Time’s Up, The Deadline to File For Continuance Under the Canada Not-for-profit Corporations Act has passed
Oct 31, 2014
The deadline to file for continuance under the new Canada Not-for-profit Corporations Act (the “Act”) for all federal not-for-profit corporations incorporated under the Canada Corporations Act was October 17, 2014. Corporations that have not yet continued under the Act are at risk of dissolution by Corporations Canada.
Notice of Dissolution
Although dissolution is not automatic, Corporations Canada is actively taking steps to dissolve non-compliant corporations. In fact, notices of dissolution have already been issued, and will continue to be sent to non-compliant corporations at the valid head office address on the corporate record. To avoid missing the notice and being dissolved upon the expiration of the grace period, please ensure a valid and current address is listed with Corporations Canada.
Upon receipt of a notice of dissolution, the corporation has a 120-day grace period to transition to the Act. Once this grace period has expired, Corporations Canada will publish the name of those corporations it intends to dissolve on its monthly transactions web page. For those corporations, the online database will indicate "active - dissolution pending (failure to transition)."
Consequences of Dissolution
The dissolution of a not-for-profit organization gives rise to various issues, including the possibility significant tax consequences. In particular, registered charities that have missed the deadline run the risk of revocation of the registered charity status by the Canada Revenue Agency, which may result in revocation tax equal to 100% of the value of its remaining assets being owed.
Avoidance of Dissolution
It is strongly recommended that any federally incorporated not-for-profit corporation that has yet to obtain a certificate of continuance from Corporations Canada, do so as soon as possible. Although the transition time period has expired, as long as the corporation has not been dissolved, filing for continuance can be a simple and straightforward process with the proper guidance, even post October 17, 2014.
Jordan Morelli is a corporate and not-for-profit lawyer at Dale & Lessmann LLP in Toronto. He can be reached at firstname.lastname@example.org or (416) 369-3813.
This blog post was prepared with the assistance of Cassandra Da Re, Articling Student at Dale & Lessmann LLP.