As we had discussed in our blog on March 24, 2023, Corporations Canada will begin issuing Notices of Intent to Dissolve to CNCA non-profit corporations that have not filed their Annual Return in 3 years or more. Now, Corporations Canada has put out a note which we have reproduced below, that says, “In July 2023, Corporations Canada (CC) will begin administrative dissolutions of not-for-profit (NFP) corporations governed under the Canada Not-for-profit Corporations Act that have not filed their annual return (AR) for 3 years.”
If your organization is a CNCA non-profit corporation it is important that you do certain filings. The Annual Return is only one of those filings. For information on those filings, see our blog post. Canadian Federal Non-Profit Corporations under the Canada Not-for-profit Corporations Act (“CNCA”) need to ensure that they do their filings.
Also, I had written to CRA to ask whether they will be alerting charities to this new initiative as a dissolved charity will eventually lose its registered charitable status. The short answer is that CRA will not be alerting charities to this corporate law requirement as this is a basic filing requirement and does not affect their governing documents, such as a continuance or articles of amendment would. Also, CRA does not want to set a precedent with filing requirements in all the different corporate acts that we have in Canada that it needs to get involved. Charities need to ensure that they meet their corporate requirements and are not dissolved, and in truth, it is not CRA’s job to remind you of your corporate requirements, or for that matter, employment law requirements, etc. I have reproduced the note I received from Sharmila Khare, Director General of the Charities Directorate, at the bottom of this post.
Corporations Canada Note
Le français suit l’anglais
Administrative dissolution program of not-for-profit corporations will be launched in July
In July 2023, Corporations Canada (CC) will begin administrative dissolutions of not-for-profit (NFP) corporations governed under the Canada Not-for-profit Corporations Act that have not filed their annual return (AR) for 3 years.
CC will send a Notice of Intent to Dissolve to NFPs in default of filing their ARs, and NFPs will have 120 days from the date of the notice to file the required ARs. CC will issue a Certificate of Dissolution to NFPs that do not respond by the deadline stated in the Notice of Intent to Dissolve.
Dissolution can have serious legal repercussions; for example, a dissolved corporation can no longer conduct activities, bank loans may be refused, and charities registered under the Income Tax Act may lose their registration as a charity.
Corporations Canada encourages all corporations to be well informed of their filing obligations in order to avoid potential dissolution.
Related information
- Your reporting obligations under the NFP Act
- Annual return – Not-for-profit corporations
- Dissolving a not-for-profit corporation
Le programme de dissolution administrative des organisations à but non lucratif sera lancé en juillet
En juillet 2023, Corporations Canada (CC) commencera à procéder à la dissolution administrative des organisations à but non lucratif régies par la Loi canadienne sur les organisations à but non lucratif qui n’ont pas déposé leurs rapports annuels depuis 3 ans.
CC enverra un Avis d’intention de dissolution aux organisations qui n’ont pas déposé leurs rapports annuels, et ces organisations auront 120 jours à compter de la date de l’avis pour déposer les rapports requis. CC délivrera un Certificat de dissolution aux organisations qui ne fournissent aucune réponse avant la date limite indiquée dans l’Avis d’intention de dissolution.
La dissolution peut entraîner de graves conséquences juridiques; par exemple, une organisation dissoute ne peut plus mener d’activités, on peut lui refuser des prêts bancaires, et les organismes de bienfaisance enregistrés en vertu de la Loi de l’impôt sur le revenu peuvent perdre leur statut d’organisme de bienfaisance enregistré.
Corporations Canada encourage toutes les sociétés à bien s’informer de leurs obligations de dépôt afin d’éviter une éventuelle dissolution.
Information complémentaire
Here is a CRA note on the Corporations Canada dissolution of CNCA corporations that I received on May 12, 2023:
Good morning Mark,
Thank you for contacting us regarding Corporations Canada’s resumption of dissolutions of charities and non-profit organizations, incorporated under the Canada Not-for-profit Corporations Act (CNCA), that are in default of filing their annual reports. Please accept our apologies for the delay in responding to you.
Understanding that maintaining corporate status is a requirement for incorporated charities to maintain their registration as a charity, the Canada Revenue Agency’s (CRA) Charities and giving web pages provide relevant information to registered charities about their obligation to maintain their status as a Canadian legal entity. Some examples of these resources include the checklist for maintaining corporate status, as well as the Change legal status, and Obligations of becoming a registered charity web pages.
The CRA has, in the past, updated its website and provided more tailored communications in situations where incorporated registered charities were required to transition to a new Act of Parliament; the transitions to the CNCA and the B.C. Societies Act being recent examples. When those circumstances arise, the CRA has a greater and more direct role to play as those organizations would be issued new or amended governing documents, which must be submitted to the CRA. However, maintaining corporate status and, in particular, filing reports to incorporating authorities, is not a requirement of, or a process that directly involves, the CRA. As a result, we have decided that we will not be implementing a communications strategy to address this Corporations Canada process.
Our understanding is that entities incorporated under the CNCA should have already received filing reminders from Corporations Canada about any outstanding reports. In addition, we are concerned that sending a reminder to federally incorporated organizations to file their annual reports with Corporations Canada would create a precedent where the CRA may be expected to do so for organizations incorporated in other jurisdictions as well.
As you know, the CRA works closely with charities and is committed to helping them resolve their concerns and meet their obligations under the Income Tax Act. However, it is ultimately the responsibility of charities to ensure that they meet all of their obligations and, in accordance with our standard processes, charities that lose their corporate status will continue to have their charitable registration revoked.
As always, Mark, we appreciate your insights and thank you again for contacting us.
Sharmila Khare
Director General
Charities Directorate
Canada Revenue Agency