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Time is Running Out for Not-For-Profit Corporations to Continue Under the New Canada Not-For-Profit Corporations Act


Tick tock...time is running out.

This summer Corporations Canada has been actively reminding federal corporations that are currently incorporated under Part II of the Canada Corporations Act (CCA) that they have to continue (transition) under the new Canada Not-for-profit Corporations Act (CNCA) or risk dissolution.

The federal government brought into force the CNCA on October 17, 2011, as a comprehensive piece of legislation designed to provide not-for-profit organizations with a more modern governance structure. Pursuant to the CNCA, it is mandatory for all federally incorporated not-for-profit corporations to transition to this new act by October 17, 2014.

Dissolution is a real risk for corporations that fail to continue. Section 297(5) of the CNCA provides that Corporations Canada may dissolve corporations that fail to continue. Dissolution, however, will not be automatic. Pursuant to Section 222 of the CNCA, before dissolving a corporation, Corporations Canada will give notice to the corporation and to each director and publish the notice in a publication generally available to the public. Unless cause for the contrary has been shown, a certificate of dissolution may be issued after 120 days of giving such notice. During the notice period, corporations will be able to continue (transition) under the CNCA.

Once dissolved for failure to continue, however, a corporation will need to be revived. According to Section 219 of the CNCA, if a corporation is dissolved any interested person may apply to the Director to have the dissolved corporation revived as a corporation under the CNCA.  The revival and continuance of the corporation will therefore need to be completed in one step at the same time.

For federal corporations that have not yet transitioned and do not want to be dissolved, the time to put a transition plan into action is now.

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