Not-for-Profit Corporations ActWebinar Presentation to

Canoe Kayak CanadaFebruary 2013

Sport Law & Strategy GroupProviding strategic insight to the Canadian sport community through professional services in these areas:Legal SolutionsPlanning & GovernanceStrategic Communications

“The Perfect Storm” of 2011Canada Not-for-Profit Corporations Act –

affects all NSOs and MSOsSport Canada’s Governance Principles - will

affect future fundingAmendments to the Income Tax Act – affects

all RCAAAsOverall 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

programs”-

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 rights

Increase accountability Increase transparency Improve efficiencyEmbrace new

technologiesOther 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 effectiveness

… 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 StructureThe 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 members” - Carters Professional Corporation

CKC Current Reality

Membership• 8 classes of members• 3 autonomous councils, each

with power to define their membership

• 4 AGMs each year!

Board• 9 directors• 6 directors are appointed

(2 from each council)• 1 director is ex-officio• Only 2 are elected!

Objects/Purposes• Not looked at since 1990

• Should be updated to comply with new requirements for RCAAAs

Name• Current name is Canadian

Canoe Association

• Should be updated!

What Other Sports Are DoingCreating simpler membership structuresEliminating non-voting individual members,

creating ‘registrants’ and ‘honorary officers’Choosing smaller, policy-based boardsCreating ‘Provincial Councils’ with defined

powersRethinking committees – ‘standing’ report to

Board/’operating’ report to staffEmbracing nomination systems to recruit

skilled/competent directors

Challenges EmergingImportance of the transition two-step!Timing of year-end and annual meeting/

conferenceMeeting CRA’s new

requirements of ‘exclusive purpose and function’

Maintaining jurisdiction over individuals/athletes

Some Things to Watch ForMaintaining an effective athlete

voiceFailure to consult with

stakeholders, orStakeholders not engaging in

consultation effortsEvolution to more modern

and corporate structures may backfire!

High demand for HQPs

Documents You Must FileArticles 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

TimingWork backwards from October 2014Member voting at AGMs, SAGMs, Special

Meetings, telephone meetings?Communication with members, trust issuesTwo-step transition needed in most casesMake a plan - and make a back-up plan

For more information, visit:

http://www.sportlaw.ca/nfp-act/