Those running a charity could be forgiven for thinking that there are no provincial rules which apply specifically to charities. In fact, this is not the case and we have written several times about such laws as the fundraising rules in Alberta or the registration of a charity in Quebec. However, there are other rules which may affect charities and which may have particular relevance when crossing borders. One such set of rules is contained within the Trustee Acts of various provinces. Generally speaking, the Trustee Acts will apply when a charity holds funds regardless of whether it is incorporated.
A complicating factor arises when the charity in question may be resident in a particular province but has directors present in more than one. This may result in the application of different acts to different directors. It should be noted that the province of Ontario in particular tends to assert jurisdiction when a charity is operating in that province. In such a circumstance one would hope that there would not be a conflict of laws (and if so this raises new issues) but regardless it generally forces the charity to act to the most stringent set of rules.
This is unfortunate when one jurisdiction may have a more sophisticated set of rules designed to allow for a more nuanced approach to certain types of behaviors. For example, the Ontario Trustee Act contains certain provisions which are beneficial for a charity wishing to delegate some investment decisions. If an organization has directors in more than one province then directors in another province which does not allow this freedom may be required to act to the stricter requirement in order that directors from that province do not fall offside to the rules there.
Of course, a charity in this position may look to simply change the director structure in order to take advantage of a certain set of rules. However, a result which requires losing good people because of bad laws is most unfortunate. We write this article not to provide concrete advice but rather to alert our readership to the problem and when considering fundamental decisions it is important that directors consider the particular responsibilities imposed by their specific province. If you require any additional guidance in managing the provincial regimes please do not hesitate to contact any of our lawyers.
Drache Aptowitzer LLP
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