Getting on track with the Canada Not-for-Profit Corporations Act

This month’s COCo note, the last of 2013, addresses the changes to federally registered nonprofits under the Canadian Not-for-profit Corporations Act (CNCA). The main impact of the CNCA is the hard deadline of October 17, 2014, by which date, if you haven’t obtained a Certificate of Continuance, your organization will be dissolved, and your assets seized by the federal government.

If you haven’t started the process for the necessary changes, now would be a good time to start. We’ll go over some of what the CNCA contains, some of the questions you should be asking, and direct you to a few resources to plan for the months ahead.

How can we know if this applies to our organization?

Nonprofits in Canada can be registered at the provincial or federal levels. The CNCA applies to Federally registered nonprofits only. If your organization is both a federally registered nonprofit and a registered charity with the CRA (Canada Revenue Agency), special provision will apply to your transition process. If you don’t know the exact status of your organization, read through the COCo CNCA transition document for some leads.

What changes should we expect?

You should be prepared to effect changes to your bylaws, the makeup  and size of your board, and the manner in which you do your yearly financial exercises and accounting. Further, you will have to submit several forms and documents in order to obtain your Compliance Certificates. Your bylaws will most likely be simplified, because many provisions in them will be covered by the CNCA, but drafting them in a way to ensure maximal continuity with your current bylaws may require some amount of work.

In making these changes, you will likely have to determine if you are considered a Soliciting or Non-Soliciting corporation. You can read the requirements of Soliciting corporations online here : http://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs05011.html . It may be a good idea to err on the side of caution and comply to requirements for Soliciting organizations.
To learn about your new overall reporting obligations under the CNCA, follow this link: http://www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs04956.html

Members now have many more rights that were previously restricted to Board or not covered. Only members have the possibility of removing a Director from the Board. They also have the capacity to convene a general meeting of members (with 5% of membership agreeing to do so), and to propose agenda items for general meetings, including bylaw changes. Even non-voting members have new rights, such as the possibility to vote on changes that affect their rights as members. Further, members can have direct access to your organization’s auditor. This obviously increases transparency and accountability, but should make you think carefully about how you define membership in your organization.

Need help or alternatives?

If your transition process is ahead of you, you’ll have reading to do, forms to fill, and approvals to obtain from your organization. You should identify the steps and schedule to make best use of your limited time until October 17 2014, being mindful of bottlenecks that may slow down your process.

If at any stage through this process you feel you’re not sufficiently equipped or supported to continue working on this, don’t hesitate to reach out to COCo for information, or you could seek to obtain legal counsel from a lawyer specializing in nonprofits (we could provide some suggestions). If you don’t think you can go through with the transition, or choose not to, be aware of the option of actively dissolving your organization before Industry Canada does it for you. That way, you’ll be sure to  have control in deciding who your assets are donated to, rather than having them seized. This decision is an extreme measure however, and should not be taken lightly.

Ressources:

The COCo transition guide for the CNCA:
https://coco-net.org/walking-transition-canadian-profit-corporation-act/ 

Imagine Canada detailed video (webinar) on the CNCA transition:
https://docs.google.com/file/d/0B__Y0ygc_-I1RXBsdWU4NWJMUGM/edit

Charity Village aritcle on CNCA:
https://charityvillage.com/Content.aspx?topic=Re_Act_How_Will_the_CNCA_Affect_You_&last=546

Mark Blumberg’s CNCA Suitcase, gathering 70 documents and over 200 pages of information from Industry Canada in a single PDF Document: http://www.globalphilanthropy.ca/images/uploads/Canada_Not-for-profit_Corporations_Act_(CNCA)_Suitcase.pdf

Very complete list of resources on Carters website:
http://www.carters.ca/nfp/index.htm

Industry Canada Website
http://www.ic.gc.ca/Intro.html