Federal Not-For-Profit Corporations Face Radical Change

On November 15, 2004, the Minister of Industry introduced legislation to radically overhaul the regulation of and governance rules affecting federally incorporated not-for-profit corporations. When passed into law, Bill C-21, the proposed new Canada Not-for-profit Corporations Act, will replace Parts II and III of the Canada Corporations Act, the current governance statute. The Canada Corporations Act has remained largely unchanged since 1917 and lacks modern corporate governance rules. In the Ministry’s own words:

"It is antiquated ... Its financial disclosure provisions are weak, the duties and responsibilities of directors are ill defined, it does not provide a proper defence against liability, and the ability of members to scrutinize the activities of the corporation is limited. Several issues, including remedies and internal governance, are not addressed directly in the Act, but through administrative policies established by the director appointed under the Canada Business