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Legal Issues for Not-For-Profits Facilitated by: Derek W. Hillier, Q.C Easton Facey Hillier Lawrence Project Partners: Mar...
Non-profit Corporations Workshop <ul><li>Three Sessions: </li></ul><ul><li>Corporations Act and Corporate Procedures </li>...
Legal Issues for Not-for-Profits Corporations Act and  Corporate Procedures
Introduction <ul><li>Importance of non-profit organizations </li></ul><ul><li>Meaning of “non-profit” </li></ul><ul><li>Co...
Objectives of Workshop <ul><li>Statutory basis for corporations without share capital </li></ul><ul><li>Liability issues f...
Comparison Charitable and Non-profit <ul><li>Similarities: </li></ul><ul><li>Operated without a profit basis </li></ul><ul...
Understanding the Non-profit Corporation <ul><li>Alternatives for non-profit groups </li></ul><ul><li>Other business entit...
Alternatives for Non-profits <ul><li>Incorporation under the Newfoundland and Labrador  Corporations Act </li></ul><ul><li...
Other Business Entities <ul><li>Partnership </li></ul><ul><li>Co-operatives </li></ul>
Differences between a partnership and a corporation <ul><li>Partnership: </li></ul><ul><li>Does not have a distinct legal ...
Co-operatives <ul><li>Co-operatives Act </li></ul><ul><li>Common shares </li></ul><ul><li>Members </li></ul>
Whether organized on a  co-operative basis <ul><li>A member or delegate has not more than one vote </li></ul><ul><li>A mem...
The  Corporations Act  general provisions <ul><li>Applicability to other corporations </li></ul><ul><li>“ Corporation” – a...
Corporations to which the  Corporations Act  does not apply <ul><li>A body corporate created for a Government or municipal...
Capacity and Powers <ul><li>The rights, powers and privileges of a natural person </li></ul><ul><li>By-law not necessary i...
Incorporating the Non-profit Corporation <ul><li>Articles of incorporation </li></ul><ul><li>Notice of registered head off...
Articles of Incorporation <ul><li>Name of Corporation </li></ul><ul><li>Registered office </li></ul><ul><li>Number of dire...
By-Laws <ul><li>Members </li></ul><ul><li>Meetings of members </li></ul><ul><li>Voting at meetings of members </li></ul><u...
Members <ul><li>Who is eligible </li></ul><ul><li>Can corporations be a member </li></ul><ul><li>Will there be one or seve...
Meetings of Members <ul><li>What is the quorum for a meeting </li></ul><ul><li>What notice is required for meetings of mem...
Voting at Meetings of Members <ul><li>Which membership classes have the right to vote? </li></ul><ul><li>Is voting by prox...
Other Corporate Issues <ul><li>Subsidiary companies </li></ul><ul><li>Record keeping </li></ul><ul><li>Signing authority –...
Record Keeping – Corporate Records (Section 36) <ul><li>A corporation shall prepare and maintain, at its registered office...
Case Study Questions & Answers
Legal Issues for Not-For-Profits Directors’ Liability
Members <ul><li>Role and responsibilities of members </li></ul><ul><li>Difference between director’s liability and member’...
Role of Directors <ul><li>Nature of Directorship </li></ul>
To avoid personal liability a director must understand: <ul><li>The legal nature of the corporation </li></ul><ul><li>The ...
Role of Directors <ul><li>Nature of Directorship </li></ul><ul><li>Officers of the corporation </li></ul><ul><li>Standard ...
Directors have the duty to act: <ul><li>Honestly </li></ul><ul><li>In good faith and in the best interest of the corporati...
Role of Directors <ul><li>Nature of directorship </li></ul><ul><li>Nature of officership </li></ul><ul><li>Standard of car...
Liability of directors <ul><li>Difference between director’s liability and corporate liability </li></ul><ul><li>Statutory...
Federal Statutory Liabilities <ul><li>Income Tax Act </li></ul><ul><li>Goods and Services Tax Act </li></ul><ul><li>Canada...
Newfoundland and Labrador Statutory Liabilities <ul><li>Corporations Act </li></ul><ul><li>Occupational Health and Safety ...
Specific liability issues <ul><li>Absence when decisions made </li></ul><ul><li>Representation on other boards </li></ul><...
Directors and Officers  liability insurance <ul><li>Does the policy cover: </li></ul><ul><li>Employee practices? </li></ul...
Questions to ask your broker <ul><li>Monetary limit? </li></ul><ul><li>Is the limit per year or per occurrence? </li></ul>...
Information required by broker <ul><li>Details of corporation </li></ul><ul><li>Revenues </li></ul><ul><li>Number of emplo...
Possible Exclusions <ul><li>Personal profit to which directors not legally entitled </li></ul><ul><li>Punitive or exemplar...
Legal Issues for Not-For-Profits Corporate Liability
Corporate Liability <ul><li>Introduction </li></ul><ul><li>Negligence of the corporation </li></ul><ul><li>Vicarious liabi...
Other Corporate Liability <ul><li>Criminal liability </li></ul><ul><li>Tort Liability </li></ul><ul><li>Contractual liabil...
Types of Insurance <ul><li>Property Insurance </li></ul><ul><li>Commercial general liability </li></ul><ul><li>Business lo...
Property Insurance <ul><li>Buildings </li></ul><ul><li>Equipment </li></ul><ul><li>Inventory </li></ul><ul><li>Glass </li>...
Commercial general liability endorsements <ul><li>Employees renting cars in company name </li></ul><ul><li>Tenants legal l...
Business Loss Insurance <ul><li>Loss of earnings for a specific time </li></ul><ul><li>Loss of earnings until building or ...
Case Study Questions and Answers
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Legal Issues For Not For Profits

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Transcript of "Legal Issues For Not For Profits"

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