New Not-for-Profit Corporations Act

On June 13th, The Honourable Diane Ablonczy introduced the Not-For-Profit Corporations Act in the House. The new Act will unbundle the not-for-profit rules from the moribund Canada Corporations Act, which will be repealed.

The Not-For-Profit Corporations Act has been in the works for several years. It started life as Bill C-21, which received first reading in November 2004. Generally, the Act makes the following changes:

• Streamlines the incorporation process by eliminating the current "letters patent" system and replacing it with an "as of right" system. Incorporation will be granted upon the filing of specified forms and the payment of a fee without the need for Ministerial review
• Improves financial accountability by creating different levels of financial accountability depending on an organization´s revenue and whether or not it solicits public donations or government funding. Organizations with high revenue will require an audit, while not-for-profits with low revenue can opt for a review engagement. All not-for-profits will be required to make their financial statements available to members, directors and officers
• Clarifies board member responsibilities by defining the standards of care that board members and directors must meet. When this standard is met, they will be protected from liability
• Enhances members´ rights and access to information, by giving them the power to access corporate reports, including financial statements, and membership lists. They also will be able to launch a suit if they believe that the directors or officers of the organization have acted improperly
• Allows streamlined transition to the new Act. Organizations currently incorporated under the Canada Corporations Act will have three years to apply for corporate status under the new Act, and there will be no fee for this process. New organizations will have to pay a $200 fee, plus an additional $30 to file mandatory annual summaries

For the Industry Canada press release announcing the introduction of the Act, click here.

For an informative paper on Bill C-21 by Jane Burke-Robertson, B.Soc.Sci., LL.B. (Counsel) of Carters Professional Corporation, a full-service law firm with a focus on charities and not-for-profit organizations, click here.

Not-for-Profit PolicyPro (NPPP), the latest addition to the Internal Control Library, includes chapters on Governance, Corporate Administration, Financial Management, Advocacy and Public Policy and Human Resources, and contains more than 25 ready-to-use policies and 50 helpful procedures. For more information on NPPP, click here.

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Bell sued for throttling Internet speeds

In the last edition of Inside Internal Control we wrote about the controversy surrounding Bell´s "traffic shaping" practices and the technology used.

The story keeps getting bigger. Now Bell is being sued by Quebec´s consumer watchdog L´Union des consommateurs. The class-action suit, filed May 29th in Quebec Superior Court, alleges that by deliberately slowing Internet speeds, Bell misrepresented its service and raised privacy concerns. The suit asks for the return of 80 percent of the Internet subscription price for all Bell subscribers in Quebec, which it says is equal to the reduction in speed, as well as $600 per subscriber to compensate for false advertising and $1,500 for privacy rights violation.

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Draft guide for environmental claims

The corporate world has gone green. Many companies (or should I say the marketing departments of many companies), are now promoting their environmental performance, and the sometimes dubious environmental benefits of their products.

Is there any substance to these claims, or can organizations say anything they want, with no regard for reality?

Into this breach steps the Competition Bureau with draft guidance entitled Environmental Claims: A Guide for Industry and Advertisers.

The guide discourages the use of unsubstantiated and vague environmental claims and states that they should detail environmental benefits in a way that can be measured and verified. The draft guide will eventually become official, and following that, after a voluntary compliance period, the guidelines will become enforceable by the Competition Bureau.

For Part 1 of the guide click here. For Part 2, click here. For the latest version of the AdBytes @ Gowlings newsletter from Gowling Lafleur Henderson LLP that discusses these guidelines, click here.

Operations and Marketing PolicyPro (NPPP) contains chapters on Sales and Marketing and Environmental Management. For more information on OMPP, click here.

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Quebec and Ontario agree on emission trading system

The premiers of Quebec and Ontario signed a Memorandum of Agreement (MOU) on June 2 that commits both provinces to establish a joint greenhouse gas emissions cap-and-trade regime.

By signing the agreement Quebec and Ontario indicated their intention to follow a different path than the federal government, choosing to set a hard cap on emissions and rejecting the feds´ proposed Regulatory Framework for Air Emission, which limits the intensity of industrial emissions.

What does this have to do with your organization? Maybe nothing, especially in the short term. But these emission trading and control regimes are becoming an important part of the business and societal landscape and presage big changes to come. And a smart entrepreneur will start understanding the risks and opportunities involved.

Need more information? Click here for the Ontario government press release announcing the MOU. Click here for an in-depth discussion of emission trading, including the existing cap-and-trade regimes Ontario and Quebec may choose to join.

Volume II - Corporate Governance of Finance and Accounting PolicyPro (FAPP) includes in-depth discussions and policies dealing with Strategy and Planning and Risk Management. For more information about FAPP, click here.

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Identity theft to be added to Criminal Code

Although identity theft is recognized as a serious and increasingly common offence, it is not expressly addressed in the current Criminal Code. This is an obvious example of the ingenuity of criminals outstripping the diligence of lawmakers.

This is about to change. Bill C-27 has passed second reading in the House and is now in committee. The Bill creates three new offences in the Criminal Code:

• Obtaining or possessing identity information with the intent to use it to commit certain crimes
• Trafficking in identity information with knowledge of or recklessness as to its intended use in the commission of such crimes, and
• Possessing and trafficking certain government-issued identity documents belonging to another person, including passports, SINs, drivers' licenses, and birth certificates

The Bill also introduces the concept of restitution for the victim.

However, as a recent article from Howard Simkevitz, an associate in the Corporate & Insurance and Privacy Groups of Lang Michener LLP in Toronto points out, there are two potential issues that arise in a reading of the Bill. First, what are the circumstances that would give rise to a "reasonable" inference that personal information is intended for fraud; and second, how do you determine that a person was "reckless" as to whether such information could be used for fraud? As he says: "The standard(s) by which one could impute reasonableness and recklessness in the realm of identity theft is/are less than clear."

The passage of Bill C-27 may be an ideal time for an organization to review its privacy and confidentiality policies. For a model policy and a thorough discussion of the issue, see Volume II - Corporate Governance of Finance and Accounting PolicyPro (FAPP). For more information about FAPP, click here.

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The end of globalization?

We´ve all become used to living in a global economy. We´re no longer surprised that our fruit comes from Chile and Canadian souvenirs are manufactured in China.

What we may not have realized, however, is that this global trade is dependent on cheap energy. When energy costs soar, it´s no longer feasible to ship everything halfway around the world.

As Jeff Rubin, CIBC´s chief economist, along with co-author Benjamin Tal recently wrote in a paper entitled Will Soaring Transport Costs Reverse Globalization?: "In a world of triple-digit oil prices, distance costs money. And while trade liberalization and technology may have flattened the world, rising transportation prices will once again make it rounder."

For the full text of this thought-provoking paper, click here.

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About Inside Internal Control

Editor: Colin Braithwaite, Managing Editor, PolicyPro.

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