Can a Canadian charity under the new Canada Not-for-profit Corporations Act have no members?

December 01, 2009 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: New corporate non-profit acts

No.  The new Canada Not-for-profit Corporations Act requires that corporations have members however the board of directors and the members can be identical as is often the case with Canadian charities.

For further information see a paper entitled Insight on C-4, the New Canada Not-for-profit Corporations Act By: Wayne Gray, Partner, McMillan LLP, Toronto.

In that paper he discusses self-perpetuating boards

Q8. Does the New Act Allow Self-Perpetuating Boards?  Answer:  Yes; but the New Act does not permit a CNCA corporation to entirely dispense with members.

To again underscore the flexibility of the New Act, it is clearly possible for a corporation to have a completely self-perpetuating board, i.e., a membership that consists entirely of board members.  First, the Act imposes no limits on who may be a member.  Second, s. 126(1) imposes limited qualifications on who can validly be a director.  Thus, a director must be an individual who is at least 18 years of age, not an undischarged bankrupt and not found by a court to be incapable.  Ergo, a director can be a member.  In effect, the same individual or small group of individuals may be both members and directors (provided that all individuals meet the limited directorship qualifications set out in s. 126(1)). 

This arrangement has the practical effect of obliterating the distinction between members and directors, except to the extent that corporate formalities (such as the approval of articles and certain by-law amendments) must be observed.  The same individuals can wear two different hats but will have to be mindful of which hat is worn at a particular meeting.  A director’s hat is inappropriate attire for a member’s meeting, and a member’s hat should not be worn at a board meeting.”

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Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.
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