Provisions in letters patent and by-laws superseded by the NFP Act
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- Annex A
- Annex B
- Annex C
- Model special resolution
Because the old Act contained few rules, the letters patent and by-laws of your corporation likely include provisions relating to the following matters. In contrast, the NFP Act provides rules to deal with these matters that apply to all not-for-profit corporations. Consequently, the articles and new by-laws of your corporation do not need to set out these provisions.
Do not include provisions dealing with the following matters:
- Statement that the operations of the corporation may be carried on throughout Canada: The NFP Act makes it clear that the corporation may carry on activities throughout Canada.
- Statement that the corporation is to carry on its operations without pecuniary gain to its members: Under the NFP Act, no profit can be distributed to members unless it is in furtherance of the corporation’s activities or is otherwise permitted by the Act.
- Removal of directors: The NFP Act provides that members may remove a director by majority vote at a special meeting. This reinforces the NFP Act rule that only members elect directors.
- Appointment of ex-officio directors: The NFP Act does not permit ex-officio directors (i.e., individuals who are directors by virtue of the office they occupy). Individuals, not offices, are elected by members to be directors.
- Powers of the board of directors to manage the corporation: The NFP Act gives directors the responsibility for managing or supervising the management of a corporation. This responsibility can be restricted in the articles.
- Annual meetings of members: The NFP Act requires that annual meetings of members be held. Written resolutions in lieu of a meeting are allowed.
- Enactment, amendment or repeal of by-laws: Ministerial approval will not be required to make a by-law effective.
- Appointment of auditor: The NFP Act requires members of a corporation to appoint a public accountant at the annual meeting. Members of a soliciting corporation with gross annual revenues equal to or less than $50,000 and members of a non-soliciting corporation with gross annual revenues less than or equal to $1 million can, by unanimous vote, decide not to appoint a public accountant.
- Report by auditor: The NFP Act specifies the types of financial review (audit or review engagement) that an auditor can conduct (see table).
|Type of Corporation||Gross Annual Revenues||Default Financial Review||Options Members Can Choose|
|soliciting||less than $50K||Review engagement||Audit or no review|
|soliciting||between $50K and $250K||Audit||Review engagement|
|soliciting||more than $250K||Audit||N/A|
|non-soliciting||less than $1M||Review engagement||Audit or no review|
|non-soliciting||more than $1M||Audit||N/A|
You will find more information on the new rules and the NFP Act on the Corporations Canada website.
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