Corporations Canada has begun a process to dissolve non-profits that have not filed their annual return (Form 4022) for at least three years. We have discussed that elsewhere. Today I saw an email notice from Corporations Canada to a non-profit relating to the non-profit not filing their financial statements with Corporations Canada. They also noted that the non-profit had not noted the date of their previous AGM on their annual return.
Please don’t say that you were not warned: “A not-for-profit corporation that is in default of sending any fee, notice or document required by the NFP Act for a period of one year could be dissolved. Dissolution terminates the existence of a corporation and can have serious legal repercussions, particularly if the corporation is a registered charity under the Income Tax Act.”
Here is the funny thing. Non-profits spend thousands on having accountants prepare financial statements or audited financial statements. Sometimes tens of thousands of dollars. Sometimes even more. It takes 5 minutes to file your financial statement with Corporations Canada and costs nothing. The consequences for non-filing are dissolution. If you are dissolved you don’t exist anymore. You don’t have limited liability. You don’t have assets. If you are a charity you will eventually be revoked. How many more reasons do you need to have if you are a soliciting corporation to file your financial statements with Corporations Canada?
By the way think of a Hollywood blockbuster action movie. You are in a room held hostage by terrorists – they say you have a choice to make. Your large charity can have your financial statements audited or you can break the law and not get an audit but file those unaudited financial statements with Corporations Canada. Do you know what the hero would do? The hero would forget about the audit and file the financial statements with Corporations Canada and save the charity and the millions of lives that that charity claims it is saving every year!
You might say that this an implausible topic for a Hollywood blockbuster. First, remember that there is a writer’s strike at the moment. Second, remember the movie “The Accountant” with Ben Affleck. I rest my case – file your financial statements with Corporations Canada.
Here is a copy of the notice:
From: Compliance-Conformité (IC) <compliance-conformite@ised-isde.gc.ca>
Sent: Monday, July 31, 2023
To:
Subject: Corporations Canada – [REDACTED NAME OF NON-PROFIT]
Corporate name: Corporation number:
A review of the corporate information of the above-noted corporation indicates that it is not compliant with at least one filing requirement with Corporations Canada. Corporations Canada is the country’s federal corporate regulator and the administrator of the Canada Not-for-profit Corporations Act (NFP Act). This corporation is incorporated under the NFP Act and is therefore subject to its provisions. The compliance issue(s) described below require immediate action.
1. The corporation has not filed its financial statements.
- This corporation has self-identified as a soliciting corporation on a recent annual return filing.
- Amongst other obligations, a soliciting corporation is required to file copies of its financial statements and reports of a public accountant every year with Corporations Canada.
Action required: The corporation can correct this situation by filing its financial statements and reports of a public accountant online with Corporations Canada immediately.
2. The corporation has not reported the date of its last annual meeting of members on its most recent annual return.
- All federal corporations must hold a meeting each year to allow their members to, at a minimum, elect directors, review the financial statements and auditor’s report, and appoint an auditor.
- Instead of a meeting, small corporations with one or few members can pass a written resolution dealing with the issues listed above.
- Corporations must report the date of their last annual meeting of members when filing their annual return with Corporations Canada.
Action required: Ensure to report the date of the last annual meeting of members (or resolution) on the corporation’s next annual return filing.
A not-for-profit corporation that is in default of sending any fee, notice or document required by the NFP Act for a period of one year could be dissolved. Dissolution terminates the existence of a corporation and can have serious legal repercussions, particularly if the corporation is a registered charity under the Income Tax Act.
Simple, fast and secure. Make changes to the corporation’s information online. File now
A compliance officer will be contacting you by phone during normal business hours to answer any questions you might have.
Related information
Your reporting obligations under the Canada Not-for-profit Corporations Act (NFP Act)
Requirements for soliciting corporations under the Canada Not-for-profit Corporations Act (NFP Act)
Here is a blog of ours dealing with CNCA filings that you might find helpful.
If you really desperately feel the need to spend money, you could take our course: