Corporations Canada will begin issuing to Canada Not-for-profit Corporations Act (“CNCA”) non-profit corporations Notices of Intent to Dissolve if the CNCA non-profit corporations have not filed their corporate Form 4022 – Annual Return (“Annual Return’) in three years in a row or more. Under Section 222 of the CNCA, Corporations Canada can provide 120 days’ notice to a delinquent non-profit to file their Annual Return and if the Annual Return is not filed within 120 days, the system will automatically dissolve the corporation.
More information should be available on Corporations Canada’s website in May of this year about the dissolution program.
The program will start issuing Notices of Intent to Dissolve during the summer of 2023 on a daily basis to corporations in default of filing their last three Annual Returns in a row. It will clean up the backlog and keep triggering which corporation would be meeting the conditions to be issued a Notice of Intent to Dissolve.
The CNCA came into force on October 17, 2011, and Canada Corporations Act (“CCA”) non-profits had three years to undertake a transition process to the CNCA. Many organizations that did not continue from Part II of the CCA were administratively dissolved around 2015 and 2016. This continuance process and the subsequent administrative dissolutions cleaned up a lot of dormant corporations.
Since 2011, many corporations were incorporated under the CNCA or continued from the CCA. Also, many Ontario and other provincial corporations have continued/moved to the CNCA. At the moment, there are about 45,000 CNCA corporations.
Some of the non-profits that are under the CNCA have now become dormant. It is a lot of work for a non-profit to voluntarily dissolve under the CNCA and it is probably more work than to establish a new corporation. Many inactive CNCA corporations have not been filing their forms, but also have not undertaken the steps to voluntarily dissolve because of the time and cost involved.
This new program of Corporations Canada will be helpful in that it will clean up the CNCA non-profits that are not operating anymore. Furthermore, with the 120 days’ notice, it will give ample time for groups that have not been filing their forms to do so if they want to avoid being administratively dissolved by Corporations Canada.
The Annual Return only asks a few questions and can be completed online in a matter of minutes. Furthermore, if a corporation is administratively dissolved by Corporations Canada but the corporation wishes to continue operating, there is a process under the CNCA to revive the corporation.
Apparently, Corporations Canada has been considering the matter of delinquent corporations for a long time and around 2018 they were planning to develop a program to start dissolving non-profits that had not filed their Annual Returns. The proposed program was put aside due to the pandemic. During the pandemic, Corporations Canada also stopped doing administrative dissolutions of business corporations under the Canada Business Corporations Act (“CBCA”). Business corporations were being administratively dissolved if they were two years in arrears, so a tighter timeline than the three years for the CNCA that will be used now.
In June of 2022, Corporations Canada restarted the CBCA dissolution program and now that they are close to having cleared their backlog, they will focus on the CNCA.
Apparently, Corporations Canada has been in contact with the Charities Directorate of CRA to alert them to the new program. Keep in mind that a registered charity that is administratively dissolved will ultimately be revoked by CRA. CRA takes the position that if a corporation is dissolved and does not exist anymore then it cannot be a registered charity.
Corporations Canada has started recently sending a mass mailing to CNCA corporations that are not subscribed to receive electronic notifications and that are delinquent in their corporate Annual Return filings. This is a courtesy letter and is not required by the legislation. There are about 3,000 corporations that are not subscribed to email notifications which is actually quite a small number compared to the 45,000 CNCA corporations.
If a corporation does not file an annual return and is not registered for email notifications, then it will only receive a reminder notice by mail for that year only from Corporations Canada. Such corporations may not have received any reminders from Corporations Canada since around 2012. Corporations that have signed up to receive electronic notifications will have received an email reminder every year.
The term “Annual Return” used by Corporations Canada in relation to the corporate annual filing may in the future be changed to ”Annual Update Statement”. This would be good as there is sometimes confusion about whether the “Annual Return” form is the same as other filings such as the T2 for non-profits or the T3010 for registered charities.
Corporations Canada is starting with those CNCA corporations that have not filed their Annual Return for three years. There are also corporations that have filed their corporate Annual Return but have not filed a copy of their financial statements with Corporations Canada (as required of soliciting corporations under the CNCA) and s. 222 allows Corporations Canada to dissolve those corporations as well. That might be another program for the future.
The problem that we have highlighted on our blog relating to Hockey Canada and Canada Soccer not doing their financial statements filings with Corporations Canada is on the radar of Corporations Canada and hopefully, they will act on that as well. Apparently, Corporations Canada has been receiving lots of complaints from the public about these non-transparent organizations.
As a charity lawyer, I have some sympathy for small organizations who may technically be soliciting corporations, not complying with this requirement, but when an organization has over $10 million in revenue, for example, it is inexcusable.
There is also a problem with organizations not understanding the definition of soliciting corporation and declaring that they are non-soliciting when they are actually soliciting. Corporations Canada is aware of that problem as well.
Takeaways and action items
Here are some ideas to consider:
- If your organization is a Federal non-profit corporation under the CNCA, you can search your organization’s corporate profile at Search for A Federal Corporation. It will show you what documents have been filed with Corporations Canada. At the same place, you can order for free all the documents that Corporations Canada has on file for your corporation.
- Has your organization filed its corporate Annual Return? If a soliciting corporation, have you filed a copy of your organization’s financial statements with Corporations Canada? Has your organization’s by-law been filed with Corporations Canada within one year of it being passed by the members? Is your organization’s list of directors up to date? Is the corporation’s registered office address listed with Corporations Canada correct? Is the number of directors of your organization in line with the minimum and maximum number of directors set out in your articles?
- Remember that you need to file your Annual Return (Form 4022) with Corporations Canada. All CNCA corporations must file this form on an annual basis. This is a corporate form, not the T2 or T3010, which are tax forms.
- It is important that corporations update their addresses on file with Corporations Canada to receive any potential notices from Corporations Canada and others and also subscribe to email notifications with an up-to-date email address.
- If your organization receives over $10,000 in public funds per year, it will become a soliciting corporation. If a soliciting corporation, your organization must also file a copy of its financial statements with Corporations Canada, even if you also file them with another Federal government department (such as the Charities Directorate of CRA for registered charities).
If a CNCA corporation, there is a number of advantages, including limited liability and if a non-profit under the Income Tax Act, its income is not taxable. It is important to comply with the CNCA’s requirements. While the public may be more forgiving if a small all-volunteer organization does not do all its filings, there will be little sympathy for large professional organizations. Corporations Canada will dissolve a corporation that fails to file its Annual Return. If the corporation is dissolved, it no longer exists and if a registered charity, CRA will also take away the dissolved corporation’s charity status.
Filings can be done through the Online Filing Centre.
While these filings can be quite easily done, if you have questions on this and other matters you can retain our law firm.
Here is section 222 of the CNCA:
Dissolution by Director
- 222(1) Subject to subsections (2) and (3), the Director may
- (a)dissolve a corporation by issuing a certificate of dissolution under this section if the corporation
- (i)has not commenced its activities within the prescribed period after the date shown in its certificate of incorporation,
- (ii)has not carried on its activities for the prescribed period,
- (iii)is in default for a prescribed period in sending to the Director any fee, notice or other document required by this Act, or
- (iv)does not have any directors or is in the situation described in subsection 130(4); or
- (b)apply to a court for an order dissolving the corporation, in which case section 227 applies.
- (a)dissolve a corporation by issuing a certificate of dissolution under this section if the corporation
The regulations provide:
Liquidation and Dissolution
31 For the purposes of subsections 218(1) and (2) of the Act, the prescribed period is three years.
- 32 (1) For the purpose of subparagraph 222(1)(a)(i) of the Act, the prescribed period is three years.
- (2) For the purpose of subparagraph 222(1)(a)(ii) of the Act, the prescribed period is three consecutive years.
- (3) For the purpose of subparagraph 222(1)(a)(iii) of the Act, the prescribed period is one year.
- (4) For the purpose of subsection 222(3) of the Act, the prescribed period is 120 days after the day on which notice is given by the Director under paragraph 222(2)(a) of the Act.
Below is the anonymized text of the letters being sent by Corporations Canada:
Innovation, Science and Economic Development Canada
Innovation, Sciences et Développement économique Canada
235 Queen St
Ottawa ON K1A 0H5
[NAME OF CORPORATION]
Incorporating act: Canada Not-for-profit Corporations Act (NFP Act)
Your annual returns are overdue
The above-mentioned corporation has not filed its annual returns for two or more consecutive years. Every federal corporation has to file its annual return with Corporations Canada (CC) every year. A corporation is at risk of being dissolved when it has not filed its annual returns for the three most current years. These filings are not income tax returns. They are completely separate from any filing obligations with the Canada Revenue Agency (CRA). Corporations Canada’s annual return is a yearly declaration including the date of the last annual member’s meeting.
File now to avoid the potential dissolution of your corporation. Processing times are faster when you file online.
If this corporation is a registered charity under the Income Tax Act, dissolution could lead to the revocation of its registration as a charity and can have serious legal repercussions. For more information, consult the Canada Revenue Agency website at canada.ca/charities-giving.
File online for $12 per year at canada.ca/annual-return.
Update your public corporate information
The corporation must keep the information regarding its registered office address and its board of directors up to date.
- Check this information regularly by looking up your corporation at canada.ca/find-corp.
- Update your public corporate information, as needed, by visiting the Online Filing Centre at canada.ca/filing-centre. There is no fee for updating your public corporate information.
Reminder notices by email
To receive a reminder every year, visit the Online Filing Centre at canada.ca/filing-centre and select “Subscribe: annual return reminders and corporate filing notices”.
Email / Courriel
Website / Site Web
By Mark Blumberg, Blumbergs Professional Corporation
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- Corporations Canada will begin issuing Notices of Intent to Dissolve to CNCA non-profit corporations that have not filed their Annual Return in 3 years or more - May 30, 2023