The Government of Canada has introduced a new Canada Not-For-Profit Corporations Act aimed at eliminating unnecessary regulation and providing flexibility to the not-for-profit sector.

 The new Act stems from recommendations under the Voluntary Sector Task Force (1999) and the Blue Ribbon Panel report on Grants and Contributions reform (2006). Work began on the Act in 2000 with a white paper and consultation process.

The proposed Act will replace the existing Canada Corporations Act that currently applies to nonprofit organizations. If the new Act is passed, organizations currently incorporated under the Canada Corporations Act will have three years to apply for corporate status under the proposed Not-For-Profit Corporations Act. There will be no fees for this process.  

The following is a summary of the highlights, and the full announcement is available online.  

The new Act: 

• Changes to financial reporting: organizations are defined as either soliciting or non-soliciting, and this category, combined with the organization’s size determines the type of financial reporting and who has to have access to the reports

• Sets out standards of care for Directors and Officers, similar to the Canada Business Corporations Act, and provides a "due diligence" defence against potential liabilities

• Enhances and protects members’ rights including access to financial information and membership lists (with restrictions)

Timing

It is anticipated that it will take at least a year for the Act and regulations to be passed. Once it is passed, there is a 3-year transition period for nonprofit organizations to incorporate under the new Act. For more details, visit Industry Canada online.