Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/50884
The current law is very inaccessible, and even for lawyers it's hard to use, and most of these types of organizations don't have lawyers who specialize full time in not-for-profi t law, so this will demystify this area of law, make it much more intuitive and simpler, and is much more in line with federal laws WAYNE GRAY, McMillan LLP company who aren't paid at all or paid very little." The possibility of a misfeasance claim could inhibit the recruitment of qualified directors and officers for not-for- profit organizations, Gray says, acknowl- edging that most organizations cannot afford directors' and officers' insurance. Terrance Carter of Carters Professional Corp. in Orangeville, Ont., who practises Notable differences Besides the lack of liability protection for officers and directors of not-for-profit corporations, the legislation includes a problematic threshold of $10,000 or more in donations or government support for an organization to qualify as a public benefit corporation (PBC). "That thresh- old of $10,000 is very low, as you could be a public benefit corporation one year and not the next, and that's going to create confusion," says Carter. He says he is also concerned with In the event of a conflict between Ontario's new legislation and other provincial laws applicable to charitable corporations, the latter prevails. A charitable corporation cannot purchase directors and officers insurance without complying with the Charities Accounting Act. Not more than one-third of directors can also serve as officers or employees of a PBC or any affiliates. charity and not-for-profit law, also thinks there is room for improvement. But he says he is also pleased to see the Ontario gov- ernment taking the initiative to replace the Ontario Corporations Act. "The legislation dealing with not-for-profit corporations has been in need of reform for some time. However, I think there's room for improv- ing the current version of bill 65." 32 • OCTOBER 2010 INHOUSE the definition of charitable corpora- tions under the legislation. "The better approach would be to have a definition of charitable corporation that references the established common law including reference to registered charities under the [federal] Income Tax Act." The legislation could have included clearer terminology that would make it simpler for users to understand the dif- ferences between the definitions of non- profit organizations, registered charities, not-for-profit corporations, and chari- table corporations at both the provincial and federal levels, he says. "There prob- ably could have been better co-ordination between province and federal officials" during the drafting of Ontario's legisla- tion. "So as you can understand, indi- viduals in the non-profit sector will have to be on top of the definitions, and my concern is they will get confused." Ultimately, says Carter, the shortcomings in the legislation could — and should — be addressed before the bill is passed. Otherwise, he says he's concerned "we may have to wait another 60 years to get it right. The solutions are not difficult to fix and in doing so the government could turn the bill from a good piece of legisla- tion to an outstanding one." IH W outlines ayne Gray , LLP , defined a charitable PBCs, in corporations, new partner some the and notable at McMillan non-PBCs legislation follows: as dif between fer non-charitable ences