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Legal Issues For Not For Profits

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  • 1. Legal Issues for Not-For-Profits Facilitated by: Derek W. Hillier, Q.C Easton Facey Hillier Lawrence Project Partners: Mariner Resource Opportunities Network Inc. Newfoundland and Labrador Rural Development Council Funding Provided By: Comprehensive Economic Development Agreement Labour Market Development Agreement
  • 2. Non-profit Corporations Workshop
    • Three Sessions:
    • Corporations Act and Corporate Procedures
    • Directors’ Liability
    • Corporate Liability
    • Format:
    • Lecture
    • Case Study
    • Questions and answers
  • 3. Legal Issues for Not-for-Profits Corporations Act and Corporate Procedures
  • 4. Introduction
    • Importance of non-profit organizations
    • Meaning of “non-profit”
    • Comparison between charitable and non-charitable non-profit organizations
  • 5. Objectives of Workshop
    • Statutory basis for corporations without share capital
    • Liability issues for the directors
    • Liability issues for the corporation
    • Minimizing liability through insurance
  • 6. Comparison Charitable and Non-profit
    • Similarities:
    • Operated without a profit basis
    • Not permitted to distribute profits to members
    • Resources devoted to carrying out objects
    • Benefit to public
    • Differences
  • 7. Understanding the Non-profit Corporation
    • Alternatives for non-profit groups
    • Other business entities
    • The Newfoundland and Labrador Corporations Act
    • Incorporating the non-profit corporation
    • By-Laws (Constitution)
  • 8. Alternatives for Non-profits
    • Incorporation under the Newfoundland and Labrador Corporations Act
    • Incorporation under the Canada Business Corporations Act
    • An unincorporated association
  • 9. Other Business Entities
    • Partnership
    • Co-operatives
  • 10. Differences between a partnership and a corporation
    • Partnership:
    • Does not have a distinct legal existence apart from the combination of its individual partners
    • Corporation:
    • Exists as a separate legal entity in its own name
    • Can sue and be sued in the name of the corporation
    • Can enter into contracts in the corporate name
  • 11. Co-operatives
    • Co-operatives Act
    • Common shares
    • Members
  • 12. Whether organized on a co-operative basis
    • A member or delegate has not more than one vote
    • A member or delegate is not entitled to vote by proxy
    • Business is carried primarily for the benefit of members
  • 13. The Corporations Act general provisions
    • Applicability to other corporations
    • “ Corporation” – a body corporate incorporated under the Act
    • “ Body corporate” – a body corporate however or wherever incorporated
    • Application of the Act : “This Act …applies to every body corporate incorporated under an act of Newfoundland or the Province of Newfoundland”. (Section 4(1))
  • 14. Corporations to which the Corporations Act does not apply
    • A body corporate created for a Government or municipal purpose
    • A body corporate under the Agricultural Societies Act
    • A body corporate under the Cooperative Societies Act
  • 15. Capacity and Powers
    • The rights, powers and privileges of a natural person
    • By-law not necessary in order to confer a particular power
    • Restrictions in articles
  • 16. Incorporating the Non-profit Corporation
    • Articles of incorporation
    • Notice of registered head office
    • Notice of directors
  • 17. Articles of Incorporation
    • Name of Corporation
    • Registered office
    • Number of directors
    • Restrictions on the business that the corporation may carry on
    • Other provisions
  • 18. By-Laws
    • Members
    • Meetings of members
    • Voting at meetings of members
    • Board of directors
    • Meetings of board of directors
    • Officers
    • Authority to execute documents
    • Notices
    • Amendments
  • 19. Members
    • Who is eligible
    • Can corporations be a member
    • Will there be one or several classes of voting and non-voting members
    • Is there a fee for membership
    • Will there be delegates
    • Under what circumstances can membership be terminated
  • 20. Meetings of Members
    • What is the quorum for a meeting
    • What notice is required for meetings of members
    • Who has the authority to call a general meeting
    • What percentage of members can request a meeting of members
  • 21. Voting at Meetings of Members
    • Which membership classes have the right to vote?
    • Is voting by proxy permitted?
  • 22. Other Corporate Issues
    • Subsidiary companies
    • Record keeping
    • Signing authority – banking
    • Execution of documents and the corporate seal
    • Youth presence and voting at board tables
  • 23. Record Keeping – Corporate Records (Section 36)
    • A corporation shall prepare and maintain, at its registered office or at another place in the Province designated by the directors, records containing:
    • The articles and by-laws and all amendments to the articles and by-laws
    • Minutes of meetings and resolutions of shareholders
    • Copies of all notices of change of directors
    • A securities register complying with Section 96
  • 24. Case Study Questions & Answers
  • 25. Legal Issues for Not-For-Profits Directors’ Liability
  • 26. Members
    • Role and responsibilities of members
    • Difference between director’s liability and member’s liability
    • How members can lose limited liability
  • 27. Role of Directors
    • Nature of Directorship
  • 28. To avoid personal liability a director must understand:
    • The legal nature of the corporation
    • The director’s role in the corporation
    • The director’s duties under the statute, the by-laws and common law
  • 29. Role of Directors
    • Nature of Directorship
    • Officers of the corporation
    • Standard of Care
  • 30. Directors have the duty to act:
    • Honestly
    • In good faith and in the best interest of the corporation
    • With care, diligence and skill
  • 31. Role of Directors
    • Nature of directorship
    • Nature of officership
    • Standard of care
    • Conflicts of interest
    • Higher standards concerning conflicts in charitable organizations
    • Ultra vires acts
  • 32. Liability of directors
    • Difference between director’s liability and corporate liability
    • Statutory liabilities (Federal)
  • 33. Federal Statutory Liabilities
    • Income Tax Act
    • Goods and Services Tax Act
    • Canada Pension Plan
    • Employment Insurance
  • 34. Newfoundland and Labrador Statutory Liabilities
    • Corporations Act
    • Occupational Health and Safety Act
    • Workplace, Health, Safety and Compensation Act
    • Labour Standards Act
  • 35. Specific liability issues
    • Absence when decisions made
    • Representation on other boards
    • Serving on unincorporated committees
  • 36. Directors and Officers liability insurance
    • Does the policy cover:
    • Employee practices?
    • Defamation?
    • Misrepresentation/non-disclosure?
    • Unpaid wages?
    • Un-remitted deductions at source?
    • GST?
  • 37. Questions to ask your broker
    • Monetary limit?
    • Is the limit per year or per occurrence?
    • Excess coverage?
    • Coverage of actions taken prior to policy being put in place?
    • Deductible for property damage?
    • Deductible for personal injury claims?
    • Who exactly is insured?
  • 38. Information required by broker
    • Details of corporation
    • Revenues
    • Number of employees and volunteers
    • Details about activities carried on by the corporation
    • Previous claims
  • 39. Possible Exclusions
    • Personal profit to which directors not legally entitled
    • Punitive or exemplary damages
    • Criminal or deliberate fraudulent acts
    • Bodily injury
    • Destruction of property
    • Acts or omissions of directors acting as directors of another entity
    • Employee claims
    • Environmental
  • 40. Legal Issues for Not-For-Profits Corporate Liability
  • 41. Corporate Liability
    • Introduction
    • Negligence of the corporation
    • Vicarious liability
    • Differences between vicarious liability and negligence of the corporation
  • 42. Other Corporate Liability
    • Criminal liability
    • Tort Liability
    • Contractual liability
    • Statutory liability
  • 43. Types of Insurance
    • Property Insurance
    • Commercial general liability
    • Business loss insurance
    • Travel accident insurance
    • Fiduciary liability
  • 44. Property Insurance
    • Buildings
    • Equipment
    • Inventory
    • Glass
    • Personal property of officers and employees
  • 45. Commercial general liability endorsements
    • Employees renting cars in company name
    • Tenants legal liability
    • Excess insurance
  • 46. Business Loss Insurance
    • Loss of earnings for a specific time
    • Loss of earnings until building or business reopens
    • Extra expense
  • 47. Case Study Questions and Answers

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