Requirements for soliciting corporations under the Canada Not-for-profit Corporations Act (NFP Act)
What is a soliciting corporation?
A corporation is considered soliciting when it has received more than $10,000 in income from public sources in a single financial year. Public sources include gifts or donations from non-members, grants from government and funds from another corporation that also received income from public sources.
More specifically, a corporation is a soliciting corporation if it receives income during a single financial year in excess of $10,000 in the form of:
- donations or gifts or, in Quebec, gifts or legacies of money or other property requested from any person who is not:
- a member, director, officer or employee of the corporation at the time of the request,
- the spouse of a person referred to in subparagraph (i) or an individual who is cohabiting with that person in a conjugal relationship, having so cohabited for a period of at least one year, or
- a child, parent, brother, sister, grandparent, uncle, aunt, nephew or niece of a person referred to in subparagraph (i) or of the spouse or individual referred to in subparagraph (ii);
- grants or similar financial assistance received from the federal government or a provincial or municipal government, or an agency of such a government; or
- donations or gifts or, in Quebec, gifts or legacies of money or other property from a corporation or other entity that has, during the most recent financial year, received income in excess of $10,000 in the form of donations, gifts or legacies referred to in paragraph (a) or grants or similar financial assistance referred to in paragraph (b).
What is a non-soliciting corporation?
A corporation is non-soliciting if it has received no public funds or less than $10,000 in public funds in each of its three previous financial years.
Why do soliciting corporations need to be identified?
Since soliciting corporations receive public funds, they must meet additional requirements to ensure sufficient transparency and accountability for that income.
What requirements must soliciting corporations meet?
A soliciting corporation must meet five requirements. It must:
- have a minimum of three directors, at least two of whom are not officers or employees of the corporation or its affiliates;
- comply with the requirements for public accountants and financial review that relate to soliciting corporations;
- send financial statements and the report of the public accountant, if any, to the Director;
- include a provision in its articles that any property remaining on liquidation of the corporation be distributed to a "qualified donee", as defined in the Income Tax Act; and
- not have a unanimous member agreement.
These requirements do not automatically apply at the time a corporation receives more than $10,000 from public funds. Instead, the corporation must first determine, at its financial year-end, the total amount it received from public sources for that financial year.
If the total amount is more than $10,000, the requirements will apply only when the corporation holds its annual meeting of members following that financial year end. The annual meeting allows the corporation to make any changes needed to meet the requirements.
The requirements will continue to apply until the corporation does not meet the definition of soliciting corporation for three financial years in a row.
|Soliciting Corporation||Non-soliciting Corporation|
|Number of directors||Minimum of 3 with at least 2 not being officers or employees||At least 1|
|Filing financial statements with Corporations Canada||Yes||No|
|Restrictions on where property goes on liquidation||Yes – to qualified donees under the Income Tax Act||No restrictions|
|Unanimous members agreement||Not allowed||Allowed|
What if a corporation can't meet all the five requirements?
In certain exceptional circumstances, it may not be necessary for a soliciting corporation to meet the five requirements. In such circumstances, the Director appointed under the NFP Act can deem a soliciting corporation to be a non-soliciting corporation. If deemed to be a non-soliciting corporation, a corporation may not need to meet all five requirements. This would only be granted if it would not be prejudicial to the public interest in any way. For information on when a corporation can apply for such a decision of the Director, refer to the Corporations Canada policy document "Deeming a Corporation Non-soliciting."
Who can help me determine if my corporation is soliciting or non-soliciting?
If you are having trouble applying the definition to the circumstances of your particular corporation, you may wish to consult a lawyer or other professional for help. Note that Corporations Canada will not be able to make that determination.
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