Corporate Update
August 2020 Charity & NFP Law Update
Corporations Canada Announces Streamlined Online Incorporation
Corporations Canada announced in July 2020 that it would begin providing a new streamlined service for online incorporation of not-for-profits whereby it is optional to submit a NUANS report when filing for incorporation. This means that those who want to incorporate online can propose and submit a corporate word name during the incorporation process. The proposed name would be approved as part of the process. Corporations Canada indicates that this new online service is intended to make incorporation easier and quicker, saving time and effort in the process.
Ontario Nonprofit Network Publishes Report on Charities and COVID-19
August 2020 Charity & NFP Law Update
The Ontario Nonprofit Network (“ONN”), together with the Assemblée de la Francophonie de l’Ontario (“AFO”), jointly released Risk, resilience, and rebuilding communities: The state of Ontario nonprofits three months into the pandemic (the “Report”) in August 2020. The Report follows a June 2020 survey conducted by ONN and AFO that was conducted to understand the impact of the COVID-19 pandemic on Ontario’s 58,000 nonprofits and charities, and the effectiveness of the public policy and supports provided by the provincial and federal governments. A total of 1,131 charities and nonprofits in Ontario had participated in the June 2020 survey.
The Report indicates that both federal and provincial government support have fallen short of providing the necessary help for charities and nonprofits to recover from the pandemic, as they “failed to recognize the size, scope, and economic impact of the nonprofit sector and have therefore fallen far short of what is needed to help nonprofits through the crisis and into recovery.” The Report calls for action by governments at all levels to assist nonprofits and charities to survive and continue to service their communities into 2021, especially given the possibility of a second wave of COVID-19 infections.
The Report also provides five recommendations, as follows: (1) creation of a “nonprofit sector stabilization fund” by the provincial government in support of the nonprofit sector given massive revenue losses and to prevent permanent job losses and closures; (2) acceleration of the deployment of pandemic pay and other support by the provincial government; (3) increased flexibility by the federal government to ensure the Canada Emergency Wage Subsidy (CEWS) is more responsive to charities and nonprofits; (4) federal and provincial government investment in rural broadband internet to better support small businesses in small communities across Ontario; and (5) federal and provincial government creation of a nonprofit sector advisory table to inform planning for the economic recovery, with representation from all nonprofit sectors.
The Report will be of interest to those in the charitable and not-for-profit sector, as it provides helpful insights into the challenges faced by Ontario’s nonprofits and charities, as well as the impacts on the pandemic on the sector, its workers, volunteers and the communities they serve. The Report’s observations include the impacts of the pandemic including the COVID-related mental health needs, increased intimate partner violence, and the growing realization that marginalized communities (particularly low-income households and racialized communities) have suffered disproportionate effects.
End of Temporary Lay-offs from Work for COVID-19 Emergency
August 2020 Charity & NFP Law Update
Ontario’s declared emergency in response to the COVID-19 pandemic ended on July 24, 2020, with the coming into force of the Re-opening Ontario (A Flexible Response to COVID-19) Act, 2020 (“ROA-2020”). The termination of the declared emergency has effects on various temporary relief measures, including the Infectious Disease Emergency Leave (“IDEL”), as prescribed by Ontario Regulation 228/20 (“O. Reg. 228/20”) under the Employment Standards Act, 2000 (“ESA”). The end of the declared emergency in Ontario means that the “COVID-19 Period”, as defined in O. Reg. 228/20, would include the period from March 1, 2020 to September 4, 2020 (six weeks after the end of the declared emergency). As explained in COVID-19 Resource of Charities and NFPs: New Infectious Disease Emergency Leave Provides Relief to Ontario Employers, employees on temporary lay-offs due to COVID-19 related reasons are, in essence, deemed to be on IDEL during the COVID-19 Period. As such, the relief provisions of O. Reg. 228/20 that deemed employees to be on IDEL if their hours of work and/or wages were reduced or eliminated for reasons related to COVID-19, during the COVID-19 Period, will expire on September 4, 2020.
However, the effect of the relief provisions of O. Reg. 228/20 was that any reduction or termination in work hours and/or wages during the COVID-19 Period would not count toward the temporary lay-off calculation. Therefore, any employee whose work hours and/or wages have not been restored by September 4, 2020 may be temporarily laid off starting the week after September 4, 2020 under the standard temporary lay-off provisions under the ESA. What this means for employers is that, after September 4, 2020, the employer may be able to temporarily lay off employees for up to 13 weeks in a 20-week period, which can be extended up to 35 weeks in a 52-week period if certain conditions under the ESA are met. Any temporary layoff longer than 13 weeks (or 35 weeks, as applicable) will be deemed a termination of employment subject to the notice of termination and severance pay provisions of the ESA.
Further, based on case law decided before the COVID-19 pandemic, it is possible that a court could rule that a temporary reduction or elimination of hours of work or a temporary reduction in wages due to COVID-19 after September 4, 2020 may entitle an employee to damages for constructive dismissal. This could potentially be the result should any employees not accept being on temporary lay-off and decide to sue for wrongful dismissal.
It is also important to note that employees continue to have the right to be away from work on unpaid IDEL for as long as the event that triggered the entitlement to the leave lasts. For example, in the context of COVID-19, section 50.1 of the ESA provides that employees may take IDEL if they will not be performing the duties of their position because of any of the following reasons:
- The employee is under individual medical investigation, supervision or treatment related to COVID-19.
- The employee is following a COVID-19 related order issued under sections 22 or 35 of the Health Promotion and Protection Act.
- The employee is in quarantine, isolation (voluntary or involuntary), in compliance with official health instructions or directions related to COVID-19.
- The employee is under a direction given by his or her employer in response to the employer’s concern that the employee might expose other individuals in the workplace to COVID-19.
- For example, this would include the employer directing the employee to stay at home for a period of time if the employee has recently travelled internationally and the employer is concerned the employee may expose others in the workplace to COVID-19.
- The employee is providing care or support (including care for a child whose school or day care is closed due to COVID-19) to certain individuals listed under subsection 50.1(8) of the ESA.
- The employee is directly affected by travel restrictions related to COVID-19 while outside Ontario and, under the circumstances, cannot be reasonably expected to travel back to Ontario.
After the above-listed triggering event is over, the employee’s entitlement to IDEL would end and their normal obligations to be at work would resume.
COVID-19 Corporate Update
August 2020 Charity & NFP Law Update
Corporations Canada Extends Periods Under CNCA and CCA
To better assist federally incorporated not-for-profits and provide some flexibility with certain aspects of corporate maintenance, the Time Limits and Other Periods Act (COVID-19) was enacted on July 21, 2020, when Bill C-20 received Royal Assent. As discussed in COVID-19 Resource for Charities & NFPs: Bill C-20 Enacts Time Limits And Other Periods Act (COVID-19), Bill C-20 replaced the federal government’s previous Bill C-17, which did not progress beyond first reading at the House of Commons, and contains identical provisions to those in Bill C-17 with respect to the Time Limits and Other Periods Act (COVID-19).
The new Act allows the Minister under various Acts, including the Canada Not-for-profit Corporations Act (“CNCA”) and Canada Cooperatives Act (“CCA”), to make orders to extend or suspend time limits retroactive to March 13, 2020 for: (i) calling and providing notice of meetings of members; (ii) placing annual financial statements before members at annual meetings, and (iii) providing copies of annual financial statements to members and directors. The Minister may also further extend a suspension or extension, as long as the total suspension or extension does not exceed six months. However, the powers of the Minister cannot be exercised after September 30, 2020, and suspensions or extensions cannot continue after December 31, 2020. In this regard, on August 5, 2020, the Minister of Innovation, Science and Industry issued an order on July 31, 2020 (retroactive to March 13, 2020) to extend the deadlines for calling annual general meetings (“AGMs”) and presenting financial statements for CNCA and CCA corporations to the shorter of (i) 21 months after the previous AGM and no more than 12 months after the last financial year-end; or (ii) December 31, 2020.
Prior to the issuance of the order, all CNCA corporations that wished to delay calling an AGM had to apply to Corporations Canada individually to obtain permission to do so. The application had to be made at least 30 business days before the date the corporation would send the notice calling its AGM under normal circumstances. However, by the time the order was announced by Corporations Canada on August 5, 2020, the majority of CNCA corporations with December 31 year ends which were not able to hold the AGM by the December 31 deadline would have already applied for permission to delay their AGMs. Nevertheless, the power of the Minister now being able to grant relief for all CNCA corporations without the need for each of them to apply for relief is a welcome step.
CNCA corporations that are not able to call an AGM within the required timeframe under the CNCA may apply to Corporations Canada to extend the time for calling an AGM if members will not be prejudiced under Corporations Canada’s normal polices are met.
Update on Provincial Emergency Relief for AGM and Annual Return Filing Deadlines
As discussed in the April 2020 Charity & NFP Law Update, various governments have implemented temporary emergency relief measures to assist and provide some flexibility with timing for annual general meetings (“AGM”) and reporting deadlines. These relief measures are constantly in a state of flux, and are subject to change. The following update is current as of August 29, 2020.
Temporary measures in Alberta providing relief under COVID-19 were previously in place suspending the deadline to hold AGMs and file annual returns. Filing deadlines were reinstated on August 15, 2020, 60 days after the province’s termination of its state of public health emergency. AGMs must now be held after August 14, 2020, depending on when the organization’s AGM was scheduled prior to the COVID-19 pandemic. Annual return filing timelines have also been reinstated as of August 15, 2020, and filing must be done after the AGM.
In British Columbia, societies may now delay their AGMs beyond March 31, 2021, to a date approved by the Registrar of Companies, though no later than November 1 of the calendar year immediately following the calendar year in which an AGM would otherwise be required to be held under the Societies Act. Societies may also hold virtual or hybrid directors’ and members’ meetings, even where their bylaws, incorporating legislation, and regulations state otherwise.
In Manitoba, AGMs that are required to be held on or after March 31, 2020, and before September 1, 2020, are now required to be held no later than September 30, 2020, and may be held electronically, even where the corporation’s by-laws do not allow.
In Newfoundland and Labrador, the deadline to hold AGMs under the Corporations Act has been extended by six months for AGMS that were to be held between May 8, 2020 and October 31, 2020. The deadline to file corporate annual returns has also been extended by six months for corporations with anniversary dates of incorporation between May 8, 2020 and October 31, 2020.
In Nova Scotia, where an AGM cannot be held in person during the declared state of emergency, it may instead be held electronically, even where the corporation’s by-laws do not allow. Alternatively, AGMs may be deferred for a period of up to 90 days after the end of the declared state of emergency, provided that notice of such meeting is provided at least 7 days in advance.
In Ontario, the declared emergency was terminated pursuant to Bill 195 as of July 24, 2020, as discussed in the Legislation Update. Corporations may hold members’ meetings during the COVID-19 pandemic electronically despite any provision in the letters patent, supplementary letters patent or by-laws that provides otherwise. As well, they may delay holding their 2020 AGMs during the now-terminated state of emergency. If the AGM was originally required to be held during the state of emergency in Ontario (i.e. March 17, 2020 to July 24, 2020), the AGM can be delayed until no later than the 90th day after the day the state of emergency is terminated (i.e. October 22, 2020). If the AGM was originally required to be held within 30 days after the state of emergency is terminated (i.e. after July 24, 2020), the AGM can be delayed to no later than the 120th day after the day the emergency is terminated (i.e. November 21, 2020). Annual returns must be filed with tax/information returns with the CRA (whether or not they are filed with the returns with CRA or filed separately with the ministry). As such, their filing deadline is delayed until the time when they file their tax/information returns with the CRA.
In Québec corporations will have the flexibility to hold their AGMs through electronic means or means that enable all members to communicate with each other immediately.
In Saskatchewan, AGMs may be held by electronic means, provided that their articles or bylaws do not prohibit electronic meetings, and further provided that participants are able to adequately communicate with each other during the meeting.
In the Yukon, societies may hold their AGMs partially or entirely by telephone or electronic means, despite their by-laws not permitting electronic meetings, between March 17, 2020 and the day that is 90 days after the end of the state of emergency in the Yukon (which is currently set to terminate on September 10, 2020, unless otherwise extended). Societies may file their annual reports up to 90 days after the end of the state of emergency.