Religious Corporations under the CNCA

The Canada Not-for-profit Corporations Act provides that religious corporations enjoy an exemption from court-ordered liquidations, derivative actions and oppression proceedings if:

• the impugned act, omission, conduct or exercise of powers is based on a tenet of faith held by the members of the corporation; and
• it was reasonable to base the act, omission, conduct or powers on the tenet of faith, having regard to the corporation's activities.

The Act does not, however, attempt to define what constitutes a "religious corporation" or a "tenet of faith". Instead, these concepts have been intentionally left to the courts.

Religious corporations will probably not be entirely immune from the disciplinary effects of the liquidation, derivative action and oppression remedies. For example, courts will be able to deal with cases involving misappropriation of church funds or property, and cases involving election disputes but will not have jurisdiction to hear disputes involving religious tenets of faith that are more properly argued outside of a courtroom. Also, a religious corporation is not exempt from compliance and restraining orders made under another provision of the Act.

In most (but not necessarily all) cases, a religious corporation can be expected to receive a type and amount of funding that will make it a soliciting corporation. In that respect, a religious corporation is subject to the same rules as any other corporation under the Act.