by Dev User | May 28, 2020 | Expertise, Real Estate Law
May 2020 Charity & NFP Law Update
On May 16, 2020, the Ontario government amended its regulation regarding restrictions on social gatherings and organized public events. Ontario Regulation 52/20 was issued in accordance with subsection 7.02(4) of the Emergency and Civil Protection Act (the “Emergency Order”). The amended Emergency Order exempts persons who gather for the purposes of a religious service, rite or ceremony if the prescribed precautions are followed.
These precautions require, generally, that: i) the persons attending the service remain inside their motor vehicle; ii) only members of the same household may be in a motor vehicle together; iii) each motor vehicle must be positioned at least two meters away from other motor vehicles; iv) no more than five persons, each remaining at least two meters apart from others, may conduct the service from outside a motor vehicle; v) any building located at the place where the gathering is taking place must remain closed except as reasonably required for access to the persons conducting the service; vi) no materials may be exchanged between the persons conducting the service or the attendees; vii) persons who ordinarily use a non-motorized vehicle because of their religious belief may attend the service provided they remain within their non-motorized vehicle and follow these rules with necessary modifications.
The Emergency Order is currently in force until June 9, 2020, although it may be extended, as has been done in the past. Other provinces also have similar special measures and/or guidelines in place for gatherings being held for the purposes of religious services, rites or ceremonies.
Read the May 2020 Charity & NFP Law Update
by Dev User | May 28, 2020 | Expertise, Real Estate Law
May 2020 Charity & NFP Law Update
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
by Dev User | May 28, 2020 | Expertise, Real Estate Law
May 2020 Charity & NFP Law Update
On May 13, 2020, the Canada Revenue Agency (“CRA”) announced that the Charities Directorate has now resumed its review of digital and paper-based applications for charitable registration after the interruption to the CRA’s operations caused by the COVID-19 pandemic. The Charities Directorate also advised that it will not close applications without prior contact and that applicants who have been required to submit more information or documents in support of their applications will now have until July 31, 2020 to respond.
In order to process applications for charitable registration in the most expedient manner, the Charities Directorate also stated that a preliminary review of all applications is under way to identify applicants providing charitable programs to those impacted by the COVID-19 pandemic.
Read the May 2020 Charity & NFP Law Update
by Dev User | May 28, 2020 | Uncategorized
May 2020 Charity & NFP Law Update
The following lawyers at Carters have been ranked by Lexpert as leading practitioners in their areas of practice:
- Terrance S. Carter, Toronto – Charities; Estate & Tax Planning
- Nancy E. Claridge, Orangeville – Estate & Tax Planning
- Jennifer M. Leddy, Ottawa – Charities
- Theresa L.M. Man, Orangeville – Charities; Estate & Tax Planning
- Esther S.J. Oh, Orangeville – Charities
- Ryan M. Prendergast, Orangeville – Charities
Read the May 2020 Charity & NFP Law Update
by Dev User | May 28, 2020 | Uncategorized
May 2020 Charity & NFP Law Update
The British Columbia Court of Appeal (“BCCA”) released its decision in Doukhobor Heritage Retreat Society #1999 v Vancouver Foundation on March 10, 2020, in which it considered an appeal from a lower court decision concerning the return of a gift from one charity to another. As discussed in the February 2019 Charity & NFP Law Update, Doukhobor Heritage Retreat Society #1999 (the “Society”) had transferred $175,000 to the Vancouver Foundation (the “Foundation”) in 2001. The letter enclosing the cheque (“Transfer Letter”) stipulated that the capital was to be “held permanently by Vancouver Foundation and invested in accordance with the provisions of the Vancouver Foundation Act”, the incorporating statute for the Foundation (“VFA”). The Transfer Letter also required that the income of the Fund was to be disbursed to the Society in quarterly installments in order to support the Society’s charitable programs as described in the Transfer Letter.
The Society requested the return of the Fund when, as a result of an economic downturn, it became apparent that the return on investment from the Fund (and other funds intended to support the same charitable programs) would be insufficient to cover the cost of operating the Society’s charitable program. The Foundation refused on the basis that it was unable to do so, given the Society’s earlier direction in the Transfer Letter that the Foundation was to hold the Funds “permanently.” The lower court found that the Fund was not a gift made to the Foundation, but instead was a transfer that reflected a situation described in s.17 of the VFA, which provides that a charity may “entrust” funds to the Foundation so that the Foundation may manage and invest the said charity’s fund. The lower court had also indicated that s. 11(1) of VFA states that “[f]or the purpose of giving effect to the objects of the foundation, the board must carry out the directions of donors if definite directions in writing are given,” and that this required the Foundation to return the Fund in accordance with the latest written direction received from the Society.
On appeal, the Foundation argued that the lower court erred in its interpretation of the VFA by failing to give effect to the language of s. 11 in the context of the statute as a whole, as well as the terms of the Fund, and principles of the law of trusts and gifts. The Society argued that since the capital and accrued interest in the Fund had already been returned to the Society and the Fund was closed, the appeal was moot. The Society also argued that the lower court did not err in its interpretation of the VFA.
On the issue of mootness, the BCCA found that a tangible and concrete dispute remained between the Society and the Foundation, and therefore the issues in the case were not moot.
In addressing the lower court’s finding that the Fund was not a gift or donation, the BCCA found that the donation of the capital to the Foundation was a gift that created a charitable purpose trust. In reviewing s. 11(1) of the VFA concerning the Foundation’s obligation to follow directions of donors, the BCCA found that “directions from donors” required to be followed by the Foundation were those made at the time that the gift was transferred. The BCCA stated that properly construed, s. 11(1) of the VFA did not oblige the Foundation to follow directions to alter or revoke the terms of a donation after the gift is complete.
Finally, in considering the principles of the law of trusts, the BCCA stated that a donor “can only retain the power to change the terms of a gift or trust, or to give directions as to the further use of the funds that are gifted …by reserving the right to do so at the time the gift is made”. As the Society had not done this, the BCCA found that a gift had been made, and set aside the lower court’s order requiring that the Foundation return the Fund to the Society.
This decision underscores the importance of clearly documenting the terms intended to apply to transfers of charitable property in an appropriate agreement, in order to avoid potential misunderstandings and disputes between the parties. In this regard, it is interesting to note that the BCCA reminded readers that “the general principle is that a person who has made a gift cannot retract it, nor dictate to the trustee how the property is to be used. A donor who has made a gift cannot qualify, retract or alter the terms of the gift after it is complete.”
