Corporations governed by the Canada Corporations Act have until October 17, 2014 to continue under the Canada Not-for-profit Corporations Act ("CNCA").  At this point, thousands of corporations have completed the transition process; many more thousands need to determine if they will continue under the CNCA.  To assist those corporations still working on the process, it is helpful to consider some of the common mistakes that have been made in continuance documents filed to date.

Corporations Canada has published a list of common deficiencies that are found in the Articles of Continuance (transition) (Form 4031), noting that over 40% of continuance applications are returned to the applicant due to these deficiencies.  Many of these deficiencies are easily avoided, and amount to technical or procedural errors, including:

  • Missing annexes or schedules;
  • Mandatory provisions of the articles not being included – each provision on Form 4031 must be completed except for the provisions for change of name (if there is none), restrictions on the activities that the corporation may carry out and additional provisions;
  • Full legal name not being set out;
  • Missing name search report if a new name is requested;
  • Incorrect corporation number;
  • Province or territory set out not matching the province or territory in Form 4002; and
  • Number of directors indicated on Form 4031 not matching the number of directors set out in Form 4002.

The provision in the Articles of Continuance (transition) that appears to cause the most problems is the provision setting out the classes of members of the corporation.  This section cannot be blank and must set out a clear description of at least one class or group of members.  In addition, the voting rights of the members must be specified.  If there is only one class of members, the members must be voting members.  If there is more than one class of members, the articles must give the right to vote to at least one class or group.

Finally, the corporation's by-laws should not be attached to the Articles of Continuance (transition) – this might cause the by-laws to become part of the articles, which would mean that the by-laws could be changed only by amending the articles.  Corporations Canada has also clarified that the by-laws should not be referenced in the articles – if they are referenced, Corporations Canada will be required to review the by-laws.