Not for Profit Corporations in Canada
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Corporations that solicit funds from the public may be soliciting corporations.

Why Incorporate?

Incorporating refers to the process of creating a new entity called a corporation. Once created, the corporation has a separate identity from the people who incorporate and run it. This has several implications, perhaps the greatest of which is that the corporation is liable for its actions but generally insulates the people who run the organization from those liabilities. On the whole, incorporating is a popular option for people who intend to create a new organization to conduct a specific set of activities.

How Does a Corporation Work?

There are three groups of people who have separate roles within a corporation: the members who elect the directors, the directors who serve as the mind and management of the organization and the officers such as the President and Treasurer who have specific duties.

By default, the new Federal law gives rights, powers and responsibilities to each of these groups in the overall governance structure of the organization. Through the adoption of by-laws, it is possible for corporations to tailor these rights, powers and responsibilities to suit the nature and needs of their organization. While a corporation has the option of customizing its by-laws after incorporation, inevitably it will be easier to do so before incorporating.

For this reason it is important to discuss your planned incorporation with counsel experienced in the practical ways not-for-profit corporations operate.

What Does a Corporation Do?

Generally speaking not-for-profit corporations are organized for specific purposes. In fact, corporations that intend on registering as charities with the Canada Revenue Agency may be required to specifically restrict themselves from conducting any activities which are not charitable.

This is not a small point. An organization which adopts a non charitable purpose could lose its registered charitable status.

Where Can Corporations Operate?

Unless the corporation limits itself, Canadian law does not limit where corporations can operate.

What if a Corporation was Previously Incorporated Under the Canada Corporations Act?

The Canada Corporations Act has governed Federal not-for-profit corporations since it was passed in 1917. The new law requires ALL corporations to file the appropriate documents to ‘continue’ under the NFP Act. In doing so corporations will have the same set of concerns as organizations newly incorporating and would be wise to undertake a detailed review of their organizational documents aided by counsel with expertise in this area of the law.

Failure to file the appropriate documents by October 17, 2014 could result in dissolution as a corporation, loss of registered charity status, and forfeiture of the corporate assets.

Organizations incorporated under the Old Act are encouraged to begin the process of continuing to the new law as soon as possible to leave enough time to do the appropriate document review and pass the required amendments to those documents.

Can the Government Refuse to Accept an Application for Incorporation

Assuming the application is complete, Corporations Canada will accept the application.

How Long Does it Take

Corporations Canada aims to process applications within 5 business days which is realistic considering incorporation is as-a-right under the NFP Act.