COVID-19 Corporate Update
May 2020 Charity & NFP Law Update
Published on May 28, 2020

By Theresa L.M. Man

Annual Members’ Meetings of Federal Corporations During the COVID-19 Outbreak

The Department of Justice Canada released Draft Legislative Proposals Regarding Time Limits and Other Periods in Circumstances Due to COVID-19 (“Draft Legislation”) on May 19, 2020. As indicated in the Explanatory Note, the Draft Legislation will extend limitation periods on civil proceedings before the courts, and introduce measures to address pressing regulatory time limits in a number of federal legislation, including the Canada Cooperatives Act and Canada Not-for-profit Corporations Act (“CNCA”).

In relation to the CNCA, once the Draft Legislation is passed, it would allow the Minister to make an order to extend or suspend time limits retroactive to March 13, 2020, for: (1) calling meetings of members; (2) providing notice of such meetings; (3) placing annual financial statements before members at annual meetings; and (4) providing copies of annual financial statements to members and directors. The Minister may also further extend a suspension or extension. However, the powers of the Minister cannot be exercised after September 30, 2020.

In the meantime, until the Draft Legislation is passed and the applicable orders are made by the Minister, CNCA corporations that wish to delay calling an annual general meeting (“AGM”) (especially on the grounds of being unable to hold AGMs during the COVID-19 pandemic) will need to continue to apply to Corporations Canada and obtain permission to delay calling the AGM.

Corporations Canada has a long-standing policy to permit CNCA corporations to apply for permission to extend the time for calling an AGM if members will not be prejudiced. Requests for permission are determined on a case by case basis. In light of the COVID-19 pandemic, on May12, 2020, Corporations Canada began offering a streamlined online process. The policy for the streamlined application was updated on May 26, 2020. At the time of writing, applications must be made at least 30 business days before the date the corporation would send the notice calling its AGM under normal circumstances. Once approved, the corporation must call its AGM and hold it before December 31, 2020. Further, if permission is granted, members must be informed of the extension as soon as possible and no later than 60 days after the date of the exemption order. Corporations Canada also issued a guidance, Annual meetings of federal corporations during the COVID-19 outbreak that explains the options of how to hold an AGM during the COVID-19 pandemic where in-person meeting are not possible – holding virtual AGMs, signing unanimous members’ resolutions in lieu of holding a meeting, or applying to Corporations Canada to delay calling the AGM.

Ontario Bill 190, COVID-19 Response and Reforms to Modernize Ontario Act, 2020

To provide certain relief in response to the COVID-19 pandemic, Ontario’s Bill 190, COVID-19 Response and Reforms to Modernize Ontario Act, 2020 was introduced and passed on May 12, 2020. Bill 190 amends various legislation in Ontario to provide relief to certain Ontario corporations struggling to comply with a number of legal requirements under those statutes. This is achieved by enacting a new statute, Alternative Filing Methods for Business Act, 2020 (the “New Act”), and amending 14 statutes, including the Ontario Corporations Act (“OCA”) and Ontario Not-for-profit Corporations Act, 2010 (“ONCA”). The following highlights key changes brought by Bill 190 affecting the not-for-profit sector.

The purpose of the New Act is to address public health and safety concerns in respect of an emergency declared under the Emergency Management and Civil Protection Act by (a) permitting documents required or permitted to be filed by in-person delivery or mail under certain “business statutes” to be filed by alternative methods, and (b) permitting electronic signatures and electronic copies in respect of certain documents. Examples of business statutes for which relief is provided include the Ontario Corporations Act (“OCA”), the Co-operative Corporations Act (“Co-op Act”), the Extra-Provincial Corporations Act (“EPCA”), and the Business Names Act.

Specifically, where a business statute requires or permits certain documents to be filed by in-person delivery or mail, the New Act allows the Minister, Director or Registrar under each business statute to permit filing by “alternative filing methods.” In this regard, the Ontario Ministry of Government and Consumer Services has set out in Notice MR-001, “Notice – Filing Methods and Requirements” that filing under the OCA, Co-Op Act and EPCA may be done by email or fax. The Act and Notice MR-001 also permit electronic signatures of these documents. Documents that may be filed by alternative filing methods include articles, notices, declarations, applications and accompanying documents under the OCA, Co-op Act, or EPCA. Bill 190 also makes coordinating amendments to the OCA, Co-op Act, EPCA, and the Ontario Not-for-Profit Corporations Act, 2010 to temporarily permit electronic signatures and alternative methods of filing under the New Act.

In relation to the OCA, Bill 190 also amends the OCA by inserting a new Part VIII on “special rules during emergency.” Part VIII provides that certain provisions of the OCA are temporarily suspended and that replacement provisions apply during the temporary suspension period. The replacement provisions are set out in new Schedule 2 to the OCA. Those provisions were previously set out in an order made under subsection 7.1(2) of the Emergency Management and Civil Protection Act and filed as Ontario Regulation 107/20. The replacement provisions provide relief of a number of matters during the pandemic, including information that must be laid before an annual members’ meeting; extending the time period in which a corporation must hold annual members’ meetings in specified circumstances; the holding of meetings of members and directors by telephonic or electronic means regardless of contrary provisions in the corporation’s letters patent, supplementary letters patent or by-laws; and notification requirements for meetings. This relief is explained in the April 2020 Charity & NFP Law Update. As such, Bill 190 also revokes Ontario Regulation 107/20, made under the Emergency Management and Civil Protection Act. Ontario Regulation 107/20 previously provided temporary relief under the OCA and Co-op Act by permitting electronic meetings, voting, as well as providing time extensions for meetings. These temporary measures are retroactive to March 17, 2020, and will end on the 120th day after Ontario’s state of emergency is terminated, though this can be extended by regulations. Similar amendments are made to the Co-op Act.

Read the May 2020 Charity & NFP Law Update