It is really important that you understand what laws apply to your non-profit and what those laws say.
This article aims to highlight some of the most important laws that affect non-profits in Canada.
Corporate Laws
When most people think of corporations, they think of large businesses like Coca-Cola, Microsoft, or Amazon. But corporations are far more pervasive than you might think. In fact, most non-profits are corporations, albeit of a slightly different variety than their for-profit cousins.
For-profit corporations usually have shareholders, and those shareholders have certain rights to the profits and assets of the corporation. On the other hand, not-for-profit corporations usually have members with limited/no rights to the profits or assets of the corporation (though some social clubs, like golf courses or sailing clubs, have shareholders). That’s why non-profits are sometimes referred to as corporations without share capital.
For this reason, non-profits need to understand corporate laws and how those corporate laws apply to them.
In Canada, a non-profit can be created under the federal laws of Canada or under the laws of any individual province or territory. At the bottom of this article is a list of the not-for-profit corporations’ acts across the country (and in addition to these, there are usually separate acts dealing with cooperatives, credit unions, marketing boards, etc.).
You can think of the corporations act as being the umbrella of laws that governs your non-profit. But under the umbrella, there are even more places that you need to look for guidance on what your non-profit should and should not do:
- Articles of Incorporation, Letters Patent, and similar documents: These documents are created at the time of incorporation. They are like the Constitution of the organization. They can only be changed in limited circumstances. The terms in the Articles of Incorporation sometimes put parameters around what an organization can do and how it can do it.
- By-Laws: Every non-profit corporation is required to have by-laws. The by-laws provide nitty-gritty details about how the non-profit corporation can be operated. For example, it provides detailed guidance about how to carry out members meetings. By-laws fall under the “umbrella” of the non-profit corporation act under which the non-profit is formed, but sometimes the Act will say that the by-laws can override what is written in certain circumstances.
- Unanimous Members Agreement: In some instances, members might come to a written agreement about making decisions on certain subjects or operating the non-profit. Like by-laws, these agreements fall under the umbrella of the governing Act, but sometimes their provisions can override the Act or the by-laws.
If you are trying to figure out what corporate law applies to your non-profit and what it says, then we would suggest going through this list from the bottom up… finishing with the legislation. That way, you will get a detailed understanding of what rules apply to your particular non-profit without getting lost in the complexities of the legislation. If you are really uncertain, then you should speak with a lawyer.
All non-profits are required to adhere to some basic corporate law requirements:
- carry out an AGM;
- carry out annual maintenance of corporate records;
- file an annual corporate information return or report;
- keep a list of Members with contact information
- keep a list of Directors and Officers with contact information
- keep a Minute Book containing the corporation’s by-laws, list of members, directors, officers, director and member resolutions, etc.
The Tobuso platform helps you manage your non-profit’s core corporate law requirements. It takes a lot of the guesswork out of the process. You can book a free call to discuss how the platform might help your non-profit easily manage its obligations without the headaches.
Employment Law
Employment law is a complex area of law. And unfortunately, that’s just as true for the non-profit sector as it is for the for-profit sector.
If your non-profit has any employees, or even volunteers or independent contractors, then you should have a basic understanding of employment laws that are applicable to your non-profit. Charity Village has prepared a summary that should help you get started in the right direction.
If employment issues are a particularly important part of your non-profit, consider putting additional resources in place. For example, you could establish a relationship with a reputable but reasonable employment lawyer who could provide services as and when needed. Or you could seek a director with employment law expertise who could provide high-level guidance in such a role.
Tax Law
Non-profits enjoy special tax treatment, but this area of law is also complex. For example, non-profits are exempt from paying income taxes (for so long as they qualify as a non-profit), but they are still required to collect and remit GST/HST upon the sale of certain goods and services.
It is best for non-profits to establish a relationship with an accountant (or bookkeeper) who is well-versed in the unique tax treatment of non-profits in Canada. Software can also help in this regard, and at least one, Sage, seems to have an offering for non-profits and charities in Canada.
There is an additional tax law complexity as well when it comes to registered charities. Registered charities are usually non-profit corporations that have received a special tax designation under the Income Tax Act, which gives them charitable status. With charitable status comes some benefits, such as the ability to offer charitable donation receipts to certain donors. However, it also comes with enhanced accounting and reporting responsibilities. This article does not go into detail about the intricacies of charities law or the applicable tax laws.
Common Law Obligations
It is always important for organizations and their directors and officers to be aware of common law obligations that apply to them. These common law obligations are often the same as they would be for individual citizens—such as trespass laws, criminal laws, etc.
However, there are additional standards that must be met in some instances. For example, directors have a fiduciary duty to act in the non-profit’s and its stakeholders’ best interest.
Situation Specific Laws
In addition to the three categories listed above, most organizations are also subject to other laws that are more specific to their situation.
One variable is geography. For example, an organization might need to obtain certain permits to operate in specific municipalities.
Another variable is the specific type of programming that you are engaging in. If your programming involves exporting aid products, then you might be subject to certain import/export laws. If your programming involves employment training, then there might be certain health and safety laws that need to be complied with.
Conclusion
We hope that this article has given you a sense of what laws apply to your non-profit. If you are ever uncertain, then it is always best to speak with a knowledgeable lawyer. If you want to avoid any uncertainty regarding meeting the corporate law obligations of your non-profit, sign up for an account on our site and follow the prompts.
Non-profit corporation legislation in Canada
FEDERAL
Canada Not-for-profit Corporations Act
ONTARIO
Not-for-Profit Corporations Act (New)
Corporations Act (Old)
NEW BRUNSWICK
SASKATCHEWAN
Non-Profit Corporations Act, 2022
BRITISH COLUMBIA
ALBERTA
MANITOBA
QUEBEC
NOVA SCOTIA
PRINCE EDWARD ISLAND
NEWFOUNDLAND
YUKON
Societies Act (New)
