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Rectification of Records of NFP Corporations

The Canada Not-for-profit Corporations Act permits the corporation or a member, director, officer or holder of a debt obligation of the corporation, or any aggrieved person, to apply to court for an order to rectify the records or registers of the corporation.

On the application, the court has a broad power to make any order it thinks fit. Sample orders include an order:

● requiring rectification of the registers or other records of the corporation;

● restraining the corporation from calling or holding a meeting of members before the rectification;

● determining the rights of a party to have his name retained in, or deleted from, the registers or records; and

● compensating a party who has incurred a loss.

1. When Will the Court Exercise its Discretion?

The Ontario Court of Appeal, in Wasauksing First Nation v. Wasauksing Lands Inc., held that the comparable rectification provision of the Ontario Corporations Act are a discretionary remedy. The discretion is not to be exercised lightly, but rather only where it is demonstrated that, by mistake, a written document or instrument does not accord with or accurately reflect the agreement or arrangements intended by the parties. Rectification is not to be used to:

● vary the intentions of the parties; or

● speculate on the substance of those intentions.

Rectification is designed instead to correct a mistake in carrying out the settled intentions of the parties that, by mistake, have not been accurately recorded.

2. Burden of Proof

According to the court, a heavy burden rests on the party seeking rectification to establish convincing proof:

● as to the existence and nature of a common intention by the parties before they made the document or instrument alleged to be deficient;

● that this common intention remained unchanged at the date that the document or instrument was made; and

● that the challenged document or instrument, by mistake, does not conform to the prior common intention of the parties.

Once a basis for making rectification is established, a broad discretion is vested in the court to make a rectification order as it thinks fit.

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