Annual general meetings during COVID-19
Federal not-for-profit corporations have options regarding holding their annual general meeting during the COVID-19 pandemic. Read Annual meetings of federal businesses, not-for-profits and cooperatives during COVID-19 in 2021.
The Canada Not-for-profit Corporations Act (NFP Act) contains some exemptions that can affect the way a corporation fulfills its obligations.
An exemption is an official decision made by the Director appointed under the NFP Act that frees a corporation from having to comply with a particular requirement of the Act.
A corporation can only be exempted...
- from specific requirements, and
- only if it meets the required criteria of the exemption.
There are nine exemptions in the NFP Act:
- Deeming a corporation non-soliciting
Consult the Deeming a Corporation Non-soliciting policy for further information.
- Restricting access to corporate records
Consult the Exemption to Restrict Access to Corporate Documents policy for further information.
- Authorization to extend the time for calling an annual meeting
Section 61 of the Canada Not-for-profit Corporations Regulations (the “Regulations”) requires annual meetings of members to be called within specific time frames. The directors of a corporation must call an annual meeting of members within 18 months of becoming an NFP Act corporation. After its first annual meeting, a corporation must call annual meetings no later than 15 months after the last annual meeting and no later than 6 months after its financial year-end.
There may be situations when allowing a corporation to have more time to call a meeting would be acceptable. In these cases, section 160(2) of the NFP Act states that the Director may authorize a corporation to extend the time for calling an annual meeting as long as the members will not be prejudiced.
- Authorization relating to method of giving notice of annual meetings
Before a members’ meeting, a corporation has to notify members who are entitled to vote of the time and place of the meeting. The method for giving notice has to be set out in the corporation’s by-laws. Methods are limited to those listed in section 63 of the Regulations (for ex., by mail, by telephone, etc.).
There may be times when allowing a corporation to give notice to members in a way that is not listed in the Regulations, or in a way that is not set out in its by-laws, is acceptable. In these cases, section 162(5) of the NFP Act states that the Director may authorize a corporation to give notice of the meeting to members in another manner as long as the members will not be prejudiced.
- Authorization relating to absentee voting methods
A corporation’s by-laws can state how members who are not attending a members’ meeting can vote. Voting methods are limited to the choices listed in section 74 of the Regulations (for ex., voting by proxy or mailed-in ballot).
There may be other methods of absentee voting that would be acceptable. In these cases, section 171(2) of the NFP Act states that the Director may authorize a corporation to permit members to vote by another method as long as the members and the corporation will not be prejudiced.
- Exemption from financial disclosure requirements
Part 11 of the NFP Act contains the different requirements that relate to a corporation’s financial disclosure. For example, section 175 requires a corporation to send annual financial statements to members.
There may be times when allowing a corporation to disregard one of these requirements is acceptable. In these cases, section 173 of the NFP Act states that the Director may exempt a corporation from any requirement in Part 11 when the detriment caused to the corporation by that requirement outweighs the benefit.
- Deeming the gross annual revenues of a soliciting corporation
Consult the Deeming the Gross Annual Revenues of a Soliciting Corporation policy for further information.
- Exemption from electronic document requirements
There are various requirements in Part 17 of the NFP Act relating to a corporation’s use of electronic documents to communicate with members, directors and creditors. For example, section 266 states that a person must consent to receive information electronically.
There may be situations when allowing a corporation to be freed from one of these requirements is acceptable. In these cases, section 271 of the NFP Act states that the Director may exempt a corporation from any electronic document requirement as long as the members will not be prejudiced.
- Exemption from trust indenture requirements
A corporation can issue debt obligations (for ex., a bond or a debenture) under a trust indenture. If those debt obligations are part of a distribution to the public, the trust indenture has to comply with certain requirements (for ex., who can act as trustee, a trustee’s duties, etc.). The requirements for trust indentures are found in Part 7 of the NFP Act.
There may be another law with requirements for trust indentures similar to those of the NFP Act that would make complying with the requirements of the NFP Act duplicative. In cases where a trust indenture, the debt obligations issued under it, and the security interests effected by it are subject to a law of a province or country that is largely the same as the NFP Act, section 104(3) states that the Director may exempt the trust indenture from the NFP Act requirements.
Before applying for an exemption
- Consider whether your corporation has a need for a particular exemption and if the test for that exemption could be met.
- Read Additional Information about Decisions made by the Director appointed under the NFP Act.
- Read the relevant sections of the NFP Act, the Regulations, and any applicable policies.