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Not-for-profit Policy Summary

June 29, 2004

This policy summary outlines the requirements for incorporation under the Canada Corporations Act, Part II, which is administered by Corporations Canada. It describes the process of application for incorporation as well as the framework for by-laws of a not-for-profit corporation. It also addresses requests for ministerial approval to amend the by-laws of existing corporations.

Text in boldface type refers to basic provisions that must be reflected in the application request or in the by-laws as required by the Act or the policies of Corporations Canada. Other text refers to policies related to those basic provisions.

A caution: This policy summary is not intended to replace legal advice. While this policy summary discusses certain by-law provisions that are not specifically dealt with (neither explicitly permitted nor prohibited) in Part II of the Canada Corporations Act, Corporations Canada can give no assurance that a court would find those particular provisions to be valid under the Act.

 


Application For Incorporation

Please see the sample application form in 1a-Sample of an Application for Incorporation, Not-for-profit.

An application for incorporation of a corporation without share capital must include the following:

  1. A request to the Minister of Industry for the issue of Letters Patent.
  2. The proposed name of the corporation and a statement to the effect that:
    1. the name is not the same as or similar to that of any other company, society, association or firm in Canada, or that if the name is the same as or similar to that of another entity, that particular entity has consented to the use of the name; and
    2. the name is not on public grounds objectionable.
  3. The name, address and occupation of each of the applicants including a statement that the applicants are the full age of eighteen years with power under law to contract.

    There must be a minimum of three applicants.

    Applicants must be individuals.

    "Occupation" refers to the occupation of the applicant and not to the position held in the proposed corporation.

    Applicants need not become "members" of the corporation, although, as noted below, a minimum of three must become members of the first board of directors.
  4. The names of the applicants who are to be the first directors of the corporation. There must be a minimum of three first directors.

    Where there are more than three applicants, only three of them are needed to constitute the first board of directors. However, more than three applicants may be first directors.

    Persons other than the applicants may be members of the board in addition to the three or more applicants, as long as the application states that the additional persons have consented to being directors.

    In the absence of specific legislative approval, federal Ministers or public servants cannot be applicants for the establishment of a not-for-profit corporation controlled by the federal government under the Act.
  5. A statement of the purposes of the corporation.

    Applications for incorporation that authorize a not-for-profit corporation to carry on business activities are acceptable under the Act, provided that the purposes state that these activities will be carried on in furtherance of the main not-for-profit objective and that there will be no pecuniary gain to the members.

    In general, a corporate shell under federal jurisdiction may be created for an organization that, on a national basis, will carry out objectives that fall within provincial jurisdiction (for example, educational, religious or professional objectives). For more details, see the Annexes I and II at the end of this document.

    Applications containing purposes that encourage racial discrimination, incite violence or are otherwise equally objectionable will not be accepted. Where there is an indication that the corporation could be used to promote violence in another country, we will consult with the Department of Foreign Affairs.

    Applications that apparently request the incorporation of a post-secondary, degree-granting institution will take extra time to process, as Corporations Canada will first refer them to the Association of Universities and Colleges of Canada for comment.

    Applications for the incorporation of international boards of trade are acceptable.

    Applications for the incorporation of political parties are acceptable.

    Due to a prohibition contained in the Trade Unions Act, applications for the incorporation of trade unions will not be accepted.

    There is no requirement for the purposes to be repeated in the by-laws of not-for-profit corporations. However, if the applicants choose to do so, the wording of the purposes in the application and in the by-laws must be identical.

  6. A statement that the operations of the corporation may be carried on throughout Canada.

    In addition, the operations of the corporation may be carried on outside Canada where permitted by the laws of the foreign jurisdiction.

  7. The place within Canada where the head office of the corporation is to be situated.

    Only the municipality/city and the province of the head office is to be specified. The complete mailing address should be indicated in a covering letter accompanying the application.

  8. A statement that by-laws are being filed with the application.
  9. A statement that the corporation is to carry on its operations without pecuniary gain to its members.

    Pecuniary gain to members is prohibited, and loans to members or directors are also prohibited. Note, however, that the following transfers to members and directors during the life of the corporation are not considered to be pecuniary gain:

    1. a transfer to a member for the purpose of carrying on activities as an agent of the corporation;
    2. a transfer to a member charity to carry out the objectives of the corporation;
    3. a transfer by a corporation that is a registered charity to a member who is a legitimate beneficiary under the corporation's purposes; and
    4. a transfer to a member or director for services rendered to the corporation.
  10. The signatures of all applicants as well as the date and place of signing.
  11. The affidavit or statutory declaration of one of the applicants stating that the contents of the application are true.

    The date of signing of the application must be the same as or precede the date of signing of the affidavit.

    Note: Applicants may also include in the application or in the by-laws a clause dealing with the distribution of property in the event of dissolution. Although not required, it is recommended (see Annex 4 in Part VI of the kit for suggested wording).

    In order to register a charitable corporation with Revenue Canada, a dissolution clause is recommended in the application or the by-laws. Under the Income Tax Act, property of a charitable corporation registered by Canada Customs and Revenue Agency must be transferred, on dissolution, to one or more organizations known either as "qualified" donees within the meaning of the Income Tax Act or as "registered charities in Canada." A particular organization may be specified if desired.

    In the event of dissolution, a charitable organization not registered with Canada Customs and Revenue Agency may not distribute its property to its members, since such a distribution would constitute pecuniary gain. It is recommended that such a corporation include a clause in its application or by-laws stating that, on dissolution, its property must be distributed to another organization carrying on similar activities. A particular organization may be specified if desired.

    The property of a corporation that is not a registered charity or charitable in nature can be distributed on dissolution to members or anyone else. It is recommended that a clause to this effect be inserted in the application or by-laws. Note that for tax purposes the corporation will cease to be a not-for-profit corporation on such distribution, and members may incur capital gain and income tax.


By-Laws

Please see Corporations Canada model by-law in the not-for-profit incorporation kit.

  1. Membership

    The by-laws must provide:

    1. The conditions of membership.

      The conditions must include who can be a member and how a member is accepted into membership. If there is to be more than one class of members, the by-laws must indicate the rights and conditions, including voting rights, attaching to each class of membership.

      There is no limit on the number of classes of membership as long as the conditions and rights attached to each class are set out and as long as at least one class has the right to vote at members' meetings.

      Voting rights of membership classes may be unequal as long as these are specified in the by-laws.

      Members need not be individuals.

      If a minimum number of members is stated, that number must be one or greater.

      There may be a maximum number of members stated in the by-laws.

      Membership may be transferable or non-transferable.

    2. Withdrawal from membership.

      The by-laws must state whether and how members can withdraw.

  2. Members' Meetings

    The by-laws must provide:

    1. The procedures for holding an annual meeting of members.

      The by-laws must state that members' meetings will be held annually. They may provide that members may hold meetings by teleconference or by other electronic means that permit members to communicate adequately with each other. (Teleconference meetings generally work best for corporations with a small numbers of members.) The by-laws should set out the minimum percentage of members needed to approve the holding of such meetings. With respect to meeting by other electronic means, the by-laws should specify how security issues will be handled and should address the mechanics of holding such a meeting, for example, procedures for establishing quorum and recording votes. Each member should have equal access to the technology and should consent in advance to the specific means of communication to be used. (Teleconference meetings generally work best for corporations with a small number of members.)

      The by-laws may provide that members' decisions are to be made by consensus unless the Act provides otherwise. The by-laws must define the word "consensus" and describe the means of referring any matter to a vote if consensus is not reached. (Decisions by consensus generally work best when corporations have ten or fewer members.)

      Where the by-laws indicate that a member may vote by proxy at a members' meeting, they must also specify who may be a proxyholder, that proxies are to be in written form and that either a form of proxy or a reminder of right to use a proxy will be attached to the notice of meeting going to all voting members.

      Where the by-laws state that a majority vote determines questions in meetings, the statement must be qualified by "unless the Act or these by-laws otherwise provide."

      Where the by-laws provide that a subdivision of members will vote through a representative or delegate at a specified meetings of members, they should explain how that representative or delegate is selected.

      Where the members' permanent delegate to the members' meetings is also the individual who represents them on the board of directors, the by-laws must make clear that:

      1. in a vote at a meeting that members have requisitioned the directors to call (i.e. a requisitioned vote), the voting members themselves have the right to vote, and the members' delegates cannot vote on behalf of the voting members, and
      2. in other types of votes, the voting members themselves have the right to attend all meetings of members, even though their vote is exercised by their delegate.

      The by-laws may permit the use of written resolutions or mail ballots (including e-mail ballots) but not to deal with matters required by the Act to be dealt with at a meeting. Where the use of written resolutions and/or mail ballots is permissible, the by-laws should clarify:

      1. what would constitue the equivalent of a quorum, and
      2. any special provisions respecting rights of voting and the percentage of votes required for approval. (there is no requirement that written resolutions must be approved by unanimous consent.)
    2. The time and place of the annual meeting.

      The time and place may be stated in the by-laws in general terms, for example, "The annual or any other general meeting of the members shall be held at the head office of the corporation or at any place in Canada as the board may determine and on such day as the said directors shall appoint. The members may resolve that a particular meeting of members may be held outside of Canada."

    3. The method of giving notice of an annual or special meeting to all voting members.

      Various ways of giving notice are acceptable:

      1. by mail to individual members;
      2. by notice published in a regular newsletter sent to all members individually;
      3. where the corporation has more than 100 members, by notice published in a local newspaper circulating in a community where the majority of members reside;
      4. where the corporation has a place where members normally congregate, by written notice posted in that location;
      5. where the corporation has a place where members normally congregate, verbally, followed by written notice posted in that location or published in a special bulletin or regular newsletter sent to all members individually;
      6. by electronic means such as e-mail or facsimile.

      Notice to members' delegates only is not sufficient.

    4. A reasonable period of notice of members' meetings.

      A minimum of 14 days is recommended for notices sent by mail.

    5. The information to be contained in a notice of a members' meeting.

      Where special business is to be conducted (that is, other than business that is required to be dealt with at the annual meeting such as appointment of auditors and auditors' report on the financial statements), the notice must contain sufficient information to allow the members to form a reasoned judgment.

    6. The quorum for members' meetings.

      The quorum has to be fixed (fixed number, percentage or determinable formula). It must consist of at least two members present.

    7. The number or proportion of voting members who have the right to requisition a special meeting of voting members.

      In order to spare the corporation the great expense of holding a special meeting solely at the request of an inordinately small number of voting members, it is recommended that the by-laws state, for example, that a minimum of five percent of the voting members are needed to requisition the directors to call a special meeting.

  3. Directors

    The by-laws must provide:

    1. The manner of appointment or election of directors.

      Directors need not to be elected at a meeting. Directors may be appointed in any manner specified in the by-laws. This could include, without restricting the foregoing, the appointment of directors by mail ballots.

      There must be a board of directors, but it may be referred to by another name in the by-laws, for example, board of governors.

      Directors cannot be less than 18 years of age, must be individuals, and must have the capacity under law to contract.

      Directors need not be members.

      Alternate directors are not permitted.

    2. The number of directors.

      There must always be a minimum of three directors. The by-laws may provide for either a fixed number of directors or specify how the number of directors on the board is to be established (for example, by formula, by directors or members or both) and, if applicable, how that number can be changed. If a formula is used to determine the number, this formula must be set out in the by-laws.

      If the number of first directors referred to in the application and the number of directors referred to in the by-laws are not the same, a separate provision must be included in the by-laws referring to the first directors specified in the application and stating when their term of office ends.

    3. The term of office for directors.

      There is no limit on what the term of office may be.

    4. The manner in which directors are removed.

      The by-laws must include a procedure for the removal of directors, including ex-officio directors, by the voting membership (through their delegates, if applicable).

      Where specific directors are appointed or elected by a certain group of members, the by-laws may provide that each director is removable only by the group of members who appointed or elected him or her.

    5. The powers of the board of directors to manage the corporation.

      The by-laws must indicate that the board of directors has the power to manage the corporation. The by-laws may specifically exclude and retain certain powers for exercise by the membership at a general meeting.

      Under section 65 of the Act, the by-laws may provide for the delegation of borrowing powers to any directors or officers of the corporation.

    6. The remuneration of directors.

      There is no limit on what the remuneration may be.

  4. Directors' Meetings

    The by-laws must provide:

    1. The procedures for holding a directors' meeting.

      The by-laws must include provisions regarding the time and place of directors' meetings. The by-laws may provide that directors may hold meetings by teleconference or by other electronic means that permit directors to communicate adequately with each other. With respect to meetings by other electronic means, the by-laws should set out the minimum percentage of directors needed to approve the holding of such meetings. The by-laws should also specify how security issues are to be handled and should address the mechanics of holding such a meeting, for example, the procedures for establishing quorum and recording votes. Each director should have equal access to the technology to be used and should consent in advance to the specific means of communication to be used.

      The by-laws may provide that directors' decisions are to be made by consensus, unless the Act provides otherwise. The by-laws must define the word "consensus" and describe the means of referring any matter to a vote if consensus is not reached. (Decisions by consensus generally work best when corporations have ten or fewer directors.)

      Mail ballots are not acceptable to replace director's meetings. However, the by-laws may provide that, in limited cases, where attendance in person or by teleconference or other electronic means is not possible, a director may be allowed to vote at a directors' meeting by means of a detailed voting ballot. The by-laws must provide that the vote in the ballot can be counted only if the motion that is on the floor at the meeting is identical to that contained in the mail ballot. All background material made available to directors at the meeting must also have been made available in advance to directors exercising their vote by mail ballot. A mail ballot cannot replace a director for the purposes of establishing quorum. It is recommended that the by-laws specify how far in advance of a meeting the ballot must be received and by which officer of the corporation. The by-laws should also contain rules specifying how directors who are not attending the meeting will comply with subsection 98(4) concerning declaration of conflict of interest, if they have not already done so at an earlier meeting.

      Proxy voting is not acceptable.

      Written resolutions are not allowed to replace directors' meeting.

    2. The method of giving notice of a directors' meeting.

      The by-laws must specify an amount of time that is reasonable for notice of directors' meetings or indicate that reasonable notice will be given.

      Where the notice period is specified, a minimum of 14 days is recommended for notices sent by mail.

      The by-laws may state that notice can be waived by directors who attend the meeting.

      Notices sent by electronic means such as e-mail or facsimile are permitted.

    3. The quorum for directors' meetings.

      The quorum must be fixed either by number or by percentage and must be no fewer than two directors.

    4. The voting rights of directors.

      All directors, with the exception of ex-officio and honorary directors, have a right to vote. If the by-laws mention voting rights, they must be equal for all directors.

  5. Officers

    The by-laws must provide:

    1. The manner of appointment or election of officers.

      Officers need not be elected at a meeting. Officers may be appointed in any manner specified in the by-laws. This could include, without restricting the foregoing, the appointment of officers by mail-ballots.

      Where an officer is elected and the individual is not a full-time employee, the by-laws must specify a term of office. There is no limit on what the term may be.

      There is no limit on the type of officer that may be elected or appointed.

      Officers need not be directors or members of the corporation.

    2. The manner in which officers are removed.

      There is no limit on the manner in which officers may be removed.

    3. The basic responsibilities or duties of officers.

      The by-laws must describe the basic responsibilities or duties of each officer. They may also include a statement that duties beyond the basic responsibilities may be added by the board of directors from time to time.

    4. The remuneration of officers.

      There is no limit on what the remuneration may be.

    5. The custody of the corporate seal.

  6. Committee Members

    Where the by-laws provide for standing committees, they must also provide:

    1. The manner of appointment or election of committee members.

      The by-laws may include a statement that the board of directors may create ad hoc committees from time to time. The by-laws should provide for the manner of appointment or election of ad hoc committee members as well as the manner in which they are removed, and should include provisions for the remuneration of committee members.

    2. The manner in which committee members are removed.

    3. The responsibilities or duties of committee members.

    4. The remuneration of committee members.

  7. Executive Committee Members

    Where the by-laws provide for an executive committee, they must also provide:

    1. The procedures for holding meetings of the executive committee.

    2. The quorum for executive committee meetings.

      The quorum must be fixed and must be no fewer than two directors.

    3. A reasonable period of notice of executive committee meetings, or indication that reasonable notice will be given.

      Where the notice period is specified, a minimum of 14 days is recommended for notices sent by mail.

      Notices sent by electronic means such as e-mail or facsimile are permitted.

    4. The manner of appointment or election of executive committee members.

    5. The manner in which executive committee members are removed.

    6. The responsibilities or duties of executive committee members.

    7. The remuneration of executive committee members.

  8. Execution of Documents

    The by-laws must indicate who has the authority to sign documents on behalf of the corporation.

  9. By-Law Ammendments

    The by-laws must provide:

    1. The procedure for repealing or amending by-laws.

    2. The coming into force of repeal or amendment of by-laws.

      The by-laws must indicate that the repeal or amendment of by-laws or the enactment of a new by-law relating to the requirements of subsection 155(2) of the Act shall not be enforced or acted upon until the approval of the Minister has been obtained.

      By-law provisions should not suggest that ministerial approval will be obtained prior to, or without, membership approval.

      By-laws enacted by the corporation that do not relate to the requirements of subsection 155(2) of the Act do not require ministerial approval. The by-laws should not suggest that ministerial approval for such by-laws will be required if it is not necessary.

      By-laws that relate to the requirements of subsection 155(2) deal with corporate governance issues such as how the corporation is structured and how meetings are to be conducted. By-laws that do not relate to these requirements deal with activities regarding the purposes of the corporation. For example, an association for figure skaters may have by-laws that define what skating jumps are, or an association for professions may prescribe the ethics of that profession. These types of by-laws do not require ministerial approval.

  10. Auditor

    1. Appointment.

      The by-laws must indicate that the members will appoint an auditor at each annual meeting.

      The requirements regarding who can be licensed to render an audit opinion may vary from province to province. However, the auditor may not be a director, officer or employee of the corporation or of an affiliated corporation, or associated with that director, officer or employee, unless all of the members have consented.

    2. Reporting.

      The by-laws must indicate that the auditor will audit the accounts of the corporation and make a report to the members at the annual meeting.

      An auditor must audit the annual financial statements of the corporation and report to the members at the annual general meeting on whether these financial statement are fairly presented in accordance with generally accepted accounting principles.

      It is important to be aware of the fact that the Canada Corporations Act does not permit a waiver of audit.


Ministerial Approval of Amended By-Laws

When requesting ministerial approval of amended by-laws, the applicant must specify the particular changes made by the by-law amendment, confirm that these changes have been duly sanctioned by the members as of a certain date, and specify that ministerial approval is being requested.

On reviewing by-law amendments, examiners check to see that:

  1. the requirements of subsection 155(2) of the Act continue to be met. Subsection 155(2) deals with what must be included in the by-laws.;
  2. the sections of the Act have not been contravened; and
  3. the not-for-profit policies have not been contravened.

By-laws that are not of the nature of things listed in subsection 155(2) of the Canada Corporations Act will be returned to the applicant with advice that ministerial approval is not required (see examples mentioned in section I.2) above).

Normally, matters contained in a corporation's Letters Patent (application) are not repeated in its by-laws. If they are, however, a corporation cannot, merely by amending its by-laws, amend matters contained in its Letters Patent. Those matters (for example, corporate name, purpose) can be amended only by Supplementary Letters Patent. An information kit on amending the provisions of the Letters Patent is available from Corporations Canada. Similarly, where provisions of the Letters Patent are amended by Supplementary Letters Patent, the corporation should consider whether there is a need for identical changes to the by-laws. If so, these changes have to be approved by the members and ministerial approval must be requested at the next available opportunity.

Where so many amendments have been made to the by-laws that it is not easy for the examiner to know exactly what the existing by-law provisions are, the request for ministerial approval will be rejected pending receipt of a recent consolidation of the corporation's general by-laws.

Where, in the opinion of the examiner, the greatest part of the proposed by-law amendment is acceptable and complete but certain smaller provisions are unacceptable or missing, a ministerial approval relating to the greater or acceptable part may be granted. The portions that have not been approved or are missing will be identified, and should be dealt with at the next annual meeting of members.

Where need is demonstrated, ministerial approval can be granted prior to and conditional upon membership approval, the effective date of ministerial approval being the date of membership approval, if it is obtained.

Ministerial approval will ordinarily be dated as of the date of receipt of the request by the Corporations Canada.

Part I

Federally Incorporated Professional Associations

Applications for incorporation of national professional associations received in Corporations Canada are of three types:

  1. those that make no claim to regulate a group of persons in any way;
  2. those that purport to regulate in a field that is already regulated provincially (for example, doctors, lawyers, accountants); and
  3. those that purport to regulate in a field that is as yet unregulated provincially.

The Minister will accept applications for the incorporation of professional associations of all such types under Part II of the Canada Corporations Act. There will be no automatic requirement for an applicant of type b) to file the consent of the existing provincial regulating body. This policy is based on the view that by incorporation, Corporations Canada merely creates a corporate shell that is subject to any and all provincial laws respecting professions. In this way, provincial jurisdiction is not infringed.

Please note, however, that no association of types b) or c) above can be permitted to give to itself the exclusive right to regulate a certain field of endeavour. Words to this effect should be deleted from the application.

Part II

Professional Associations and Business Corporations

When incorporating a not-for-profit association whose proposed name or purposes suggest that it considers itself to be an association of professionals, examiners will incorporate the following clause into the Letters Patent cover page in the manner set out in attached Part III):

The issuance of these Letters Patent does not constitute authority to practise or to regulate the practice of the profession referred to herein.

The examiner will also enclose a copy of the attached Notice (Part IV) with the outgoing Letters Patent or rejection letter.

Similarly, when pre-clearing a proposed name that suggests an association of professionals (for example, "Canadian Association of Laboratory Technologists") or a professional qualification (for example, "P. H. Brown, Engineering Associates Inc." or "P. Brown, C. A. Consultants Inc." or P. Brown, Professional Accounting Services Ltd."), the Name Officer will enclose a copy of the attached Notice with her/his name decision letter and indicate on the file that this has been done.

Finally, when issuing Canada Corporations Act Letters Patent approving a proposed name that appears to make reference to a professional qualification, the Examiner (unless the Name Officer has already done so) will enclose a copy of the attached Notice with the outgoing certificate or rejection notice and indicate on the file that this had been done.

Part III - Canada Letters Patent

The issuance of these Letters Patent does not constitute authority to practise or to regulate the practice of the profession referred to herein.

Whereas an application has been filed to incorporate a corporation under the name

Therefore the Minister of Industry, by virtue of the powers vested in him by the Canada Corporations Act, constitutes the applicants and such persons as may hereafter become members in the corporation hereby created a body corporate and politic in accordance with the provisions of the said Act. A copy of the said application is attached hereto and forms part hereof.

Date of Letters Patent ____________

Given under the seal of office of the Minister of Industry.

for the Minister of Industry

Recorded

Film
Document

Deputy Registrar General of Canada

Part IV - Notice

Please note that an incorporation in the proposed name may be in violation of provincial regulatory laws dealing with professions. It is your responsibility to refer to the statutory body, if any, of the province or provinces in which you intend to operate for confirmation of name acceptability.

Evidence of such confirmation is not required for federal incorporation.


Annex 3
Corporations Canada Model By-Law

Disclaimer

This by-law contains certain provisions which are not specifically dealt with (neither permitted nor prohibited) in Part II of the Canada Corporations Act.

While it will be accepted for filing, Corporations Canada can give no assurance that a court would find the provisions of this by-law to be validly authorized by the Act.

You may wish to obtain private legal advice before using this model.

Model By-Law

Corporate Seal

  1. The seal, an impression whereof is stamped in the margin hereof, shall be the seal of the corporation. *

Head Office

  1. Until changed in accordance with the Act, the Head Office of the corporation shall be in the (City-Municipality) of _________________________, in the Province of ________ ** _______.

Conditions of Membership

  1. Membership in the corporation shall be limited to persons interested in furthering the objects of the corporation and shall consist of anyone whose application for admission as a member has received the approval of the board of directors of the corporation. ***
  2. There shall be no membership fees or dues unless otherwise directed by the board of directors.
  3. Any member may withdraw from the corporation by delivering to the corporation a written resignation and lodging a copy of the same with the secretary of the corporation.
  4. Any member may be required to resign by a vote of three-quarters (3/4) of the members at an annual meeting.

Members' Meetings

  1. The annual or any other general meeting of the members shall be held at the head office of the corporation or at any place in Canada as the board of directors may determine and on such day as the said directors shall appoint. The members may resolve that a particular meeting of members be held outside of Canada.
  2. At every annual meeting, in addition to any other business that may be transacted, the report of the directors, the financial statement and the report of the auditors shall be presented and auditors appointed for the ensuing year. The members may consider and transact any business either special or general at any meeting of the members. The board of directors or the president or vice-president shall have power to call, at any time, a general meeting of the members of the corporation. The board of directors shall call a special general meeting of members on written requisition of members carrying not less than 5% of the voting rights. ___ members present in person at a meeting will constitute a quorum.
  3. Fourteen (14) days' written notice shall be given to each voting member of any annual or special general meeting of members. Notice of any meeting where special business will be transacted shall contain sufficient information to permit the member to form a reasoned judgement on the decision to be taken. Notice of each meeting of members must remind the member if he has the right to vote by proxy.
    Each voting member present at a meeting shall have the right to exercise one vote. A member may, by means of a written proxy, appoint a proxyholder to attend and act at a specific meeting of members, in the manner and to the extent authorized by the proxy. A proxyholder must be a member of the corporation.
  4. A majority of the votes cast by the members present and carrying voting rights shall determine the questions in meetings except where the vote or consent of a greater number of members is required by the Act or these By-laws.
  5. No error or omission in giving notice of any annual or general meeting or any adjourned meeting, whether annual or general, of the members of the corporation shall invalidate such meeting or make void any proceedings taken thereat and any member may at any time waive notice of any such meeting and may ratify, approve and confirm any or all proceedings taken or had thereat. For purpose of sending notice to any member, director or officer for any meeting or otherwise, the address of the member, director or officer shall be his last address recorded on the books of the corporation.

Board of Directors

  1. The property and business of the corporation shall be managed by a board of directors, comprised of a minimum of three directors. The number of directors shall be determined from time to time by a majority of the directors at a meeting of the board of directors and sanctioned by an affirmative vote of at least two-thirds (2/3) of the members at a meeting duly called for the purpose of determining the number of directors to be elected to the board of directors. Directors must be individuals, 18 years of age, with power under law to contract. Directors need not be members.
  2. The applicants for incorporation shall become the first directors of the corporation whose term of office on the board of directors shall continue until their successors are elected.
    At the (first, second, etc.) __________ meeting of members, the board of directors then elected shall replace the provisional directors named in the Letters Patent of the corporation.
  3. Directors shall be elected for a term of ____ year(s) by the members at an annual meeting of members.
  4. The office of director shall be automatically vacated:
    1. if at a special general meeting of members, a resolution is passed by ____ of the members present at the meeting that he be removed from office;
    2. if a director has resigned his office by delivering a written resignation to the secretary of the corporation;
    3. if he is found by a court to be of unsound mind;
    4. if he becomes bankrupt or suspends payment or compounds with his creditors;
    5. on death;
    provided that if any vacancy shall occur for any reason in this paragraph contained, the board of directors by majority vote, may, by appointment, fill the vacancy with a member of the corporation.
  5. The directors shall serve as such without remuneration and no director shall directly or indirectly receive any profit from his position as such; provided that a director may be paid reasonable expenses incurred by him in the performance of his duties. Nothing herein contained shall be construed to preclude any director from serving the corporation as an officer or in any other capacity and receiving compensation therefor.
  6. A retiring director shall remain in office until the dissolution or adjournment of the meeting at which his retirement is accepted and his successor is elected.

Powers of Directors

  1. The directors of the corporation may administer the affairs of the corporation in all things and make or cause to be made for the corporation, in its name, any kind of contract which the corporation may lawfully enter into and, save as hereinafter provided, generally, may exercise all such other powers and do all such other acts and things as the corporation is by its charter or otherwise authorized to exercise and do.
  2. The directors shall have power to authorize expenditures on behalf of the corporation from time to time and may delegate by resolution to an officer or officers of the corporation the right to employ and pay salaries to employees. The directors shall have the power to enter into a trust arrangement with a trust company for the purpose of creating a trust fund in which the capital and interest may be made available for the benefit of promoting the interest of the corporation in accordance with such terms as the board of directors may prescribe.
    The board of directors is hereby authorized, from time to time
    1. to borrow money upon the credit of the corporation, from any bank, corporation, firm or person, upon such terms, covenants and conditions at such times, in such sums, to such an extent and in such manner as the board of directors in its discretion may deem expedient;
    2. to limit or increase the amount to be borrowed;
    3. to issue or cause to be issued bonds, debentures or other securities of the corporation and to pledge or sell the same for such sums, upon such terms, covenants and conditions and at such prices as may be deemed expedient by the board of directors;
    4. to secure any such bond, debentures or other securities, or any other present or future borrowing or liability of the company, by mortgage, hypothec, charge or pledge of all or any currently owned or subsequently acquired real and personal, movable and immovable, property of the corporation, and the undertaking and rights of the corporation.
  3. The board of directors shall take such steps as they may deem requisite to enable the corporation to acquire, accept, solicit or receive legacies, gifts, grants, settlements, bequests, endowments and donations of any kind whatsoever for the purpose of furthering the objects of the corporation.
  4. The board of directors may appoint such agents and engage such employees as it shall deem necessary from time to time and such persons shall have such authority and shall perform such duties as shall be prescribed by the board of directors at the time of such appointment.
  5. Remuneration for all officers, agents and employees and committee members shall be fixed by the board of directors by resolution. Such resolution shall have force and effect only until the next meeting of members when such resolution shall be confirmed by resolution of the members, or in the absence of such confirmation by the members, then the remuneration to such officers, agents or employees and committee members shall cease to be payable from the date of such meeting of members.

Directors' Meetings

  1. to be determined by the directors provided that 48 hours written notice of such meeting shall be given, other than by mail, to each director. Notice by mail shall be sent at least 14 days prior to the meeting. There shall be at least one (1) meeting per year of the board of directors. No error or omission in giving notice of any meeting of the board of directors or any adjourned meeting of the board of directors of the corporation shall invalidate such meeting or make void any proceedings taken thereat and any director may at any time waive notice of any such meeting and may ratify, approve and confirm any or all proceedings taken or had thereat. Each director is authorized to exercise one (1) vote.
  2. A majority of directors in office, from time to time, but no less than two directors, shall constitute a quorum for meetings of the board of directors. Any meeting of the board of directors at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions by or under the by-laws of the corporation.

Indemnities to Directors and Others

  1. Every director of the corporation and their heirs, executors and administrators, and estate and effects, respectively, shall from time to time and at all times, be indemnified and saved harmless out of the funds of the corporation, from and against;
    1. all costs, charges and expenses which such director, sustains or incurs in or about any action, suit or proceedings which is brought, commenced or prosecuted against him, or in respect of any act, deed, matter of thing whatsoever, made, done or permitted by him, in or about the execution of the duties of his office or in respect of any such liability;
    2. all other costs, charges and expenses which he sustains or incurs in or about or in relation to the affairs thereof, except such costs, charges or expenses as are occasioned by his own wilful neglect or default.

Officers

  1. The officers of the corporation shall be a president, vice-president, secretary and treasurer and any such other officers as the board of directors may by by-law determine. Any two offices may be held by the same person. Officers need not be directors, nor members.
  2. The president shall be elected at an annual meeting of members. Officers other than president of the corporation shall be appointed by resolution of the board of directors at the first meeting of the board of directors following an annual meeting of members.
  3. The officers of the corporation shall hold office for year(s) from the date of appointment or election or until their successors are elected or appointed in their stead. Officers shall be subject to removal by resolution of the board of directors at any time.

Duties of Officers

  1. The president shall be the chief executive officer of the corporation. He shall preside at all meetings of the corporation and of the board of directors. He shall have the general and active management of the affairs of the corporation. He shall see that all orders and resolutions of the board of directors are carried into effect.
  2. The vice-president shall, in the absence or disability of the president, perform the duties and exercise the powers of the president and shall perform such other duties as shall from time to time be imposed upon him by the board of directors.
  3. The treasurer shall have the custody of the funds and securities of the corporation and shall keep full and accurate accounts of all assets, liabilities, receipts and disbursements of the corporation in the books belonging to the corporation and shall deposit all monies, securities and other valuable effects in the name and to the credit of the corporation in such chartered bank of trust company, or, in the case of securities, in such registered dealer in securities as may be designated by the board of directors from time to time. He shall disburse the funds of the corporation as may be directed by proper authority taking proper vouchers for such disbursements, and shall render to the president and directors at the regular meeting of the board of directors, or whenever they may require it, an accounting of all the transactions and a statement of the financial position, of the corporation. He shall also perform such other duties as may from time to time be directed by the board of directors.
  4. The secretary may be empowered by the board of directors, upon resolution of the board of directors, to carry out his affairs of the corporation generally under the supervision of the officers thereof and shall attend all meetings and act as clerk thereof and record all votes and minutes of all proceedings in the books to be kept for that purpose. He shall give or cause to be given notice of all meetings of the members and of the board of directors, and shall perform such other duties as may be prescribed by the board of directors or president, under whose supervision he shall be. He shall be custodian of the seal of the corporation, which he shall deliver only when authorized by a resolution of the board of directors to do so and to such person or persons as may be named in the resolution.
  5. The duties of all other officers of the corporation shall be such as the terms of their engagement call for or the board of directors requires of them.

Committees

  1. The board of directors may appoint committees whose members will hold their offices at the will of the board of directors. The directors shall determine the duties of such committees and may fix by resolution, any remuneration to be paid.

Executive Committee (Optional)

  1. There shall be an executive committee composed of directors who shall be appointed by the board of directors. The executive committee shall exercise such powers as are authorized by the board of directors. Any executive committee member may be removed by a majority vote of the board of directors. Executive committee members shall receive no remuneration for serving as such, but are entitled to reasonable expenses incurred in the exercise of their duty.
  2. Meetings of the executive committee shall be held at any time and place to be determined by the members of such committee provided that forty-eight (48) hours written notice of such meeting shall be given, other than by mail, to each member of the committee. Notice by mail shall be sent at least 14 days prior to the meeting. (no less than 2) members of such committee shall constitute a quorum. No error or omission in giving notice of any meeting of the executive committee or any adjourned meeting of the executive committee of the corporation shall invalidate such meeting or make void any proceedings taken thereat and any member of such committee may at any time waive notice of any such meeting and may ratify, approve and confirm any or all proceedings taken or had thereat.

Execution of Documents

  1. Contracts, documents or any instruments in writing requiring the signature of the corporation, shall be signed by any two officers and all contracts, documents and instruments in writing so signed shall be binding upon the corporation without any further authorization or formality. The directors shall have power from time to time by resolution to appoint an officer or officers on behalf of the corporation to sign specific contracts, documents and instruments in writing. The directors may give the corporation's power of attorney to any registered dealer in securities for the purposes of the transferring of and dealing with any stocks, bonds, and other securities of the corporation. The seal of the corporation when required may be affixed to contracts, documents and instruments in writing signed as aforesaid or by any officer or officers appointed by resolution of the board of directors.

Minutes of Board of Directors (and Executive Committee

  1. The minutes of the board of directors (or the minutes of the executive committee) shall not be available to the general membership of the corporation but shall be available to the board of directors, each of whom shall receive a copy of such minutes.

Financial Year

  1. Unless otherwise ordered by the board of directors, the fiscal year end of the corporation shall be _____________________.

Amendment of By-Laws

  1. The by-laws of the corporation not embodied in the letters patent may be repealed or amended by by-law, or a new by-law relating to the requirements of subsection 155(2) of the Canada Corporations Act, may be enacted by a majority of the directors at a meeting of the board of directors and sanctioned by an affirmative vote of at least two-thirds (2/3) of the members at a meeting duly called for the purpose of considering the said by-law, provided that the repeal or amendment of such by-laws shall not be enforced or acted upon until the approval of the Minister of Industry has been obtained.

Auditors

  1. The members shall, at each annual meeting, appoint an auditor to audit the accounts and annual financial statements of the corporation for report to the members at the next annual meeting. The auditor shall hold office until the next annual meeting provided that the directors may fill any casual vacancy in the office of the auditor. The remuneration of the auditor shall be fixed by the board of directors.

Books and Records

  1. The directors shall see that all necessary books and records of the corporation required by the by-laws of the corporation or by any applicable statute or law are regularly and properly kept.

Rules and Regulations

  1. The board of directors may prescribe such rules and regulations not inconsistent with these by-laws relating to the management and operation of the corporation as they deem expedient, provided that such rules and regulations shall have force and effect only until the next annual meeting of the members of the corporation when they shall be confirmed, and failing such confirmation at such annual meeting of members, shall at and from that time cease to have any force and effect.

Interpretation

  1. In these by-laws and in all other by-laws of the corporation hereafter passed unless the context otherwise requires, words importing the singular number or the masculine gender shall include the plural number or the feminine gender, as the case may be, and vice versa, and references to persons shall include firms and corporations.

Annex 3a
Model By-Law Supplement

By-Laws relating to corporations with more than one "level"

PDF version of the diagram showing By-Laws relating to corporations with more than one "level".

When adopting this kind of structure, it is important to deal clearly with certain matters in your by-laws:

I - Membership

  1. State clearly which of the "levels" are the "members" of the corporation, e.g. the individuals at the bottom of the regional associations or both?
  2. Are there different kinds of membership for different levels? e.g. individuals are Class A members, regional associations are Class B members.
  3. What are the different rights attaching to different classes of membership? e.g. Class A members to have right to vote, Class B members to have no voting rights.
  4. How is each type of member admitted to membership? e.g. on application approved by resolution of the board of directors, or, approved by resolution of the board of directors upon recommendation of the executive of the chapter in whose area the applicant lives, or, automatically, upon admission as a member of the chapter.

Please note that where the regional associations are already in existence at the time of the federal incorporation, neither they nor their members can be made members of the federal corporation without their consent. Any "admission to membership clause" which says that certain specific entities are members should be careful to use the words "upon application for membership"...

II - Appointment Election of Directors

State clearly who appoints or elects the directors to manage the corporation.

III - Removal of Directors

Directors must be removable for any reason. Unless they are elected by the voting members (through their delegates, if applicable) annually, they must be removable by those voting members (through their delegates, if applicable) in addition to anyone else.

  1. In the by-laws, specify whether a director is removable only by the membership of the region who elected him, or whether the membership as a whole, of the federal corporation, votes on his removal.
  2. In the by-laws, specify how a special meeting of voting members can be requisitioned by those members for the purpose of voting on the removal of a director. In the case where members' permanent delegates to members' meetings are themselves the directors, go on to clarify that this is a meeting of the voting members themselves and that they will not be voting through their delegates.

IV - Members Meetings

  1. Reasonable notice must always be sent in writing directly to the voting member. If he is an individual, it should not go to the regional association of which he forms a part, and not to any delegate which may represent him on a permanent basis at members' meetings (unless some clear mechanism can be set out whereby it is inevitable that the regional association or delegate will deliver the written notice to each voting member).
    In cases where the members' permanent delegate to members' meetings is also the individual who represents them on the board of directors of the corporation, the by-laws must make it very clear that the voting members themselves have the right to attend all members' meetings even though their vote is exercised through their delegate.
  2. State clearly how the right to vote is to be exercised.
    • e.g.   each voting member can go directly to the annual meeting to vote, or can send his proxy
    • e.g.   each voting member can submit his mail ballot (except where the Act or by-laws require a meeting)
    • e.g.   if the voting members are the individuals (level 1), the voting members from each region get together (perhaps at a regional association meeting), select a certain number of delegates, carrying a certain number of votes, to represent them at the members' meeting, for a certain period of time. It should be clear whether the delegate so selected is also the director representing that region on the board of directors

V - Control on Chapters

Where the federal corporation has, by its by-laws, delegated certain powers to its chapters or branches, for example the power to accept an individual as a member on behalf of the corporation, the by-laws of the federal corporation should go on to specify how those chapters and branches are responsible to the board of directors of the corporation which manages the corporation, e.g. submit by-laws and financial statements to national board of directors for approval, provide for creation and disbandment of chapters or branches etc.


*  seal need not be imprinted until after incorporation.
**  please do not include a postal address here.
***  if more than 1 class of members, specify which classes are voting.

Source: Canada's Business and Consumer Site