As Jade Renault pointed out in an earlier blog post, under normal circumstances a not-for-profit Corporation (NPC) incorporated under the Canada Not-for-profit Corporations Act (the “Act”) is required to call its annual general meeting within specific time periods. For a NPC that has already held its initial annual general meeting, it is required to call all subsequent annual general meeting within 15 months of the anniversary of the preceding annual general meeting but no longer than 6 months after a corporation’s preceding financial year. However, in recognition of the difficulties imposed by the COVID-19 pandemic, the Federal Government announced a few months ago that a Canada Not-for-profit Corporation could apply to Corporations Canada to extend the time for calling its annual general meeting online through a portal on the Corporations Canada Website.
At the beginning of August, Corporations Canada removed the application requirement for a NPC to extend the time for calling its annual general meeting. Instead, a NPC can independently extend the time to call a 2020 annual general meeting to the shorted of the following two options:
- 21 months after the previous AGM and no more than 12 months after the last financial year-end; or
- December 31st, 2020.
Many NPC’s have opted to take advantage of this special exception, particularly those that have traditionally held in person annual general meetings. However, for some NPC’s the extension still does not provide them with sufficient time to call their annual general meetings.
For instance, some NPC’s contain provisions in their by-laws specifically allowing virtual annual general meetings. For these NPCs it is likely possible to organize a virtual annual general meeting within the new time frames mentioned above. However, the by-laws of some NPC’s specifically require that annual general meetings be held in person and likewise do not empower the board of directors to temporarily change the NPC by-laws until they are ratified by the members at the subsequent meeting of the members. Given the current restrictions on gatherings and the challenges and risks of travelling to attend a meeting, this places some NPC’s in a difficult position.
A potential solution to this is an application under section 160(2) of the Act. This section of the Act allows a NPC to apply to the Director appointed under the Act to extend the time to call its annual general meeting. The wording in the section affords the Director with significant discretion to authorize the corporation, “on any terms that the Director thinks fit, to extend the time for calling an annual meeting if the Director reasonably believes that members will not be prejudiced.”
A NPC must submit an application that includes a cover letter, a description of the decision sought, a statement of facts, convincing reasoning by way of argument and a filing fee.
In reviewing a NPC’s application to extend the time for calling an annual general meeting, the Director will then 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?
If the application convinces the Director that an extension for calling an annual meeting of members beyond December 31st 2020 would not be prejudicial to the members, the Director may agree to extend such an extension.
This blog post was written by Mark Fortier-Brynaert, a member of the Business Law and Wills and Estates teams. He can be reached at 613-566-0380 or at email@example.com.