Spring Cleaning
By Yvonne Chenier
There has been much written about the pending changes for certain federally incorporated entities as we wait for the Canada Not-for-profit Corporations Act (the CNCA ) to come into force and become law. This has perhaps been delayed but not cancelled by the upcoming federal election. The message that is being broadcast loud and clear by all who practice in the tax and charity law area is that corporations incorporated under Part II of the Canada Corporations Act and most Canadian Special Act Corporations should make plans today to undertake a comprehensive review of their governance structure in preparation for the requirements of the CNCA.
Just like these federally regulated corporations, some of which will be putting a governance review on their board or retreat agendas this spring, it is just as important for all not-for-profit organizations to take time for an organizational review, regardless of whether they are impacted by the CNCA. Even if the laws that regulate an organization do not dramatically change, practices sometimes do and certainly organizations change. What better time to do this than springtime when it feels good to dust of the cobwebs and take stock of what you have, what you need to get rid of and what you need to get.
Consider some of the following questions you might be asking during this review process:
· Are you a non-profit organization but should you be a charity or vice versa?
· Are you a religious organization that would be better served under another structure?
· Have you reviewed your stated objects and activities and are they in line with what
the organization is actually doing?
· Are you operating in other provinces or territories and if so should you consider
registration under their regulations or laws?
· Is the legal name of the organization used in all documents, advertisements etc.?
· Are you legally permitted to do something as modern as have meetings by telephone or other
electronic means?
· Are you legally permitted to get resolutions signed by an email or even use something as
archaic as a fax?
· Did you keep minutes of that last meeting where important decisions were made?
· Are the audit requirements in your bylaws working for you?
· Is your practice involving ex officio directors really permitted under your governing legislation
or bylaws?
· Do you have a clear distinction between your members and directors and officers?
· Do you have committees and if so do they have any legal status?
· If you use the terms special resolution, ordinary resolution or extraordinary resolution are
these clearly defined in your organizational documents or governing legislation?
· Do you have signed contracts with service personnel?
· Do you have a privacy policy or is one actually required?
· Are your dissolution and wind up procedures keeping up with modern practices?
· Is it time to amalgamate (join) with another organization and is there a process that applies?
· Do you know who know who your members are? Where your members are?
· If you have classes of members, do any have veto power or should they?
· Do you have the power to borrow funds and are the requirements relevant?
· What investment powers does the organization have over its funds?
· Do you need to make any amendments to your documents and if so is the procedure realistic?
· Are you a RCAAA that needs to prepare for the extra requirements that will be imposed on you
if the provisions of budget 2011 are brought back to life by the new government after the
election on May 2nd? .
These are just a few questions that one could start with in organizational spring cleaning. Many more may be applicable to your special and unique situation. Even though the answer to some of these questions may raise some dust it is no excuse not to get started. All organizations should be prepared. Those who procrastinate in their spring cleaning may end up sweating it out in the dog days of summer. Or worse, sweeping up the dead leaves into piles in the fall.