Readers will know that the Canada Not-For-Profit Corporations Act (the "CNCA"), which received Royal Assent June 23, 2009, is anticipated to come into force later this year. Ostensibly, there were at least two reasons for the delay between Royal Assent (when a bill becomes law) and its enactment: the draft regulations and the outreach strategy.

Even though the proposed regulations, intended to implement modern corporate governance rules for federally incorporated not-for-profit corporations, were released last summer and the consultation period closed in the fall, they have yet to be finalized. Consequently, the CNCA cannot come into force because the statute specifies a great number of details to be set out in the regulations, including time periods, options for providing notice to members' meetings and user fees. Though relatively mundane, the regulations will undoubtedly impact each organization differently depending on its by-laws and circumstances.

The following areas will require such charities to consider their organizational structure and current by-laws to ensure compliance.

Corporate records and registers

Under the CNCA, a corporation will be required to keep separate registers of the directors, officers and members. The regulations stipulate that these registers must include the names and addresses of the aforementioned, including when they became and ceased to be directors, officers or members, as well as the class, if applicable, in the case of members.

Email addresses will also need to be included in the registers where the director, officer or member has consented to receiving information or documents by electronic means. Bear in mind that the CNCA allows any member to require the corporation to provide a list of members, including their contact information and class if any, within 10 days.

Of practical import, unless another federal or provincial law provides for a longer retention period, a corporation will be required to retain its accounting records for a period of six years after the end of the financial year to which the accounting records relate. This includes minutes of meetings of the directors and any committee of directors as well as resolutions adopted by the directors or any committee of directors.

By-laws and meeting of members

The CNCA requires corporations to give members entitled to vote at a members' meeting notice of the time and place of the meeting in accordance with its by-laws and the regulations. The regulations outline four options for giving notice and a corporation's by-laws must set out its selected option or options:

1. notice sent by mail, courier or personal delivery, between 21 and 60 days before the meeting;
2. notice communicated by telephone or other electronic communication means, between 21 and 35 days before the meeting;
3. notice affixed to a notice board on which information respecting the corporation's activities is regularly posted at least 30 days before the meeting;
4. notice by publication where a corporation has more than 250 members. In such cases, corporations must provide notice at least once a week for three weeks prior to the meeting in a newspaper or at least once between 21 and 60 days if using a publication of the corporation that is distributed to members.

If the by-laws do not specify a time period, the statutory default for giving notice to each member is between 21 and 60 days before the meeting.

Similarly, the CNCA permits a corporation to stipulate a manner of absentee voting. There are three options provided for in the regulations:

1. by proxy;
2. by mailed-in ballot;
3. by telephone, electronic or other communication.

A corporation will need to set out its selected option or options to be used as well the procedure for collecting, counting and reporting the results of a vote. Votes need to be gathered in a way that permits their subsequent verification and ensures voter anonymity.

Electronic documents

The requirement to provide members with notice will not be met by providing an electronic document unless the member has consented in writing to receiving notice electronically and has designated an information system for receipt. The regulations provide that the pertinent information may be made available through a generally accessible electronic source, such as a website, providing that the CNCA does not stipulate that the information must be sent to a specific place. Notice in writing of the availability and location must be provided to the members.

In general, an electronic document is considered to have been provided when it leaves the information system of the sender and received when it enters the information system of the recipient. In situations where electronic documents are made available by posting them on a website, they are considered to be received when notice is received by the recipient or if that notice is sent electronically, when it enters the information system designated by the recipient.

It is worth mentioning that there is at least one other plausible reason for the delay bringing the CNCA into force. The statutory and regulatory provisions will be implemented together through a comprehensive outreach program. According to Industry Canada, the CNCA "will be supported by a full complement of policies, pamphlets and other documents, available by paper and on the website." Considering the great number of organizations incorporated under Part II of the current Canada Corporations Act, it is understandable that Corporations Canada wants to be prepared for the transition as well.

Joel Secter is a student-at-law with Drache Aptowitzer LLP.