July 2, 2014 By: Kimberley Cunnington-Taylor
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The Canada Not-for-profit Corporations Act (the 'CNCA') came into force on October 17, 2011. This legislation states that all not-for-profit corporations incorporated under Part II of the Canada Corporations Act (the 'CCA') must continue (transition) to the CNCA by October 17, 2014 or face dissolution. October 17, 2014 is fast approaching but there are still approximately 13,000 corporations incorporated under the CCA that have not transitioned to the CNCA.

Corporations that do not continue to the CNCA by October 17, 2014 will first receive a notice from Industry Canada advising of its intent to dissolve the corporation. It usually takes about 6 months for a dissolution to work its way through the formal process.

Industry Canada has been communicating with all federally incorporated not-for-profit corporations since 2011. It has stepped up its communications efforts by sending e-mails to the corporation and the directors of the corporations (where it has e-mail addresses). Industry Canada will also be contacting these corporations by telephone, and sending notices to all addresses they have, including the addresses on file of all directors listed for a corporation.

Some corporations have either disbanded or do not wish to continue. These corporations will be dissolved. Industry Canada will follow its legislative procedures for this purpose.

Many corporations remain unaware of the requirement to continue. It is important to understand that, if your organization wishes to continue, it must continue by October 17, 2014 or face the consequences of dissolution.

If a corporation is a registered charity, the implications are even more serious: all registered charities that are incorporated, are required to maintain their legal status as a requirement for charitable status. Registered charities in Canada are regulated by the Canada Revenue Agency ("CRA"), which administers the Income Tax Act. Loss of legal status is a reason for loss of charitable status. Loss of legal status does not mean that loss of charitable status is automatic. It does, however, give CRA the authority to revoke charitable status, the consequences of which could be dire for the charity.

If your organization is a federally incorporated not-for-profit corporation, and if it has not yet continued to the CNCA, the time is now. We can help with the entire process, including making sure that CRA has the documents that it needs for registered charities, to ensure that all necessary government records are up-to-date.

Please contact Kim Cunnington-Taylor at 613-231-8299 or by e-mail at kim.cunnington-taylor@nelligan.ca to find out how we can assist with the transition.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.

Service: Business Law