Aug 10, 2020
COVID-19: Extensions Granted for Federal Not-for-Profit Corporations
Many charities and non-profits have faced difficulties in holding their annual general meetings (AGMs) due to the restrictions on in-person gatherings as a result of COVID-19.
Blanket relief has now been provided to federal not-for-profit corporations governed by the Canada Not-for-profit Corporations Act (CNCA). Specifically, an order has been issued (Order) to extend deadlines for CNCA corporations to hold their AGMs, present their annual financial statements to their members, and where applicable, file copies of their annual financial statements with the federal corporate ministry, Corporations Canada.
COVID-19: Previous Announcements by Corporations Canada
This past spring, due to the pandemic, Corporations Canada issued a notice (Notice) outlining options for CNCA corporations to hold virtual AGMs or to apply to postpone their AGMs, and it also extended the deadline for CNCA corporations to file their annual returns. You can read about the Notice in our article here and about the extension to file annual returns in our article here.
In May, we also wrote about proposed legislation that would facilitate the issuance of the Order, but that Bill never went beyond First Reading in the House of Commons.
Deadlines Relating to AGMs and Financial Statements
The directors of a CNCA corporation (Directors) are required to call an AGM within 15 months of the corporation’s last AGM and not more than 6 months after its most recent financial year-end. At each AGM, among other things, the Directors must present financial statements relating to the corporation’s last financial year-end to the members. For more information on the requirements for meetings of CNCA corporations generally, see our article here.
Corporations that are “soliciting corporations” are also required to file copies of their annual financial statements with Corporations Canada not less than 21 days before their AGMs must be held. A corporation is considered soliciting when it has received more than $10,000 in income from public sources in a given financial year, and it will remain soliciting until it has received less than $10,000 in public funds for 3 consecutive financial years.
Prior to the issuance of the Order, CNCA corporations needed to apply to Corporations Canada for authorization to delay the calling of their AGMs and for exemptions from the requirements relating to financial statements. These requests would be considered by Corporations Canada on a case-by-case basis.
Extensions Granted under the Order
The Order extends, by a maximum of 6 months, the deadline for CNCA corporations to call their AGMs and the deadline for soliciting corporations to file their financial statements with Corporations Canada to the earlier of the following:
- 21 months after the last AGM and not more than 12 months after the last fiscal year-end; or
- December 31, 2020.
For example, if a CNCA corporation has an October 31st year end and held its last AGM on January 15, 2019, it ordinarily would be required to hold its AGM on or before April 15, 2020. The Order permits the CNCA corporation to hold its AGM on or before October 15, 2020.
The Order also allows Directors to present a corporation’s financial statements to its members at an AGM which is held within 12 months of the corporation’s last fiscal year-end.
The extensions granted under the Order apply retroactively to March 13, 2020, and end on December 31, 2020. As a result of the Order, CNCA corporations automatically qualify for these extensions, and do not need to apply to Corporations Canada for authorization.
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While the Order provides comfort to federal not-for-profit corporations which have been unable to hold their AGMs or which have held or are planning to hold their AGMs after their previous deadlines, the relief is quite late in coming, notwithstanding that it is retroactive. Furthermore, unlike the Emergency Order issued by the Ontario government with respect to meetings of Ontario not-for-profit corporations (see our article here), the Order does not explicitly state that it overrides a corporation’s by-laws. Presumably the intention is that it does, but there is still uncertainty.
We would be happy to answer any questions that you may have about holding members’ or directors’ meetings.
For legal advice on issues arising from COVID-19, please contact your Torkin Manes lawyer. For more information about dealing with COVID-19, please visit our COVID-19 Resource Center.