FEDERAL NOT-

FOR-PROFIT
CORPORATIONS
NFP Act S.C 2009, c.23

■ Fundamental law which governs the internal affairs of federal not-for-profit

corporations (http://laws.justice.gc.ca/eng/acts/c-7.75/page-1.html)
■ All federal not-for-profits must obey these guidelines when creating their
corporation
Requirements for a Not-for-Profit
Corporation
■ In order to create a corporation under s.6(2) of the NFP Act: “An
individual may incorporate a corporation under subsection (1) only if that
individual…”
– (a) is not less than 18 years of age
– (b) is not incapable; or
– (c) does not have the status of bankrupt
Requirements for a Not-for-Profit
Corporation
■ Furthermore, under s.6(1) of the NFP Act, “One or more individuals or
bodies corporate may incorporate a corporation by signing articles of
incorporation and complying with section 8.”
– Section 8 of the NFP Act, “One of the incorporators shall send to the
Director articles of incorporation and the documents required by
sections 20 and 128.”
 Creating a Not-for-Profit Corporation
■ In order to create a federal not-for-profit, you must submit an application
for a certificate of incorporation, as stated in s.7(1)
– A completed and signed copy of Form 4001 – Articles of
Incorporation
– A completed and signed copy of Form 4002 – Initial Registered
Office Address and First Board of Directors
– A Nuans name search report for the proposed name
– Pay the filing fee

These articles may be in either official language (French or English), as

outlined in s.11(1)
Form 4001 – Articles of Incorporation
■ Section 7(1) Articles of incorporation shall follow the form that the Director
fixes and shall set out, in respect of the proposed corporation,
– (a) the name of the corporation
– (b) the province where the registered office is to be situated
– (c) the classes, or regional or other groups, of members that the
corporation is authorized to establish and, if there are two or more classes
or groups, any voting rights attaching to each of those classes or groups
– (d) the number of directors or the minimum and maximum number of
directors
– (e) any restrictions on the activities that the corporation may carry on
– (f) a statement of the purpose of the corporation; and
– (g) a statement concerning the distribution of property remaining on
liquidation after the discharge of any liabilities of the corporation
Form 4002 – Initial Registered Office
Address and First Board of Directors
■ S.20(1): “A corporation shall at all times have registered office in the
province in Canada specified in its articles.”
■ S.128(1): “At the time of sending articles of incorporation, a notice of
directors in the form that the Director fixes shall be sent to the Director.”
■ Both of these forms may be found online with instructions on how to
complete them:
http://www.strategis.gc.ca/eic/site/cd-dgc.nsf/eng/cs05260.html#NFP
Nuans Name Search Report

■ A document that contains the business names and trademarks registered

in Canada
■ When completing your application, you must attach a copy of the letter
from Corporations Canada approving the name and a copy of the search
report
Filing Fee

■ 200-250$ fee for submitting an application of incorporation

What to do after the Corporation has been
created?
■ Hold the First Directors’ Meeting
■ Hold the First Members’ Meeting
■ Complete Provincial and Territorial Registrations
■ Receive a Business Number
■ Obtain permits and complete other formalities
■ Register as a Charity under the Income Tax Act
First Directors’ Meeting
■ The directors are required to call a meeting of the directors in order to
organize the corporation by adopting a number of resolutions that will
allow the corporation to conduct its activities
■ A minimum of 5 days’ notice must be given to each director that is listed
in the Form 4002 – Initial Registered Office Address and First Board of
Directors, in virtue of s.127(3) of the NFP Act
– This notice must indicate the date, time and place of the meeting
First Directors’ Meeting Objectives
■ S.127(1): “After the issue of the certificate of incorporation, the directors of a
corporation shall hold a meeting at which the directors may
– (a) make by-laws;
– (b) adopt forms of debt obligation certificates and corporate records;
– (c) authorize the issue of debt obligations;
– (d) appoint officers;
– (e) appoint a public accountant to hold office until the first annual meeting
of members;
– (f) issue memberships;
– (g) make banking arrangements; and
– (h) transact any other business
S.127(1)(a): Make by-laws

■ By-laws are a set of rules which concern the governance and operations
of a corporation
– By-laws may be amended from time to time by a resolution, in virtue
of s.197(1)
■ Changes must be filed with Corporations Canada within 12
months
■ By-laws can be easily made by referring to Model By-laws (
http://www.strategis.gc.ca/eic/site/cd-dgc.nsf/eng/cs04999.html)
S.127(1)(b): Adopt forms of debt obligation
certificates and corporate records
■ Corporations are required to maintain corporate records and issuing debt
obligation certificates
■ These documents hold crucial information such as:
– Registers of members, directors and officers
– Minutes of member and director meetings

It is important that these documents be kept at the Registered Office or

at a location that meets the requirements of the NFP Act, in virtue of
s.21(1)
S.127(1)(c): Authorize the issue of debt
obligations
■ There are multiple debt obligation forms under s.37
– Must choose the appropriate one, depending on the circumstances of
the corporation
■ In virtue of s.38, ”An issuer shall provide a debt obligation holder, on
request, with
– A debt obligation certificate that complies with this Act; or
– A non-transferable written acknowledgement of their right to obtain
a debt obligation certificate
S.127(1)(d): Appoint officers

■ Officers are appointed by directors to assist and carry out the functions
delegated to them
– They may be replaced at the discretion of the directors at any point in
time by simple resolution, as described in s.130(1)
S.127(1)(e): Appoint a public accountant to hold
office until the first annual meeting of members

■ In order to appoint a public accountant, a simple majority is required at

each annual meeting, in virtue of s.181(1)
■ For an individual to be eligible for this position, he/she must respect the
requirements set out in s.180(1) of the NFP Act
S.127(1)(f): Issue memberships

■ A person becomes a member when a corporation admits that person as a

member of the corporation and issues a membership in that person’s
name, in virtue of s.155
S.127(1)(g): Make banking arrangements

■ A financial institution must be chosen to perform its corporate banking

needs
■ The corporation must also determine the processes for conducting other
banking business and authorize signing officers
– Specific officers must be chosen as signing officers to sign cheques
S.127(1)(h): Transact any other business

■ This section includes the adoption of corporate policies, employing staff,

purchasing insurance coverage, leasing premises and purchasing real
property
First Directors’ Meeting

■ In cases where the number of directors is small, they may all sign a
written record of resolutions, thereby deeming the meeting unnecessary,
as stated in s.127(5)
■ A copy of these resolutions must be kept with the minutes of the
meetings, in virtue of s.127(6)
First Members’ Meeting

■ Following the meeting of the first directors, a meeting for the members is
required
■ In virtue of s.160(1), this meeting must take place within 18 months of
the date of incorporation
– Normally this meeting is held immediately after the directors meeting
First Members’ Meeting Objectives
■ At this meeting, the members must:
– Elect Directors
– Confirm, modify, or reject the general by-laws established by the first
Directors
– Appoint a public accountant, who can be the same one appointed by
the first directors, or a different one
– Adopt special by-laws, if any
– Transact other business
Elect Directors

■ In virtue of s.128(3), “members shall, by ordinary resolution at each

annual meeting at which an election of directors is required, elect
directors to hold office for a term expiring within the prescribed period.”
Confirm, modify, or reject the general by-
laws established by the first directors
■ In virtue of s.152(2), “the directors shall submit the by-law, amendment
or repeal to the members at the next meeting of members, and the
members may, by ordinary resolution, confirm, reject or amend the by-
law, amendment or repeal.”
Appoint a public accountant, who can be the
same one appointed by the first directors, or a
different one
■ Under s.181(1), “members of a corporation shall, by ordinary resolution,
at each annual meeting, appoint a public accountant to hold office until
the close of the next annual meeting.”
Adopt special by-laws, if any

■ The members may propose or adopt any special-by laws, if applicable

Transact other business

■ This section includes the adoption of corporate policies, employing staff,

purchasing insurance coverage, leasing premises and purchasing real
property
First Members’ Meeting

■ Similarly to the First Directors’ Meeting, these objectives may also be

adopted by written resolutions, instead of holding a meeting
– A copy of these resolutions must be kept with the minutes of the
meetings
Provincial and Territorial Registrations
■ While incorporation creates a legal entity, provincial and territorial
registrations allow the corporation to carry on its activities within
Canada’s individual provinces and territories
■ Federal corporations also need to register provincially/territorially, In the
province or territory where the corporation carries on its activities
■ Must be signed a few weeks before operations begin in their jurisdictions
■ The requirements and processes vary among the provinces and territories
(always refer to the local corporate law)
Business Number
■ A business number is a unique federal government numbering system
that identifies the organization and the accounts maintained at the
Canadian Revenue Agency
■ The CRA will issue this number, register your corporation and follow-up
with letters confirming your registration
– A summary of the information is included
■ With this number, the organization may be identified and followed by a
program account identifier
– Useful for GST, HST, registered charitable status, payroll deductions,
corporate income tax, import and export duties, and taxes
Permits and other formalities

■ It is important to check with the appropriate municipal, provincial,

territorial or federal government agencies to learn about the required
permits
Registering as a Charity under the
Income Tax Act
■ Corporations which are created exclusively for the charitable purposes
must register with the CRA as a charity in order to be able to issue
official donation receipts and be exempt from tax
The process for creating a federal or a
provincial corporation is similar in
nature, but differs in outcome due to
jurisdiction…
How do Federal and Provincial Not-for-
Profits differ?
■ Name protection
■ Areas of operation
■ Business name
■ Recognition
■ Time and money
■ Paperwork
■ Licenses
■ Levels of Expertise
■ Registered Office
Name Protection
Federal corporations obtain
increased business name
protection and wider rights to
carry on business
Provincial corporations have no
name protection outside of the
particular province or territory
Areas of Operation
Federal corporations enable
you to operate your business
all across Canada under the
same business name, even if
some other company is already
using a similar name in some
province or territory
Provincial corporations only
permit you to operate your
business in a particular province
or territory – even if you apply
for provincial incorporation
elsewhere, there is no guarantee
that there won’t be other
businesses in that name, which
means that your company may
not be able to operate in that
province in your chosen name
at all
Business Name

Federal corporations require Provincial corporations can

that your business name is choose their business name, so
significantly distinct and will long as there is no exact match
need to be reviewed by
Corporations Canada for
approval
Recognition

Federal corporations receive Provincial corporations do not

global recognition receive global recognition
Time and Money

Federal corporations require a Provincial corporations are

lot of time and money due to more time and money efficient
filing requirements and fees due to the limited amounts of
paperwork required
Paperwork
Federal corporations are
required to fill out annual
paperwork whether there have
been changes to the corporation
or not
Provincial corporations only
require paperwork in specific
circumstances – such as
changes to the Board of
Directors, changes to corporate
officers, change of physical
location of company, etc.
Licenses
Federal corporations must Provincial corporations are only
register for extra-provincial required to file for a provincial
licenses, in addition to the license in their province of
federal license (Exceptions: operation(s).
may file for Ontario,
Newfoundland, Nova Scotia
and Saskatchewan at the same
time as federal license)
Levels of Expertise

Federal corporations entail Provincial corporations are

complex processes and
excessive filing requirements
which implies more time and
money spent on legal
professionals
easier and better known by legal
professionals, thereby, saving
you time and money
Registered Office

Federal corporations allow for Provincial corporations do not

a degree of flexibility regarding have the liberty to choose just
the province or territory where any province or territory – they
the Registered Office can be must choose the one in which
located the business operates
 References
Canada Not-for-profit Corporations Act 2009 (S.C) (Cdn.).

Federal vs. Provincial Incorporation: What’s the Difference? (2017, November 3).
Retrieved from
https://www.opstart.ca/federal-vs-provincial-incorporation-whats-difference/

Government of Canada. (2017). Operating a federal not-for-profit corporation.

Retrieved from http://www.strategis.gc.ca/eic/site/cd-dgc.nsf/eng/h_cs03925.html

Ward, S. (2017, April 13). Federal Incorporation vs. Provincial in Canada. Retrieved
from https://www.thebalancesmb.com/provincial-versus-federal-2948230