Mr. Speaker, as my party's industry, science and technology critic, it is my honour to say a few words about Bill C-4, An Act respecting not-for-profit corporations and certain other corporations. This bill, you will remember, originated with the Liberal Party almost a decade ago in order to review the regulations and the governance rules of not-for-profit organizations.
As we know, this bill specifically concerns not-for-profit organizations; it would replace part II of the Canada Corporations Act and it would apply to some entities currently covered by part III of that act.
The bill would also provide for continuance of companies that were created by special acts of Parliament and subject to part IV of the Canada Corporations Act and, finally, it would repeal the Canada Corporations Act.
Bill C-4 was developed as a result of the previous Liberal government's commitment to the voluntary sector task force initiated in 1999 to modernize the governance of the non-profit sector. It proposes substantial changes to regulations going back to 1917.
Many of the corporate governance provisions, as well as many other provisions found in the bill, are modelled on the corporate governance provisions contained in the Canada Business Corporations Act, the statute that regulates federally incorporated for profit corporations; that is business corporations.
Generally speaking, this legislation is seeking to provide a framework for the modern corporate governance of some 20,000 federally incorporated not-for-profit organizations that include community, ecological, cultural and religious organizations as well as national charities and many others.
Since July 2000, and then again in March 2002, Industry Canada has shared its consultation reports while organizing new consultations across the country in order to discuss different reform alternatives.
Following the second round of consultations Industry Canada released a paper entitled “Reform of the Canada Corporations Act: The Federal Not-for-Profit Framework Law”. Two years later the Liberal Party introduced the first version of the non-profit corporations act as Bill C-21. The bill passed second reading, underwent three committee meetings, but did not reach a final vote before the election call in late 2005.
Under the Conservative government, the bill was reintroduced as Bill C-62 but only passed first reading before being lost in the September 2008 election call.
Bills C-62 and C-4 certainly do contain amendments to Bill C-21, as well as the definition of a “soliciting corporation”.
We are all aware that soliciting corporations receive part or all of their funding from public sources, whether by fundraising or other means.
I should point out that Bill C-4 is flexible enough to address the needs of not-for-profit organizations of all sizes effectively by introducing clearer rules and both accountability and transparency for the entire not-for-profit sector.
Overall, the bill introduces significant changes with respect to financial accountability, the rights and responsibilities of directors and officers, and the rights of members.
If passed, Bill C-4 will implement new rules on financial reporting based on the organization's annual revenue and sources of funding, new rules on standard of care for directors and new rules for direction liability, new rules that permit written resolutions in place of meetings and allow corporations to avail themselves of technological advances, also new rules permitting members access to certain information to monitor director activities and enforce their rights within the organization and a streamlining of the incorporation process and a reduction in the regulatory burden for the not for profit sector.
In other words, with this new bill, the sometimes endless and often complicated incorporation process will be streamlined and simplified.
Organizations will be able to fill out electronic forms and pay fees on line, and the current requirement that applications for incorporation are subject to a departmental review will be eliminated. This will make the incorporation process easier and faster.
The new office of director of corporations would replace the current system of ministerial review and discretion. This director would have administrative and regulatory functions and would be able to issue incorporation, amalgamation or dissolution certificates, investigate and make enquiries about compliance and access key corporate documents like membership lists and financial statements.
As stated, the new bill would also make significant changes in terms of financial accountability, the rights and responsibilities of directors, officers and members' rights. Improving transparency and accountability is a major objective of the new legislation through new rules on financial review and disclosure. All non-profits will need to make their financial statements available to their members, directors and officers in addition to the director appointed under the act.
Directors of soliciting organizations will have to make their records available to the public. This legislation will also improve financial accountability with new accounting audit rules. These rules recognize that not-for-profit organizations have different levels of revenue and different funding sources. All soliciting and non-soliciting organizations classified under the new legislation as having “significant” revenue will be subject to an accounting audit.
I want to point out that the stakeholders targeted by this new legislation supported the proposed changes during initial consultations, as did the witnesses who testified during the earlier committee meetings.
Strong support was given for the proposed reforms dealing with standard of care, due diligence defence, indemnification and insurance and limited liability of directors and officers. Some of the areas where there was less unanimity between those consulted included clarification of the rules governing non-for-profit corporations versus registered charities, whether there should be classifications under the bill that would stipulate different requirements based on the type of not-for-profit organization, whether it should be necessary to file bylaws and, finally, the level of auditing required.
The committee can certainly examine these points in detail. In the meantime, speaking as a person who has been involved in not-for-profit organizations, I must say that I support this legislation wholeheartedly.
I want to emphasize that my Liberal colleagues and I are eager to work with our colleagues on the government side to pass this important legislation, which has been a long time coming.
