Overview
So you sit on the board of a not-for-profit corporation, have read our recent blog post, and determined whether your organization is currently a soliciting or a non-soliciting corporation. What does it all mean?
As noted previously, soliciting and non-soliciting corporations are subject to different requirements under the Canada Not-for-profit Corporations Act (the CNCA), including those related to audits, reporting, and governance. Since soliciting corporations receive at least $10,000 of income from public sources, the CNCA subjects these corporations to more stringent oversight.
Audit Requirements
The level of financial review required under the CNCA depends on two factors: (i) status as a soliciting or non-soliciting corporation; and (ii) gross annual revenues. The following chart is an adaptation of a summary provided by Industry Canada. It explains the various levels of financial review required under the CNCA.
| Type of Corporation | Gross Annual Revenues | Appointment of Public Accountant ("PA") | Reporting Requirements |
| Soliciting | $50,000 or less | Default: Members must appoint a PA appointed by ordinary resolution. Alternative: Members may waive appointment by annual unanimous resolution. | Default: PA conducts review engagement (if no PA appointed, only compilation is required).
Alternative: Members may pass ordinary resolution to require an audit. |
| Between $50,000 and $250,000 | Members must appoint a PA by ordinary resolution. | Default: PA must conduct an audit.
Alternative: Members can pass a special resolution to require a review engagement. | |
| More than $250,000 | Members must appoint a PA by ordinary resolution. | PA must conduct an audit. | |
| Non-Soliciting | $1 million or less | Default: Members must appoint a PA appointed by ordinary resolution. Alternative: Members may waive appointment by annual unanimous resolution. | Default: PA conducts review engagement (if no PA appointed, only compilation is required).
Alternative: Members may pass ordinary resolution to require an audit. |
| More than $1 million | Members must appoint a PA by ordinary resolution. | PA must conduct an audit |
Reporting Requirements
Both soliciting and non-soliciting corporations must provide certain documents, including financial statements and the public accountant's report (if any), to the members of the corporation prior to the annual meeting. Soliciting corporations are required to provide copies of these documents to the Director, but non-soliciting corporations are exempt from this requirement.
Governance Requirements
While the CNCA allows not-for-profit corporations to implement a unanimous members agreement which directs or restricts the powers of the directors, these are not permitted in the context of soliciting corporations.
Additionally, there is no minimum number of directors for non-soliciting corporations, but soliciting corporations must have at least three directors. In addition, at least two directors of soliciting corporations cannot also be officers or employees of the corporation.
Since a non-soliciting corporation will become a soliciting corporation if its public revenues exceed the $10,000 threshold in a particular financial year, not-for-profit corporations should ensure that their articles and by-laws contain the necessary flexibility to permit any necessary adjustments to the size or composition of their boards. Otherwise, an organization that becomes a soliciting corporation may be forced to amend its articles and/or by-laws in order to make the necessary changes to comply with the CNCA requirements.