another benefit of this bill, one that I think is very important, is that it increases public confidence in not-for-profit organizations and their credibility among the general public.

It is important that the people who sit on the boards of these organizations, often as volunteers, and the organizations themselves, which often have few resources for taking action in the community, be perceived by the public as a whole in a positive way.

For example, in my riding, there are often organizations that deal with young people in difficulty or with disadvantaged or illiterate people, and there are many prejudices often expressed against those organizations.

Having a law that can provide more protection for the directors and managers of those organizations is an accomplishment in itself, and it will certainly facilitate the organizations’ work.

Bill C-4 is indeed complex, because it imposes an entirely new framework on not-for-profit organizations, those under federal jurisdiction of course. Organizations under federal jurisdiction and organizations under the jurisdiction of Quebec and the provinces must never be confused. However, this legislation had become necessary here, in Parliament, because the existing law did not reflect our modern circumstances.

The issues this bill addresses are important and it involves major and necessary changes in the way not-for-profit organizations operate.

Bill C-4 involves transparency and accountability, that is, financial responsibilities. At present, the law does not require that detailed accounts of their activities be disclosed. Under Bill C-4, not-for-profit organizations will now be obliged to make their financial records available to their members, directors and officers, as well as the director. That is a step forward.

In more concrete terms, this bill will certainly simplify the incorporation of not-for-profit organizations. Incorporating a not-for-profit organization should be a relatively simple matter. The process should not be surrounded by hard and fast administrative procedures that would make it so that people who came together to create a not-for-profit organization would be reluctant to take action to provide greater support for the community in whatever area or field of activity it might be.

What is interesting in this bill is that the minister will no longer have the right to agree or refuse to allow a group to incorporate a not-for-profit organization.

As I already mentioned, this bill will clarify the duties and responsibilities of the directors. It is important for people who sit on boards to know what their responsibilities, duties and roles are in not-for-profit organizations. This kind of information needs to circulate more freely. My experience has been that people who sit on the boards of these organizations sometimes learn on the job. People show up at the general meeting some evening and end up on the board. They do not always know, though, what their responsibilities are.

More specifically, this bill will set forth defences for managers and directors in case they are held responsible. It is important to protect volunteers who sit on boards against suits from the public, other institutions or other businesses as a result of a purchase or any other situation. I think that the volunteer directors of these not-for-profit organizations should be protected.

The bill will also increase the rights of the organizations’ members and help them participate in the governance of the organizations. These people need to be in charge of what they are doing and have a certain amount of autonomy in the exercise of their duties on boards and in voluntary organizations. The bill provides a certain latitude in this regard.

Finally, the bill provides a better mechanism for overseeing the accounting of these organizations. It is hard to be against that. I think that any organization that receives money and grants should be ready to account to its donors.

In summary, I have taken a good look at Bill C-4 and I think it is a step forward. However, as my colleague in the Bloc Québécois indicated previously, we would have liked to see at least some procedures for classifying the different kinds of organizations. There are no classifications in this bill. Whether it is a charitable organization, an economic organization or a cultural organization, there is nothing in the bill to enable the public or the government to know what kind of organization it is.

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12:35 p.m.

Liberal

Keith Martin Liberal Esquimalt—Juan de Fuca, BC

Mr. Speaker, I would like to ask the member a couple of questions about how we can actually improve on this bill. I think the government needs to hold a public stakeholder meeting to deal with the non-profits. They labour and struggle. They serve the most underprivileged and some of the most desperate people in our country because of the failure of our social programs in many cases. They pick up the pieces. Many of them are run by volunteers who give hundreds, if not thousands, of hours every single year in service to their neighbour. I think the government may want to do a better job of honouring those Canadians from coast to coast who are donating their time, efforts, skills and talents to serve some of the most needy people in our country.

However, apropos to this particular bill, I would like to ask my hon. friend whether he thinks the government ought to again have a public round-table meeting, that it make the tax deductible donations to non-profits equivalent to the tax donations to political parties and that it facilitate the way in which groups can actually get tax charitable status.

For example, the Hospital for Sick Children, with its HealthyKids international program, which is an amazing program, is having real trouble in trying to get tax-free status. It is an absurd situation. I really encourage the Minister of National Revenue to get on that, and that is a message more for the Minister of National Revenue than my colleague.

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12:40 p.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, I want to thank my colleague for his excellent question. The financing of not-for-profit organizations is a major concern, particularly those that help people in distress, as my colleague mentioned.

Should there be a tax credit? Should it be easier to obtain charity status so that these organizations can get a tax credit? Indeed, in 1984 and 1985 the Conservatives tightened the eligibility criteria that allow not-for-profits to get charity status. This status is often denied to organizations that are not strictly charitable in nature. This is a way to get charity status or a tax credit, which is important.

Since being elected not so long ago, the Conservative government has cut many programs that provided funds for not-for-profit organizations, such as programs for the voluntary sector, women's programs and literacy programs. When people are declared ineligible for EI benefits, the population becomes poorer, which increases the need for not-for-profit organizations. The government should therefore make it easier to help these people.

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12:40 p.m.

Bloc

Robert Bouchard Bloc Chicoutimi—Le Fjord, QC

Mr. Speaker, I first want to congratulate the member for Berthier—Maskinongé for his speech. He gave us a good summary of Bill C-4. It is obvious that he is very well acquainted with the voluntary sector and the structure of not-for-profit organizations. This is very interesting and commendable. I also think that volunteers who work at the local and national levels deserve our admiration.

He talked about a lot of things but I want to ask him a question about financial statements. These have to be made available to members, to the director appointed under the act and to organizations collecting funds.

I would like the member to tell us why, in his opinion, financial statements are useful and should be made available to the public and to members.

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12:40 p.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, I thank my colleague for his question. I know that in his own region, he worked in recreational activities, and so he also met many volunteers. He is also aware of the importance of transparency in volunteer organizations.

As I said earlier in my remarks, when we give money to these organizations, it is normal, since this is public and private money, that they are accountable for the money they receive and spend to carry out their missions.

I think this bill strengthens somewhat the moral and legal requirement that these organizations should make their financial statements available to their members. That is one of the reasons we support this bill.

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12:45 p.m.

Bloc

Jean Dorion Bloc Longueuil—Pierre-Boucher, QC

Mr. Speaker, first I would like also to congratulate my colleague for Berthier—Maskinongé on his remarks. He showed his command of the content of this bill, but there is a point on which he could elaborate further, and that is the issue of democracy. I would ask him to comment more on this.

We live in communities where anonymity is prevalent. People want to protect their private life. They do not give their names and addresses to many people, but they do disclose them to the associations they belong to.

Does my colleague think that the provisions of this bill, which require the organization to give its membership list to all members who ask for it, are a step forward democratically, compared to the situation that prevailed in the past?

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12:45 p.m.

Bloc

Guy André Bloc Berthier—Maskinongé, QC

Mr. Speaker, it is indeed important that the ability of not-for-profit organizations to send their membership list to all members be written into this bill. It is important first so that the association knows who its members are; but it is equally important that other members of the association also know who the members are.

Ethics, governance and democracy are now back in vogue. This is as it should be because, more and more, people want transparency and ethics to be part of democracy. These are concepts that must be 100% enforceable, and this bill makes that possible.

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12:45 p.m.

Bloc

Roger Pomerleau Bloc Drummond, QC

Mr. Speaker, my thanks also go to the hon. member fromBerthier—Maskinongé for his overview of the bill that is before us today. As he described, not-for-profit organizations have always faced a number of problems, such as raising funds, finding directors, having countless forms to fill out.

Now it has been decided to update the act. The Bloc Québécois is going to vote for the bill in order to make the act more transparent and to improve governance and make the sector easier to manage.

The hon. member points out that, given the increasing poverty and the increasing age of the population, this is urgent. We know that it is good in theory, but, given that he has worked with organizations on many occasions, what exactly does he think of it in practice?

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12:45 p.m.

Conservative

The Deputy Speaker Conservative Andrew Scheer

The hon. member for Berthier—Maskinongé has only 30 seconds left.