We are delighted that Corporations Canada today has provided a simple way for non-profits and charities under the Canada Not-for-profit Corporations Act (“CNCA”) to request an extension of the six-month timeframe for holding AGM’s and also a requirement to provide financial statements to members at least 21 days ahead of the AGM.  These are separate requirements and both covered under the simple online form.

 

We have previously written on the topic of:

COVID-19 and AGMs for Federal non-profit corporations under the CNCA

We will update our article to include this new information.

We have worked with Corporations Canada over the last 6-7 weeks on this and we are very pleased that it has finally been launched and it took a lot of work on Corporations Canada’s part to make this happen as the CNCA does not provide Corporations Canada an ability to do blanket exemptions and unlike some provinces that have declared emergencies that has not be done on the Federal level.

 

The simple form for requesting both extensions is on the Corporations Canada website.

 

Here is the “Additional Guidance” page from Corporations Canada:

http://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs08643.html 

Additional guidance — Annual meetings of federal corporations during the COVID-19 outbreak

Corporations Canada has published additional guidance for federal business and not-for-profit corporations regarding annual general meetings during COVID-19. This includes:

  • information on signing a resolution instead of hosting an annual general meeting (AGM)
  • a link to a simple online application for not-for-profit corporations who want to delay calling their AGM.

Annual meetings of federal corporations during the COVID-19 outbreak

If you have any questions, please contact us.

 

Corporations Canada had previously provided guidance on AGMs

 

Here is the announcement on three different matters:

http://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs08611.html

Annual meetings of federal corporations during the COVID-19 outbreak

By law, federally incorporated businesses and not-for-profit corporations have to hold an annual general meeting (AGM) of shareholders or members every year. This is so that shareholders and members can make governance decisions based on current information, and have confidence to continue to support the business or not-for-profit.

Under normal circumstances, federally incorporated businesses and not-for-profits have to call an AGM within 15 months of the previous annual general meeting and no more than six months after the organization’s last financial year-end.

As hosting in-person AGMs during the COVID-19 outbreak would contradict public health advice, we have outlined options for federal corporations to consider in order to remain compliant under the Canada Business Corporations Act and the Canada Not-for-profit Corporations Act.

Hold a virtual meeting

Some corporations have the right to hold meetings virtually using digital technologies. To see if this is a valid option, check the corporation’s by-laws to make sure there are no restrictions on participation in meetings by digital means.

Depending on the by-laws, a corporation could have two options:

  1. Virtual meeting: Participants attend exclusively through a digital channel that allows participants to communicate with each other during the meeting. The corporation’s by-laws must specifically allow virtual meetings.
  2. Partially virtual meeting: Some participants attend in-person and others participate through a digital channel that allows participants to communicate with each other during the meeting. A partially virtual meeting may be a viable alternative if the by-laws do not permit virtual meetings.

Under both options, participants can vote digitally as long as:

  • it is not prohibited by the corporation’s by-laws
  • it complies with regulations, meaning that the corporation gathers votes in a way that allows them to be verified, tallied and presented while maintaining votes anonymous.

If the corporation’s by-laws prohibit virtual meetings or are silent on holding them, the board of directors may change the by-laws with the change effective until the next meeting of shareholders or members (when the change can be confirmed or rejected).

Sign a resolution in lieu of a meeting

A practical option for corporations with a small number of shareholders or members is a written resolution instead of an AGM. The resolution must include the business items normally communicated at the AGM. At minimum, this includes:

  • electing directors
  • considering the corporation’s financial statements
  • appointing the corporation’s auditor or public accountant, or deciding to waive the appointment of an auditor or public accountant.

All shareholders or members who are entitled to vote at the corporation’s AGM must sign the written resolution. Once signed, keep the resolution in your corporation’s records.

Delay calling the meeting

Not-for-profit corporations can apply to delay calling their AGM when it is detrimental to call the meeting within the normal timeframe. Apply using the online form below at least 30 business days before your not-for-profit would send the notice calling its AGM under normal circumstances.

Apply to delay a not-for-profit corporation’s annual meeting due to COVID-19

Federal business corporations need court approval to delay an AGM. If you have any questions, please contact us.

Resources

Canada Business Corporations Act, paragraphs 132(4) and 133(3)

Canada Not-for-profit Corporations Act, paragraph 160(2)

Extending the time for calling an annual meeting of members (Not-for-profit corporations)

 

Here is additional information on extending the time for calling an AGM:

 

Extending the time for calling an annual meeting of members

Annual general meetings during COVID-19
If your not-for-profit is unable to host its annual general meeting due to COVID-19, apply here to delay your annual meeting during the pandemic.

This policy sets out information about applying to the Director appointed under the Canada Not-for-profit Corporations Act (NFP Act) to extend the time for calling an annual meeting of members. It will help you:

  • understand when your corporation must call its annual meeting
  • decide if your corporation should apply to extend the time for calling the meeting.

Note

This policy provides information and sets out guidelines. It is not intended to be a binding statement of the decision that will be made in any particular case nor is it meant to replace legal advice. Consider consulting a lawyer or another professional to ensure that your particular needs are being addressed when applying.

Annual meetings

A corporation must call an annual meeting of members every year. The NFP Act and the Canada Not-for-profit Corporations Regulations (NFP Regulations) set out the time frames within which a corporation must call an annual meeting.

It is important that a corporation call an annual meeting every year and in a timely manner because it will:

  • ensure that members can make governance decisions based on current information
  • ensure transparency and disclosure
  • give members the confidence to continue to support the corporation.

A corporation is required to call an annual meeting within 18 months of the date the corporation comes into existence. After that, an annual meeting must be called no later than 15 months after the previous annual meeting and no later than 6 months after the corporation’s preceding financial year-end.

There may be circumstances where it would be detrimental to a corporation to call an annual meeting of members within the time frames mentioned above. In such cases, the corporation can apply to extend the time for calling the meeting (refer to paragraph 160(2) of the NFP Act).

The Director has the power to extend the time for calling the meeting, as long as the Director reasonably believes that members will not be prejudiced. However, the Director does not have the power to exempt a corporation from the obligation of calling an annual meeting of members altogether.

Why a corporation would apply for this exemption

A corporation may consider applying for this exemption when it would be detrimental to a corporation to call an annual meeting of members within the prescribed time frames. This detriment can relate to one financial year or multiple financial years. The Director evaluates the detriment on a case-by-case basis.

For example, it could be impractical for a corporation that is about to go through an internal reorganization to call the annual meeting of members within the prescribed time frames before the reorganization is complete.

Another example where it may be detrimental to a corporation to call an annual meeting of members within the prescribed time frames is when its annual meeting has historically been scheduled after the annual meetings of related corporations have been held. This accommodation results in the annual meeting falling outside of the prescribed time frames.

When a corporation can apply for this exemption

A corporation must apply at least 30 days before the day on which the notice of the time and place of the meeting is to be given to members (refer to paragraph 89(2)(b) of the NFP Regulations). All applications are reviewed on a case-by-case basis.

How long an exemption is effective

An exemption to extend the time for calling an annual meeting of members is typically effective for one financial year. However, there may be circumstances where a multi-year exemption is warranted. In those cases, the exemption is effective for the period indicated on the exemption.

Review of an application

When evaluating an application to extend the time for calling an annual meeting of members, the Director will assess the reasons for the application and the potential prejudice to members. The potential prejudice is assessed by asking the following question:

  • Would extending the time for calling an annual meeting of members be prejudicial to members?

The Director will consider there to be little or no prejudice to members in situations where:

  • members still have access to the required current information; for example, a corporation provides its annual financial statements (refer to paragraph 172(1) of the NFP Act) to members within 6 months of its previous financial year-end, as well as its interim financial statements for the particular ongoing financial year
  • the corporation gives sufficient disclosure to its members of the extension and how it affects their rights under the NFP Act; for example, a corporation informs its members of the exemption as soon as possible after its issuance, and
  • members support extending the time for calling an annual meeting by passing a special resolution before applying and, for multi-year extensions, at annual meetings for each year that is covered by the exemption.

What information must be included in the application

An application must clearly set out:

  • when the annual meeting is required to be called according to the NFP Act and NFP Regulations
  • when the corporation proposes to call the annual meeting
  • why the meeting cannot be called within the required time frames and the nature of the detriment to the corporation if the meeting were called within the required time frames, and
  • how extending the time for calling an annual meeting would cause little or no prejudice to the members of the corporation.

Issuing an exemption

If the exemption is issued, the corporation will receive an exemption to extend the time for calling an annual meeting of members on any terms that the Director thinks fit.

Renewing an exemption

There could be circumstances where a renewal is required. Renewal applications are reviewed on a case-by-case basis.

Additional information about decisions made by the Director appointed under the NFP Act

Date modified:

 

 

Here is the text of the form that needs to be filed out online on the Corporations Canada website:

 

http://corporationscanada.ic.gc.ca/eic/site/cd-dgc.nsf/frm-eng/JCRE-BNGKQY

Apply to delay a not-for-profit’s annual meeting due to COVID-19

Federal not-for-profit corporations have several options to hold annual meetings during the COVID-19 outbreak while remaining compliant under the Canada Not-for-profit Corporations Act.

Should your not-for-profit decide it is unable to hold its annual general meeting (AGM) due to COVID-19, you can apply for authorization to delay your AGM using this online form. Apply at least 30 business days before the date your not-for-profit would send the notice calling its AGM under normal circumstances. Once approved, your not-for-profit must call its AGM before October 31, 2020 and hold it before December 31, 2020.

Do not use this form to delay an AGM for reasons unrelated to COVID-19. Instead, see Extending the time for calling an annual meeting of members.

Not sure about your corporate name or number? Search for a federal corporation

This application is for the annual meeting of members that is required to be called within six months of the financial year that has recently ended.

The corporation applies, under section 160(2) of the Canada Not-for-profit Corporations Act (NFP Act), for authorization to extend the time for calling an annual meeting based on the following factors:

  • The corporation is unable to comply with the timelines established by the NFP Act due to COVID-19 circumstances. Federal and provincial governments have restrictions on public gatherings and support social distancing measures during the COVID-19 crisis. These make it impossible for the corporation to have a physical, in-person annual meeting as planned.
  • Extending the time for calling an annual meeting would cause little or no prejudice to members. The corporation believes that the health and safety of its members, directors, officers and staff outweigh any potential prejudice to its members caused by an exemption and/or an extension granted to the corporation as a result of this application.

If the extension is approved, the corporation agrees to call the annual meeting before October 31, 2020 and to hold it before December 31, 2020.

The corporation also applies to have the financial statements that are required to be sent to and placed before the members at the annual meeting be the full financial statements for the year ending on the most recent financial year end or, if the corporation was incorporated in the past year, the financial statements for the period that began on the date the corporation came into existence and ended on the first financial year end as well as the immediately proceeding financial year.

The corporation agrees to inform its members of this extension, once granted, as soon as possible but not later than 60 days after the date of this exemption order.