Canada Not-for-profit Corporations Act (S.C. 2009, c. 23)

Marginal note:Directors’ liability

• 145 (1) Directors of a corporation who vote for or consent to a resolution authorizing any of the following are jointly and severally, or solidarily, liable to restore to the corporation any money or other property so paid or distributed and not otherwise recovered by the corporation:

  • (a) a payment or distribution to a member, a director or an officer contrary to this Act; or

  • (b) a payment of an indemnity contrary to this Act.

• Marginal note:Recovery of shares

  (2) A director who has satisfied a judgment rendered under this section is entitled to recover from the other directors who voted for or consented to the unlawful act on which the judgment was founded their respective shares.

• Marginal note:Recovery

  (3) A director liable under subsection (1) is entitled to apply to a court for an order compelling a member or other recipient to pay or deliver to the director any money or other property that was paid or distributed to the member or other recipient contrary to this Act.

• Marginal note:Order of court

  (4) On an application under subsection (3), a court may, if it is satisfied that it is equitable to do so, order a member or other recipient to pay or deliver to a director any money or other property that was paid or distributed to the member or other recipient contrary to this Act and make any further order that it thinks fit.

• Marginal note:Limitation

  (5) An action to enforce a liability imposed by this section may not be commenced after two years from the date of the resolution authorizing the action complained of.

Marginal note:Liability of directors for wages

• 146 (1) Directors of a corporation are jointly and severally, or solidarily, liable to employees of the corporation for all debts not exceeding six months’ wages payable to each employee for services performed for the corporation while they are directors.

• Marginal note:Conditions precedent to liability

  (2) A director is not liable under subsection (1) unless

  • (a) the corporation has been sued for the debt within six months after it has become due and execution has been returned unsatisfied in whole or in part;

  • (b) the corporation has commenced liquidation and dissolution proceedings or has been dissolved and a claim for the debt has been proved within six months after the earlier of the date of commencement of the liquidation and dissolution proceedings and the date of dissolution; or

  • (c) the corporation has made an assignment or a receiving order has been made against it under the Bankruptcy and Insolvency Act and a claim for the debt has been proved within six months after the date of the assignment or receiving order.

• Marginal note:Limitation

  (3) A director, unless sued for a debt referred to in subsection (1) while a director or within two years after ceasing to be a director, is not liable under this section.

• Marginal note:Amount due after execution

  (4) If execution referred to in paragraph (2)(a) has issued, the amount recoverable from a director is the amount remaining unsatisfied after execution.

• Marginal note:Subrogation of director

  (5) A director who pays a debt referred to in subsection (1) that is proved in liquidation and dissolution or bankruptcy proceedings is subrogated to any priority that the employee would have been entitled to and, if a judgment has been obtained, the director is

  • (a) in Quebec, subrogated to the employee’s rights as declared in the judgment; and

  • (b) elsewhere in Canada, entitled to an assignment of the judgment.

• Marginal note:Recovery of shares

  (6) A director who has satisfied a claim under this section is entitled to recover from the other directors who were liable for the claim their respective shares.

Marginal note:Dissent

• 147 (1) A director who is present at a meeting of directors or of a committee of directors is deemed to have consented to any resolution passed or action taken at the meeting unless

  • (a) the director requests a dissent to be entered in the minutes of the meeting;

  • (b) the director sends a written dissent to the secretary of the meeting before the meeting is adjourned; or

  • (c) the director sends a dissent by registered mail or delivers it to the registered office of the corporation immediately after the meeting is adjourned.

• Marginal note:Loss of right to dissent

  (2) A director who votes for or consents to a resolution is not entitled to dissent under subsection (1).

• Marginal note:Dissent of absent director

  (3) A director who was not present at a meeting at which a resolution was passed or action taken is deemed to have consented to the resolution or action unless, within the prescribed period after becoming aware of the resolution or action, the director

  • (a) causes a dissent to be placed with the minutes of the meeting; or

  • (b) sends a dissent by registered mail or delivers it to the registered office of the corporation.

Marginal note:Duties of directors and officers

• 148 (1) Every director and officer of a corporation in exercising their powers and discharging their duties shall

  • (a) act honestly and in good faith with a view to the best interests of the corporation; and

  • (b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

• Marginal note:Duty to comply

  (2) Every director and officer of a corporation shall comply with

  • (a) this Act and the regulations; and

  • (b) the articles, the by-laws and any unanimous member agreement.

• Marginal note:Lawfulness of articles and purpose

  (3) Every director of a corporation shall verify the lawfulness of the articles and the purpose of the corporation.

• Marginal note:No exculpation

  (4) Subject to subsection 170(5), no provision in a contract, the articles, the by-laws or a resolution relieves a director or an officer from the duty to act in accordance with this Act or the regulations or relieves them from liability for a breach of this Act or the regulations.

Marginal note:Director — reasonable diligence

• 149 (1) A director is not liable under section 145 or 146, and has complied with his or her duties under subsection 148(2) and (3), if the director exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on

  • (a) financial statements of the corporation represented to the director by an officer of the corporation or in a written report of the public accountant of the corporation fairly to reflect the financial condition of the corporation; or

  • (b) a report of a person whose profession lends credibility to a statement made by that person.

• Marginal note:Director — good faith

  (2) A director has complied with his or her duties under subsection 148(1) if the director relied in good faith on

  • (a) financial statements of the corporation represented to the director by an officer of the corporation or in a written report of the public accountant of the corporation fairly to reflect the financial condition of the corporation; or

  • (b) a report of a person whose profession lends credibility to a statement made by that person.

Marginal note:Officer — reasonable diligence

• 150 (1) An officer has complied with his or her duties under subsection 148(2) if the officer exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on a report of a person whose profession lends credibility to a statement made by that person.

• Marginal note:Officer — good faith

  (2) An officer has complied with his or her duties under subsection 148(1) if the officer relied in good faith on a report of a person whose profession lends credibility to a statement made by that person.

Marginal note:Indemnification

• 151 (1) A corporation may indemnify a present or former director or officer of the corporation, or another individual who acts or acted at the corporation’s request as a director or an officer or in a similar capacity of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the corporation or other entity.

• Marginal note:Advance of costs

  (2) A corporation may advance money to a director, an officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection (1). The individual shall repay the money if the individual does not fulfil the conditions of subsection (3).

• Marginal note:Limitation

  (3) A corporation may not indemnify an individual under subsection (1) unless the individual

  • (a) acted honestly and in good faith with a view to the best interests of the corporation or, as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at the corporation’s request; and

  • (b) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, had reasonable grounds for believing that their conduct was lawful.

• Marginal note:Indemnification

  (4) A corporation may, with the approval of a court, indemnify an individual referred to in subsection (1), or advance money under subsection (2), in respect of an action by or on behalf of the corporation or other entity to procure a judgment in its favour to which the individual is made a party because of the individual’s association with the corporation or other entity as described in subsection (1), against all costs, charges and expenses reasonably incurred by the individual in connection with the action, if the individual fulfils the conditions set out in subsection (3).

• Marginal note:Right to indemnity

  (5) Despite subsection (1), an individual referred to in that subsection is entitled to indemnity from the corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual’s association with the corporation or other entity as described in that subsection, if the individual seeking indemnity

  • (a) was not judged by the court or other competent authority to have committed any fault or to have omitted to do anything that the individual ought to have done; and

  • (b) fulfils the conditions set out in subsection (3).

• Marginal note:Insurance

  (6) A corporation may purchase and maintain insurance for the benefit of an individual referred to in subsection (1) against any liability incurred by the individual

  • (a) in the individual’s capacity as a director or an officer of the corporation; or

  • (b) in the individual’s capacity as a director or an officer, or in a similar capacity, of another entity, if the individual acts or acted in that capacity at the corporation’s request.

• Marginal note:Application to court

  (7) On the application of a corporation or an individual or entity referred to in subsection (1), a court may approve an indemnity under this section and make any further order that it thinks fit.

• Marginal note:Other notice

  (8) On an application under subsection (7), the court may order notice to be given to any interested person and the person is entitled to appear and be heard in person or by counsel.

PART 10By-laws and Members

Marginal note:By-laws

• 152 (1) Unless the articles, the by-laws or a unanimous member agreement otherwise provides, the directors may, by resolution, make, amend or repeal any by-laws that regulate the activities or affairs of the corporation, except in respect of matters referred to in subsection 197(1).

• Marginal note:Member approval

  (2) The directors shall submit the by-law, amendment or repeal to the members at the next meeting of members, and the members may, by ordinary resolution, confirm, reject or amend the by-law, amendment or repeal.

• Marginal note:Effective date

  (3) Subject to subsection (5), the by-law, amendment or repeal is effective from the date of the resolution of the directors. If the by-law, amendment or repeal is confirmed, or confirmed as amended, by the members it remains effective in the form in which it was confirmed.

• Marginal note:Ceasing to have effect

  (4) The by-law, amendment or repeal ceases to have effect if it is not submitted by the directors to the members as required under subsection (2) or if it is rejected by the members.

• Marginal note:Subsequent resolution

  (5) If a by-law, an amendment or a repeal ceases to have effect, a subsequent resolution of the directors that has substantially the same purpose or effect is not effective until it is confirmed, or confirmed as amended, by the members.

• Marginal note:Member proposal

  (6) A member entitled to vote at an annual meeting of members may, in accordance with section 163, make a proposal to make, amend or repeal a by-law.