The deadline of October 17, 2014, the date by which federal corporations must continue under the new Canada Not-for-Profit Corporations Act (“CNCA”), has come and gone. If a federal corporation has not continued, all is not lost. But corporations should file their articles of continuance as soon as possible. 

Fewer than half of federal corporations in compliance

We understand that as of today, fewer than 7,000 of approximately 17,000 corporations have completed this process.  Both Industry Canada and the Canada Revenue Agency have been issuing notices to corporations reminding them of the deadline. Corporations that are unsure of their status should search for their information online.

Industry Canada will continue to receive and process articles of continuance after the deadline has passed and until such time as the corporation has been dissolved.  In the meantime, ensuring that the address on file with Industry Canada for the corporation is correct will ensure that the corporations receives adequate notice. 

We know that Industry Canada will soon begin issuing notices of its intention to dissolve the corporation to the approximately 5,000 corporations that are considered inactive, i.e., have not filed an annual return or other document with Industry Canada within the last five years.  Corporations will be given 120 days notice; then, if the corporation has not been continued during that time, Industry Canada may issue a certificate dissolving the corporation.

Reporting requirements more stringent, frequent

For the many corporations that have continued under the CNCA, it is time to consider your regular/annual reporting obligations under that legislation. They are more numerous and will be difficult to keep track of:

1. Annual Return – Form 4022: Must be filed within 60 days following the anniversary date of continuance, a date that may otherwise mean nothing to the corporation, and must indicate whether or not the corporation is a soliciting corporation.  There is a $20 filing fee when filing directly online with Industry Canada
2. Changes Regarding Directors – Form 4006:  Must be filed within 15 days of the change in directors or being notified of change in registered address - in most cases, this form will have to be filed within fifteen (15) days of the Annual General Meeting since that is when such changes usually occur.  There is no filing fee.
3. Financial Statements:  Soliciting corporations must file their financial statements and the public accountant’s report, if any, with Industry Canada not less than 21 days before each annual meeting of members.

Since most federal non-share capital corporations will be soliciting corporations and will have a regular turn-over in directors, most corporations will have to interact with Industry Canada at least three times a year. It is unlikely that those interactions will occur at the same time: within 60 days of the continuance anniversary date, 21 days before the annual meeting and 15 days after the annual meeting.

When added to the occasional obligation to file changes to the by-laws or registered office address, the compliance obligations under the CNCA will be onerous.  Any default in complying with these requirements is an offence, and is liable on summary conviction to a fine of not more than $5,000, or to imprisonment for a term of not more than six months, or to both.  Further, a corporation that defaults for a period of one year in sending any fee, notice or document required by the CNCA could be dissolved.

An interesting note about the addresses of directors:  Initially, Industry Canada indicated that it would only accept residential addresses of directors, but that the addresses of directors would not be available to the general public online.  This policy has been changed to permit directors to provide another address for service and now the addresses of directors are available to the general public when the corporation is searched online.  Corporations should ensure that directors are aware of this change in policy, and consider whether some directors may want to provide another address for service.

Karen J. Cooper practices charity and not-for-profit law at Drache Aptowitzer LLP. She has been recognized as a leading expert in charity and not-for-profit law by Lexpert and The Best Lawyers in Canada.

In addition to her considerable legal experience, she is a frequent author, speaker and teacher, and a contributing author to The Management of Charitable and Not-for-Profit Organizations in Canada (LexisNexis Butterworths). She is on the Board of Directors of the Canadian Land Trust Alliance and the Kemptville District Hospital, and is a member of the Canadian Association of Gift Planners and the Association of Fundraising Professionals.

Contact her by email.