Not-for-Profit Corporations Act
Webinar Presentation to
Canoe Kayak Canada
February 2013
Sport Law & Strategy Group
Providing strategic insight to the Canadian
sport community through professional
services in these areas:
Legal Solutions
Planning & Governance
Strategic Communications
“The Perfect Storm” of 2011
 Canada Not-for-Profit Corporations Act –
affects all NSOs and MSOs
 Sport Canada’s Governance Principles - will
affect future funding
 Amendments to the Income Tax Act – affects
all RCAAAs
 Overall trends to
improve Canadian
sport governance
“Arguably, organization and system
mismanagement costs us more medals
and more lifelong participants [in sport]
than the culprits we prefer to blame,
such as limited facilities and funding, or
insufficient school sport and activity
programs”
-
Efficiency Features
 NFP Act contains mandatory rules, default rules
and alternate rules
 Bylaws can be slim as the rules are in the Act
 Directors may change bylaws without approval of
members, except for ‘fundamental’ changes
 Industry Canada will be a
storehouse, not a clearing
house, for bylaws
 Changes to bylaws will
take immediate effect
Rationale for New Legislation
 Strengthen member
rights
 Increase accountability
 Increase transparency
 Improve efficiency
 Embrace new
technologies
 Other provinces will
follow (Ontario, B.C.)
Possible Approaches
 Avoidance approach – do the minimum to
comply with the letter of the law
 Compliance approach – do more to comply
with both the letter and the spirit of the law
 Strategic approach – leverage opportunity to
review governance model and improve
effectiveness
… this opportunity will not present itself again in our lifetimes …
Impact #1 - Member Rights
Members may pursue more ‘judicial’ remedies
Easier for members to ‘requisition’ a meeting
Members elect directors
Members may remove any, some or all directors by
ordinary resolution
 Members without voting
rights may vote on certain
‘fundamental changes’
 In some instances, member
classes may vote separately
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Impact #2 - Board Structure
The Act requires that members will
elect directors … therefore:
• ‘Ex-officio’ directors are prohibited
• Appointed directors are restricted
Therefore …. You need to
Simplify and streamline
membership classes
Move to an elected
Board structure
“Organizations may wish to collapse
voting member classes into one
category, and eliminate non-voting
members”
- Carters Professional Corporation
CKC Current Reality
Membership
Board
•
•
•
•
•
8 classes of members
3 autonomous councils, each
with power to define their
membership
4 AGMs each year!
•
•
9 directors
6 directors are appointed
(2 from each council)
1 director is ex-officio
Only 2 are elected!
Objects/Purposes
Name
•
•
•
Not looked at since 1990
Should be updated to comply with
new requirements for RCAAAs
•
Current name is Canadian
Canoe Association
Should be updated!
What Other Sports Are Doing
 Creating simpler membership structures
 Eliminating non-voting individual members,
creating ‘registrants’ and ‘honorary officers’
 Choosing smaller, policy-based boards
 Creating ‘Provincial Councils’ with defined
powers
 Rethinking committees – ‘standing’ report to
Board/’operating’ report to staff
 Embracing nomination systems to recruit
skilled/competent directors
Challenges Emerging
Importance of the transition two-step!
Timing of year-end and annual meeting/
conference
Meeting CRA’s new
requirements of
‘exclusive purpose
and function’
Maintaining jurisdiction
over individuals/athletes
Some Things to Watch For
 Maintaining an effective athlete
voice
 Failure to consult with
stakeholders, or
 Stakeholders not engaging in
consultation efforts
 Evolution to more modern
and corporate structures may
backfire!
 High demand for HQPs
Documents You Must File
 Articles of Continuance must contain name,
location, # of directors, statement of purpose,
classes of members, restrictions on activities,
distribution of assets after dissolution
 Bylaws must contain conditions of membership,
method of giving notice for meetings
 If an RCAAA, Canada Revenue Agency has to
approve the Articles of Incorporation
Timing
Work backwards from October 2014
Member voting at AGMs, SAGMs, Special
Meetings, telephone meetings?
Communication with members, trust issues
Two-step transition needed in most cases
Make a plan - and make a back-up plan
For more information, visit:
http://www.sportlaw.ca/nfp-act/
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NFP Act Webinar PPT - Sport Law & Strategy Group