Updated June 2012
This How-To Brief outlines the steps to take to set up a non-profit corporation under both federal and Ontario legislation.
1Discuss the general incorporation issues with the client
- Canvass options with client as to the most appropriate vehicle in which to carry on the non-profit organization, e.g., unincorporated association, trust, provincial incorporation or federal incorporation.
- Note that they cannot be partnerships since their objective is not to make a profit.
- Issues to be covered would normally include concepts such as limited liability, perpetual existence, taxation, costs of incorporation and maintenance, and prestige.
- Consideration should also be given as to whether the entity should be a registered charity.
- Discuss whether the entity should be registered as a federal or a provincial corporation.
On June 23, 2009, the Canada Not-for-Profit Corporations Act (the "CNPCA") received Royal Assent, and on October 17, 2011, the majority of the provisions of the CNPCA and its regulations came into force. The CNPCA applies to every corporation incorporated under it and to every corporation incorporated under the old legislation, Part II of the Canada Corporations Act (the "CCA"), prior to that time and continued under the CNPCA. Federal not-for-profit corporations are required to transition to the CNPCA. (All corporations incorporated under the old CCA legislation must transition to the CNPCA by October 17, 2014. See the Corporations Canada’s"Guide to Transitioning to the New Federal Legislation"link in the Resources section of this How-To Brief.) Until they have made the transition, however, the provisions of Part II of the CCA will continue to apply to them. Within three years of its enforcement date, all corporations incorporated under Part II of the CCA will be required to apply for a certificate of continuance in order to avoid dissolution. The application must include an officer's certificate certifying that the members have adopted a new by-law that conforms to the requirements of the CNPCA. The CNPCA replaced Part II of the CCA and introduced the following changes:
- Incorporation is now "as of right" (there is no longer a need for Ministerial approval of letters patent); corporations will be incorporated pursuant an application for articles of incorporation.
- It is no longer necessary to submit a draft form of the by-laws with the application for articles of incorporation; rather, at the first organizational meeting, the directors may make by-laws, which must then be filed within 12 months after the members have confirmed them (see the Corporations Canada’s Model By-Laws link in the Resources section of this How-To Brief, which was designed to apply to a typical not-for-profit corporation).
- The corporation will no longer be required to have "objects"; however, if the corporation is a charity, it will likely continue to be desirable to include them.
- It is no longer necessary to list the powers of the corporation.
- The CNPCA allows for the incorporation of a corporation as a numbered company.
- Documents may now be filed electronically.
See the Resources section of this How-To Brief for the Corporations Canada’s Not-for-Profit Corporations link, which describes how to create and maintain a federal not-for-profit corporation and also includes a comparison between the old CCA and the new CNPCA.
The Ontario Government passed Bill 65, the Not-for-Profit Corporations Act, 2010 (the “NPCA”), which will take effect on a date to be named by proclamation. The stated purpose of the NPCA is to establish a comprehensive modern corporate framework for Ontario’s 46,000 not-for-profit corporations by replacing Part III of the Corporations Act. One of the most important changes the Bill will introduce is the ways in which a not-for-profit corporation can be created. Similar to the CNPCA, the NPCA will replace incorporation at the discretion of the Minister with incorporation "as of right," and it will no longer be necessary to submit draft form of the by-laws with the application. Articles of incorporation will replace letters patent. Articles of amendment will replace supplementary letters patent. There will no longer be a requirement to set out "objects." It is expected that the incorporation process will become significantly faster and more efficient. Incorporation will likely become possible within about one week rather than as much as six or more.
2Establish that the desired name is permitted
- Obtain a valid NUANS name search report; ensure that the proposed name otherwise complies with the ss. 11–13 of the CNPCA, as well as ss. 43–57 of the Canada Not-for-Profit Corporations Regulations, made under the CNPCA.
- The proposed name must be distinctive, must not cause confusion with any existing name or trade-mark and must not include unacceptable terms; check local telephone directories to ensure the proposed corporate name is not deceptively similar to the name of a known corporation, association, partnership, individual or business. See the Corporations Canada's "Choosing a Name" link in the Resources section of this How-To Brief.
- The CNPCA also allows the client to choose a number name as the corporation’s legal name.
- Obtain an Ontario-biased NUANS name search result; ensure that the name otherwise complies with s. 13 of the Ontario Corporations Act, as well as ss. 3, 5, 6, 7, 8 and 9 of the General regulation, made under the Corporations Act.
- Check local telephone directories to ensure the proposed corporate name is not deceptively similar to the name of a known corporation, association, partnership, individual or business.
- In addition to not being "deceptively similar" to the existing name of a publicly known entity, the proposed corporate name must be sufficiently distinctive and not too general.
- The word "Incorporated," "Incorporée," "Corporation," "Inc." or "Corp." may be, but are not required to be part of the name of the corporation.
- When choosing a business name, the following words or expressions cannot be used (see s. 3 of General):
- "Amalgamated," "fusionné" or any other related word or expression in French, unless the corporation is an amalgamated corporation resulting from the amalgamation of two or more corporations
- "College," "collège," "institute," "institut," "university" or "université," except with a consent in writing on behalf of the Ministry of Education and Training
- "Engineer," "ingénieur," "engineering," "génie" or "ingénierie" or any variation thereof, except with the consent in writing of the Association of Professional Engineers of Ontario
- "Royal," where used as an adjective, unless the consent of the Crown has been obtained through the Secretary of State
- "Limited," "Limitée" or the corresponding abbreviations
- Numerals indicating the year of incorporation, unless the proposed corporation is the successor to a corporation the name of which is the same as or similar to the proposed corporation or the year is the year of amalgamation of the corporation
- Any word or expression that would lead to an inference that the corporation is a business corporation
- Additionally, a corporate name shall not
- be too general
- be primarily or only a given name or surname used alone of an individual who is living or has died within 30 years preceding the date of filing an application for letters patent or supplementary letters containing the name
- be primarily or only a geographic name used alone
- contain any word or expression in any language that describes in a misleading manner the activities or services in association with which the corporate name is proposed to be used
- use words or expressions, in any language, that are obscene or objectionable in nature
- use words that imply the business is a different type of organization—you may not use numbers or words that imply the business name is a corporate number name
- use words with restricted use under federal or Ontario laws
- use names of individuals unless they have or had a material interest in the business activity and have given their written permission—if an individual is not living, and the name is used within 30 years of the date of death, the written consent of the estate must be obtained
- Only letters from the Roman alphabet (English, French, Spanish, Italian, Latin, etc.) or Arabic numerals or a combination thereof and punctuation marks and other marks set out below may form part of the name of a corporation.
- The following marks may also be included in the proposed corporate name, however a name shall not consist only or primarily of a combination of these marks and at least the first three characters of the name shall be letters from the Roman alphabet or Arabic numerals or a combination thereof: ! " # $ % & ' ( ) * + , - . / : ; > = < ? [ ] \ ˄≤ ≥ ´ ` ^ ¨ @.
3Prepare and file the application for incorporation
In order to apply for a certificate of incorporation, the following items must be filed with Corporations Canada, which will then review the client’s application package and make its decision (see the Industry Canada’s"Instructions to File Articles of Incorporation"link in the Resources section of this How-To Brief for another useful checklist):
- Completed and signed copy of Form 4001, Articles of Incorporation
- Completed and signed copy of Form 4002, Initial Registered Office Address and First Board of Directors
- NUANS name search report for the proposed name that is not more than 90 days old—if there has been prior approval of the proposed name, attach a copy of the letter from Corporations Canada approving the corporation name along with the copy of the NUANS Name Search Report
- To obtain a number name, leave a blank space (in which Corporations Canada will insert an assigned number), followed by the word Canada and one of the following prescribed terms: "Association," "Center," "Centre," "Fondation," "Foundation," "Institut," "Institute" or "Society."
- If the proposed name is a number name, a NUANS name search report is not required.
- $250 filing fee payable by credit card, a cheque to the Receiver General for Canada or cash, depending on the method of filing the application (see the Industry Canada’s Schedule of Feeslink in the Resources section of this How-To Brief)
- Covering letter giving a contact name, return address and telephone number
(See the links for the above forms in the Resources section of this How-To Brief.)
See Corporations Canada’s "Reporting Obligations after Incorporation" link in the Resources section of this How-To Brief, for a list of maintenance requirements once your client’s federal not-for-profit corporation has been incorporated.
In order to incorporate a not-for-profit corporation in Ontario, each of the following must be submitted to the Companies and Personal Property Security Branch:
- Form 2, Application for Incorporation of a Corporation without Share Capital, completed in duplicate and bearing original signatures on both copies
- Ontario-biased NUANS name search report
- Fee of $155 (standard-service processing time is six to eight weeks) or a fee of $255 (expedited-service processing time is seven business days)
- Covering letter giving a contact name, return address and telephone number
(See the link to the above form in the Resources section of this How-To Brief.)
For additional information, see the following links in the Resources section of this How-To Brief:
- Ministry of Government Services, Incorporation (Not-For-Profit Corporations), for general filing instructions
- Ministry of The Attorney General, Not For Profit Incorporator's Handbook, for comprehensive information and guidelines on incorporation in Ontario
- The Ontario NUANS Search Houses listed by Industry Canada
- Corporations Canada, Guide to Transitioning to the New Federal Legislation
- Corporations Canada, Model By-Laws
- Corporations Canada, Federal Not-for-Profit Corporations
- Corporations Canada, Choosing a Name
- Industry Canada, Instructions to File Articles of Incorporation
- Industry Canada, Articles of Incorporation Form 4001
- Industry Canada, Form 4002, Initial Registered Office Address and First Board of Directors
- Industry Canada, Instructions for Form 4002 — Initial Registered Office Address and First Board of Directors
- Industry Canada, Schedule of Fees
- Corporations Canada, Reporting Obligations after Incorporation
- Government of Ontario Ministry of Government Services, Form 2, Application of Incorporation of a Corporation without Share Capital, Corporations Act
- Government of Ontario, Ministry of Government Services, Incorporation (Not-For-Profit Corporations)
- Government of Ontario, Ministry of the Attorney General, Not-For-Profit Incorporator's Handbook
- Ontario NUANS Search Houses listed by Industry Canada
Statutes and Rules
- Canada Not-for-profit Corporations Act, S.C. 2009, c. 23
- Canada Not-for-profit Corporations Regulations, SOR/2011-223, made under the Canada Not-for-profit Corporations Act
- Canada Corporations Act, R.S.C. 1970, c. C-32
- Corporations Act, R.S.O. 1990, c. C.38
- General, R.R.O. 1990, Reg. 181, made under the Corporations Act
- Not-for-Profit Corporations Act, 2010, S.O. 2010, c. 15