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Information Kit on the Creation and Amendment of Not-for-Profit Corporations [1]

Policy Statement 13.1
September 19, 1997

I Introduction ...

Our Role

In our view, our role is to ensure that the requirements of the Canada Corporations Act Part II, with respect to the creation and amendment of not-for-profit corporations, have been met, and

To assist the applicants in the creation or amendment of a federal not-for-profit corporation in such a way that they end up with a workable structure for carrying on their activities.

Our Problems

The number of applications continues to increase, putting a strain on existing resources.

The vagueness of the Act is a serious problem. CCA Part II (see annex 1) provides very few answers as to whether particular by-law provisions are acceptable, with the result that a body of ad hoc, unwritten policy decisions has built up over the years.

Our Method of Dealing with these Problems

During the 1987/88 work year, we installed a telephone answering machine on the Examiners' line to provide periods of peace, when necessary, in order that work could be processed.

Also in 1987/88, we formulated a written policy designed for publication (see annex 2). This policy tries to define what types of provisions are acceptable or unacceptable when the Act is unclear or silent on the question. In drafting this document, reference was made to the contemporary thinking reflected in the draft not-for-profit legislation known as Bill C-10 which was first proposed approximately 10 years ago but never became law.

For a period of time, we advertised a 6-week waiting period for processing not-for-profit applications and worked on the recurring backlog on an overtime basis. This was as hard on the staff and their morale as it was difficult for the applicant. For this reason, in the Summer of 1988, we initiated a new system which we hope will eliminate the backlog over a period of time.

This new initiative involves the following components:

1. a revised set of model by-laws (see annex 3) drafted by Corporations Canada, which, if adopted for use by the applicant and properly identified on filing, will guarantee the speedy processing of the applicant's application

2. a procedure whereby a regular user of Corporations Canada services can have a standard by-law format approved so that those by-laws, properly identified as such, will guarantee the speedy processing of the application with which they are filed (see how to get approval)

3. publishing the not-for-profit policy so that those who want to draft their own customized set of by-laws will know in advance which types of provisions are acceptable or unacceptable (see annex 2)

4. a procedure whereby an applicant may ensure the speedier processing of an application by completing the checklist against which the application and customized by-laws will be examined in the Directorate (see how to complete the checklist)

II For your Assistance ...

What is a Corporation?

A corporation is a legal entity which can sue or be sued or hold property in its own name. A corporation provides a permanent structure through which individual persons or corporations can act together for a common purpose without incurring any personal liability for the corporation's debts and obligations.

What is a Non-Profit Corporation?

Unlike a profit-making corporation where certain shareholders will be entitled to participate in the profits of the company, for instance by receiving dividends, in a not-for-profit corporation, the persons acting together for a common purpose are members who are prohibited by the statute from receiving any pecuniary gain. Their common purpose is not to make money for themselves but rather to carry on some activity of a national, patriotic, religious, philanthropic, charitable, scientific, artistic, social, professional or sporting character, or the like.

What is the Basic Structure of a Non-Profit Corporation?

The two basic components of a not-for-profit corporation are the Membership and the Board of Directors.

Under the terms of the general by-laws of the corporation, the Board of Directors is given the responsibility to manage the affairs of the corporation. In order to do this, they meet together as often as necessary and may delegate certain responsibilities to specified officers so that routine matters can be taken care of in the interval between their meetings.

Under the federal Act, the Membership must meet at least once a year to receive the Board's report on how the corporation has been managed over the last year and how it will be managed over the next year, to review the audited financial statements and to appoint an auditor for the coming year.

Certain actions of the board must be confirmed by the membership, e.g. amendment of the Letters Patent. In many corporations, the Membership will have the power to re-elect directors on a regular basis and to remove existing directors, if necessary, in order that the management of the corporation reflects the wishes of the Membership.

How to Apply for Incorporation

In order to obtain Letters Patent of incorporation you must file certain documents with the Corporations Canada.

These are:

1. An application for Letters Patent in the format set out in annex 4 (2 originals).

2. An affidavit or statutory declaration of one of the applicants, sworn before a commissioner for taking oaths, stating that the contents of the application are true (see annex 5).

3. A $200 filing fee (cheque payable to the Receiver General for Canada).

4. A Canada-biased NUANS® name search report not more than 90 days old, of the proposed name, or one $15.00 filing fee per search so that the NUANS® search or searches may be made in the Corporations Canada. A bilingual name normally requires 2 searches.

The applicants may wish to consider adopting a bilingual corporate name if they intend to carry on business in a bilingual region.

5. One copy only (unsigned) of the proposed By-laws of the Corporation (see models attached as annex 3) with identifier, if applicable.

6. A covering letter in the format set out in annex 6, specifying the street address of the Head Office of the corporation.

Non-Profit By-laws must deal with at least the following matters:

1. conditions of membership

2. whether and how membership may withdraw

3. mode of holding directors' meetings (including provision for notice, quorum and voting rights)

4. mode of holding members' meetings (including provision for notice, quorum and voting rights)

5. mode of holding executive committee meetings (including provision for notice, quorum and voting rights)

6. directors

§ their appointment or election

§ their term of office

§ their powers

§ their remuneration

§ their removal

7. officers

§ their appointment or election

§ their term of office

§ their powers

§ their remuneration

§ their removal

8. committee members

§ their appointment or election

§ their term of office

§ their powers

§ their remuneration

§ their removal

9. auditor to be appointed by the members at each annual meeting to audit the books for report to members at the annual meeting

10. mode of repealing or amending by-laws including a clause to say that no repeal or amendment shall be enforced or acted upon until it has received the approval of the Minister of Industry

11. custody of the corporate seal (with which officer?)

12. mode of certifying that a particular document is a document of the corporation (who signs on behalf of the corporation?)

If accepted, what you get back

Letters Patent, with one of the original applications attached, dated as of the date of receipt of the application in the Department. No copies of the approved by-laws are returned to you.

If not accepted, what you get back

§ a form letter explaining that the date of receipt of the application will continue to be the effective date providing that the date of the returning application remains the same

§ a checklist identifying the unacceptable provisions with an "X"

§ the original pages to be corrected

How you Apply to Amend the Provisions of your Letters Patent

To amend the provisions of your Letters Patent (e.g. name, objects, other provisions) you must apply to the Corporations Canada for Supplementary Letters Patent (SLP). See annex 7. An application for SLP must include the following:

1. An application document in the format set out in the annex.

2. An affidavit or statutory declaration of an officer attesting to the due passage of the by-law (by the directors and by the members) on a specific date.

3. Two certified copies of the by-law effecting the change (less than 6 months old except in the case of a change of name).

4. A $50 filing fee (except where the purpose of the change is to add an English or French version to the name in which case there is no fee).

5. A Canada-biased NUANS® name search report not more than 90 days old, of the proposed name, if applicable or one $15.00 filing fee per search so that the NUANS® search or searches may be made in the Corporations Canada. A bilingual name normally requires 2 searches.

The applicants may wish to consider adopting a bilingual corporate name if they intend to carry on business in a bilingual region.

6. A covering letter in the format recommended in the annex.

If accepted, what you get back

Supplementary Letters Patent, with one copy of the by-law attached, dated as of the date of receipt of the application in the Department.

If not accepted, what you get back

§ a form letter explaining that the date of receipt of the application will continue to be the effective date providing that the date of the returning application remains the same

§ a checklist identifying the unacceptable provisions with an "X"

§ the original pages to be corrected

How you Apply to Amend your General By-Laws

A request for Ministerial approval of by-law amendments of a not-for-profit corporation must include the following:

1. A letter (see annex 8) specifying:

a. the exact changes which have been made to the existing by-laws (with section references)

b. the date on which the amendments were sanctioned by the members in accordance with the existing by-laws

c. a request for Ministerial approval

2. A consolidation of the existing by-laws where a number of amendments have been made to the provisions which are now being amended again

3. no fee

If accepted, what you get back

A letter giving Ministerial approval as of the date of receipt in the Department.

If not accepted, what you get back

1. a form letter explaining that upon return of the corrected documentation, Ministerial approval will normally be effective as of the date of receipt which follows the necessary membership approval

2. a checklist identifying the unacceptable provisions with an "X"

3. the by-law amendments

How you Apply to Amend the Place of your Head Office

The Corporation may, by by-law sanctioned by at least 2/3 of the votes cast at a special general meeting of members, change the place where the Head Office of the Corporation is to be situated.

A copy of the by-law certified under the seal of the corporation must be filed with the Minister. A covering letter indicating a street address for the Head Office must also be submitted. A bilingual notice of the by-law must be published in the Canada Gazette by the client.

Sample Notice:

Notice is hereby given that (corporate name) has changed the location of its head office to the city of ___________, province of __________.

Dated __________.

John Doe
President

Exemple d'un avis :

Avis est par la présente donné que (dénomination sociale) a changé son lieu du siège social en la ville de ___________, province de __________.

Daté le __________.

Jean Doe
Président

Address: Canada Gazette, Public Works and Government Services Canada, 5th Floor, 350 Albert Street, Ottawa, Ontario K1A 0S5 - Telephone: 613-996-1268

Note: The notice must be bilingual. Failure to submit a bilingual notice will result in Supply and Services translating your notice and billing you for its services.

If accepted, what you get back

A letter indicating that the by-law has been filed with the Minister.

If not accepted, what you get back

A letter identifying the deficiencies.

Note: A change of street address within the same place of the Head Office does not require such a by-law but must be indicated on the Annual Summary filed as at March 31 each year. In the meantime, a letter to the Corporations Canada providing the new address, would suffice.

How to Apply to Continue Certain types of Non-Profit Organizations, Incorporated by Special Act of Parliament, under the Provisions of the Canada Corporations Act Part II

A Special Act company without share capital that wishes to amend its charter may do so either by having Parliament pass an amending statute (consult the Law Clerk and Parliamentary Counsel to the Senate at 613-992-2416, Parliament Buildings, Wellington Street, Ottawa, K1A 0A4), or, by applying to continue under Part II of the Canada Corporations Act, pursuant to Section 159 of that Act during which process the corporation is entitled to "limit or extend its powers" and "change its corporate name". Once continued under Part II, of course, the new Part II corporation would be entitled to change any part of its charter or by-laws in accordance with the provisions of the Canada Corporations Act.

In order to continue under CCA - Part II in accordance with section 159, (see annex 9) the following must be submitted:

1. an application in the format set out in the annex

2. an affidavit or statutory declaration of an officer of the corporation, sworn before a commissioner or taking oaths, certifying that:

a. the facts in the application are true

b. the corporation is presently carrying on its affairs

c. the resolution authorizing continuance was duly passed

3. two certified copies of the directors' resolution which was duly approved by the members (2/3 vote) or a resolution originating the corporation's by-laws amended to comply with the requirements of section 155(2) or alternatively, a notice to the effect that the by-laws will be so amended at the next meeting of the members

4. the corporation's by-laws amended to comply with the requirements of section 155(2) or alternatively, a notice to the effect that the by-laws will be so amended at the next meeting of the members

5. a copy of the incorporating statute and any amending statutes

6. a $200 filing fee (cheque payable to the Receiver General for Canada)

7. a Canada-biased NUANS® name search report not more than 90 days old, of the proposed name, or $15.00 filing fee per search so that the NUANS® search or searches may be made in the Corporations Canada. A bilingual name normally requires 2 searches

If the application is accepted, Letters Patent of Continuance will be prepared in a form similar to that set out in the annex.

Note that Section 156 of the Canada Corporations Act is similar to Section 159 but appears to relate to corporations incorporated under a general Act of Parliament.

How to Apply to Surrender your Charter and dissolve

A not-for-profit application for Surrender of Charter (see annex 10) must include the following:

1. an application in the format set out in the annex

2. a certified copy of the by-law or resolution authorizing the surrender including the date it was passed by the members

3. a certificate or statement of an officer of the corporation attesting to the due passage of the by-law or resolution by the members of the corporation

4. an affidavit or statutory declaration of an officer certifying that the facts mentioned in the application are true

5. an officer's statement certifying that:

a. the corporation has no assets

b. if the corporation had assets they have been: i) rateably divided amongst the members or ii) distributed among other corporations in Canada having the same or similar objects or among other recognized charitable corporations in Canada

c. the corporation has no debts, liabilities or other obligations

6. the original Letters Patent (and Supplementary Letters Patent if any). If those have been lost, an affidavit or statutory declaration attesting to that fact is required

If the application is pursuant to subsection 32(1), the following further documents must be filed:

§ A copy of the Canada Gazette and newspaper publications, indicating the date of publication (see model in annex)

If the application is pursuant to subsection 32(2), i.e. the corporation has not gone into bona fide operation or has been inoperative for 3 or more consecutive years, the Department will publish the notice in the Canada Gazette.

If accepted, what you get back

A Directive of Dissolution and Surrender of Charter bearing an effective date one year after the date of publication in the Canada Gazette. No other certificate is issued and the dissolution takes effect unless a reasonable objection is received.

If not accepted, what you get back

§ a checklist identifying the unacceptable provisions with an "X"

§ original documents to be corrected

How you Complete the Non-profit Checklist

You indicate with a check mark the items that appear in your application document and you specify under what Section number of your by-laws certain listed matters have been dealt with (see annex 11). Send the completed checklist along with your application.

How you Apply for Approval of your Standard By-Law Format

If you intend to use the same By-Law more than once, write to us requesting approval. Your covering letter should be referenced "Request for Approval of Standard By-law Format". If your standard by-law format is approved, you will receive an identifier. In all cases where this standard by-law format is used the identifier should be clearly indicated in the covering letter. In such a case there will be no need to complete the by-law checklist, and the by-laws will not be examined in the Directorate.

How you Find an Acceptable Name for your Non-Profit Corporation

The proposed name of your corporation must be searched and approved before Letters Patent or Supplementary Letters Patent changing the name, may be issued. It must be searched on NUANS®, the automated search system administered by the Department, which scans the database also administered by the Minister.

In addition to the Corporations Canada, certain private firms, called Search Houses may access this database of the NUANS® system. They will produce a 5 page computer printout called a search report and may provide you with their opinion as to whether or not the Minister will approve the name which you propose. Where the search report reveals no conflicting names and the name is not otherwise prohibited for incorporation by the regulations, you will have a priority on that proposed name, over other federal applicants for incorporation, for 90 days from the date of the search.

To have your proposed name searched you may:

a. prior to submitting your application to Corporations Canada, forward a request for reserving a proposed corporate name to one of the private firms (Search Houses), who access the federal database on the NUANS® System. The five page computer printout which they will issue for a fee which they determine, must accompany your application, or

b. send the appropriate name search fee along with the application and the name will be searched when the documents are received in the Corporations Canada

If approved, the name will be reserved for a period of 90 days from the date of the search. If not approved, you will be advised that Letters Patent cannot be issued.

A copy of the relevant name regulations and the relevant page from the name policy are attached as annex 12. Generally speaking, not-for-profit corporations should avoid names which are too general, e.g. The Kidney Institute, or connote government involvement, or are likely to be confused as being, or as being affiliated with certain existing organizations.

The applicants may wish to consider adopting a bilingual corporate name if they intend to carry on business in a bilingual region.

III Please Note ...

Totally Inadequate Applications

From time to time, applicants, especially those who represent an existing unincorporated body, will submit their organizations' existing by-laws without any attempt to alter them to meet the requirements of the Act. Such applications will be rejected after only a cursory examination. The applicants will be furnished with a kit and advised to resubmit redrafted documents for examination.

Complaints and Suggestions

We would be happy to receive any constructive complaints or suggestions relating to the kit, the model by-laws, the policy or the processing of applications, which may reasonably enable us to improve our service. Please address such written complaints or suggestions to the attention of the Chief, Corporate Examination Section.

Registration with Revenue Canada as a Charitable Corporation

Certain not-for-profit corporations whose objects meet the criteria specified by Revenue Canada may be registered with Revenue Canada as charitable corporations, enabling them to issue tax deductible receipts to those who contribute to their cause. Information and the application form concerning charitable registration are available from:
Charities Division
Revenue Canada, Taxation
400 Cumberland Street
Ottawa, Ontario K1A 0L8
Telephone: Local 613-954-0410
Long distance (Toll Free) - 1-800-267-2384

In order to avoid unnecessary applications for Supplementary Letters Patent, Revenue Canada suggests that you make your application for registration prior to or at the same time as you file your application for incorporation. A draft of the objects which you propose to insert in the application for incorporation should be attached to the application going to Revenue Canada, for registration.

"Non-Profit" Status with Revenue Canada

Non-profit corporations may be exempt from the need to pay tax if they meet certain criteria specified by Revenue Canada. Revenue Canada suggests that you consult your District Taxation office to obtain those Interpretation Bulletins dealing with "not-for-profit" status for tax purposes.

Filing Requirements

Annual Summary

Once incorporated, a not-for-profit corporation must file an Annual Summary with the Corporations Canada, on or before June 1st of each year, containing information relating to the year ending March 31st. A blank Annual Summary form is sent out to the corporation at its postal address on record in the Corporations Canada, on or about March 31st of each year. A sample Annual Summary form is attached as Annex 14. Failure to file the Annual Summary in any given year is an offence which is subject to a fine. Failure to file for two consecutive years can result in the dissolution of the corporation (Section 133 of the Act).

Change of Head Office Location

The corporation must file a by-law, sanctioned by a 2/3 vote of members, in order to change the place (municipality) where the head office of the corporation is situated (Section 24 of the Act).

By-Law Amendments

In accordance with the general by-laws, a not-for-profit corporation will be required to submit any amendments of its general by-laws to the Corporations Canada for the approval of the Minister. Most general by-laws require that such amendments be approved by the membership before the application is made to the Minister for his approval.

Record Keeping

The corporation is to keep the following records in the custody of the secretary or some other officer especially charged with that duty (Section 109 of the Act):

1. a copy of the Letters Patent, any Supplementary Letters Patent and all by-laws of the corporation

2. the names of all persons who are or have been members

3. the address of each such person while he/she is a member

4. the names, address and occupations of all persons who are or have been directors, and the dates upon which each became or ceased to be a director

The corporation is to keep adequate accounting records at the Head Office of the corporation (Section 117 of the Act).

Director General's Power of Investigation and Inquiry

The Director General, Corporations Canada has the power to inquire into alleged contravention of the Act by a not-for-profit corporation. Where, for instance, it is brought to her attention that a corporation fails to hold annual meetings or to keep proper books and accounting records, or fails to appoint auditors, the Director General may conduct an inquiry and, where necessary, will use the remedies available to her under the Canada Corporations Act to enforce compliance.

Affidavits, Statutory Declarations and Commissioner for Taking Oaths

An affidavit is a written statement of evidence sworn before an authorized person. There is a clause, known as a jurat, written at the foot of an affidavit certifying when, where and before whom the affidavit was sworn (see annex 5).

Where a person does not want to give evidence under oath, he/she may make a solemn declaration in the form prescribed under the Canada Evidence Act. Those persons who are authorized to take evidence under oath may receive the solemn declaration of any person in this form (see annex 13).

Certain persons are authorized by law to take oaths by virtue of the offices they hold. Lawyers, notaries and Members of Parliament are automatically such persons and are called Commissioners for Taking Oaths. You will also be able to find a Commissioner at your local city hall.

IV Remember ...

Unless you have a particular reason for doing so, do not send your application to the Minister, but rather directly to:
Corporations Canada
Industry Canada
9th Floor, Jean Edmonds Tower South
365 Laurier Avenue West
Ottawa, Ontario K1A 0C8

1. Enclose the proper fee (see annex 15)

2. Indicate if you are using the Corporations Canada Model By-law, Privately approved By-laws which have been assigned an identifier or customized by-laws which have not previously been reviewed by this office

3. For faster service of customized by-laws, complete and submit the checklist contained in the kit

4. Verify that the application and affidavit or statutory declaration have been signed, sworn and appropriately dated

5. On resubmitting your rejected application:

a. make reference to the corporate number assigned to your application or indicate that a DRAFT was previously reviewed and

b. make sure that your NUANS® search which has a life of 90 days, is still alive

6. In cases where you have an urgent need to be incorporated, send your application to Corporations Canada, by courier, highlighting the reasons for need of urgency, in colour on your covering letter.


[1] http://strategis.ic.gc.ca/epic/site/cd-dgc.nsf/en/cs02167e.html