II. Incorporation and Name

Framework Paper

Incorporation - general

Similar to the Canada Business Corporations Act and the Saskatchewan Non-profit Corporations Act, incorporation of not-for-profit organizations would be "as of right". This method of incorporation would streamline administrative practices and eliminate the cost of ministerial review associated with the present incorporation procedure by letters patent. ("Letters patent" refers to a document sealed with the seal of Canada by which a corporation is created and under which a company may do something or enjoy privileges not otherwise possible.)

Incorporation procedure - incorporators

The application for incorporation would require a minimum of one incorporator, either a person or a "body corporate" - any incorporated organization. Reducing the required number of incorporators would make the incorporation process easier and more flexible, particularly for smaller organizations. By allowing a corporate entity to act as an incorporator, moreover, a representative of the corporation (for example) would not have to act as an incorporator. This would eliminate the need to identify a particular individual who will act as director on behalf of that corporation. Individual incorporators would have to be at least 18 years old, and have the legal power to contract. Undischarged bankrupts would be disqualified from acting as incorporators.

Articles of incorporation

To incorporate under the proposed Act, the incorporator(s) would have to file articles of incorporation with the Director. The articles of a corporation typically comprise information on the corporation, its members and objects. Currently, under the Canada Corporations Act, letters patent issued by the Minister would contain this information in addition to specific provisions on the corporation's powers and objects. Both the corporation and its members are bound by the articles. The articles of the corporation would have to provide, among other things:

The by-laws of the corporation, any amendments made to them, and a list of current directors would have to be filed with the articles of incorporation.

Statement on the distribution of assets upon dissolution

The articles of incorporation would have to state how the remaining property of the corporation would be distributed after its liquidation and dissolution. Before the surrender of its charter, a corporation would have to distribute its remaining assets "rateably" (that is, proportionally) among its members, or otherwise have divested itself of its assets. The corporation would choose between two options:

In the case of an organization registered as a charitable organization under the Income Tax Act, a distribution to its members after dissolution may constitute pecuniary gain (a monetary gain enjoyed by the members). Such a corporation would have to include in its articles a provision that on dissolution, its property would have to be distributed to another charitable organization in accordance with the Income Tax Act. A particular organization may be specified, if desired.

Certificate of incorporation

The Director would have to issue a certificate of incorporation on receiving the articles of incorporation written in the prescribed form. The corporation would come into existence on the date shown on the certificate.

Name

The Canada Business Corporations Act and the Canada Corporations Act have similar provisions and regulations dealing with corporate names. The proposed Act would largely adopt the current rules, including the requirement that a corporation not have a deceptive name, and - to avoid confusion with the names of other corporations - that a corporation have a distinctive name.

The new Act would largely maintain the current set of rules about the use and publication of corporate names. The provisions would be included as protections for the use - and as safeguards against the misuse - of a corporate name. The requirements for the name of a corporation would be as follows: