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Fundamental Changes under the CNCA

The Canada Not-for-profit Corporations Act provides that the members must approve, by special resolution (which requires the approval of at least two-thirds of the members who cast votes) certain changes or transactions. In some cases, the changes require the approval of each separate class of members - even if the membership class is otherwise non-voting.

Fundamental Changes under the CNCA

A. Articles

1. Change the corporation's name - no SCV required.

2. Change the province or territory in which the registered office is situated - no SCV required.

3. Add, change or remove restriction on the activities that the corporation may carry on - no SCV required.

4. Create a new class or group of members - requires a separate class vote ("SCV") if there is more than one class of member, the new class would have rights equal or superior to those of the existing class (the "Protected Class") and the articles do not opt out of the SCV.

5. Change the designation of any class or group of members or add, change or remove any rights and conditions of such class - requires an SCV if there is a change to the rights or conditions attaching to memberships of the Protected Class, an increase in the rights of any other class having equal or superior rights to those of the Protected Class or an increase in the rights of a class of members having rights inferior to those of the Protected Class to make the inferior class equal or superior to the Protected Class.

6. Divide any class or group of members into two or more classes or groups and fix the rights and conditions of each class or group - A4 or A5 may apply.

7. Increase or decrease the number of directors (or the minimum or maximum number or directors) set out in the articles - no SCV required.

8. Change the statement of purpose - no SCV required.

9. Change the rights to the distribution of property remaining on liquidation after the discharge of any liabilities of the corporation - no SCV required (unless change affects rights to liquidation distribution of the members of the Protected Class).

10. Add, change or remove any other provision that is permitted to be set out in the articles - for example, this would include adding, changing or removing a condition required for being a member, a provision respecting the transfer of a membership, the manner of giving notice to members entitled to vote at a meeting of members or the method of voting by members not in attendance at a meeting of members.

B. Articles or By-laws (depending on the location of the provision)

11. Change a condition required for being a member - no SCV required.

12. Add, change or remove a provision respecting the transfer of membership - no SCV required.

13. Change the manner of giving notice to members entitled to vote at a meeting of members - no SCV required.

14. Change the method of voting by members not in attendance at a meeting of members - no SCV required.

C. Amalgamation (other than a vertical short-form or a horizontal short-form amalgamation where no amalgamation agreement need be approved)

15. Members of each amalgamating corporation must approve the amalgamation - members of a Protected Class of an amalgamating corporation have an SCV if the amalgamation agreement contains a provision that, if contained in a proposed amendment of the articles, would entitle the member of the Protected Class to an SCV.

D. Export Continuance

16. Members must approve a continuance - members of a non-voting class have the right to vote on the continuance but do not have an SCV.

E. Extraordinary Sale, Lease or Exchange

17. Members must approve a sale, lease or exchange of all or substantially all of the property of the corporation other than in the ordinary course of its activities - members of a Protected Class enjoy an SCV if, but only if, the Protected Class is affected by the sale, lease or exchange in a manner different from the members of another class.

F. Arrangement

18. An arrangement is approved by the court - while approval of members is not technically required, it is a significant factor in the exercise of the court's discretion to approve the plan of arrangement (except perhaps where the corporation is insolvent).

G. Liquidation and Dissolution

19. Dissolution where the corporation has no property and no liabilities - each class of members must approve the dissolution.

20. Dissolution after corporation has distributed any money or other property - each class of members must approve the dissolution.

21. Voluntary liquidation and dissolution in other circumstances - each class of members must approve the dissolution.

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