NFP Act Webinar PPT - Sport Law & Strategy Group

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Transcript NFP Act Webinar PPT - Sport Law & Strategy Group

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
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
 Increase accountability
 Increase transparency
 Improve efficiency
 Embrace new
 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
… 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
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
- Carters Professional Corporation
CKC Current Reality
8 classes of members
3 autonomous councils, each
with power to define their
4 AGMs each year!
9 directors
6 directors are appointed
(2 from each council)
1 director is ex-officio
Only 2 are elected!
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
 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/
Meeting CRA’s new
requirements of
‘exclusive purpose
and function’
Maintaining jurisdiction
over individuals/athletes
Some Things to Watch For
 Maintaining an effective athlete
 Failure to consult with
stakeholders, or
 Stakeholders not engaging in
consultation efforts
 Evolution to more modern
and corporate structures may
 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
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
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