Non-profit Incorporation
Who would want to incorporate as a non-profit organization?
Why should an organization incorporate?
How does an organization get incorporated?
Will you need a lawyer to incorporate?
What will it cost to incorporate?
Who would want to incorporate as a non-profit organization?
an organization that manages a large budget or at least a regular flow of money an organization that has employees
an organization that operates an office or a vehicle
an organization that has been set up to exist over the long-term
Why should an organization incorporate?
Limited liability: the main reason for becoming incorporated. With limited liability, the volunteers involved with the organization will not be forced to pay the organization’s debts or be held responsible for other obligations such as contracts as long as they have carried out their duties in a responsible way.
Funding: Many funding sources, such as foundations and certain government departments, will only fund an organization if it is incorporated.
Recognition: Incorporation enhances the credibility of an organization by requiring some public accountability.
Legal rights: Incorporation gives the organization the right to:
- own property;
- obtain a bank loan;
- sign a contract on behalf of the organization, rather than its individual members.
How does an organization get incorporated?
Step 1 - Get the information and forms
Applications for incorporation can be filed at the Companies and Deeds Online website from the Commercial Registrations Division of the Department of Government Services. Visit https://cado.eservices.gov.nl.ca/Company/ArticlesOfIncorporationMain.aspx. Staff are available at the Registry office to help an organization walk through the different steps of incorporation.
Department of Government Services
Government of Newfoundland and Labrador
Ground floor, East Block
P.O. Box 8700
Confederation Building
St. John’s, NL A1B 4J6
Telephone: (709) 729-3316
Fax: (709) 729-0232
Web site: https://cado.eservices.gov.nl.ca/Company/CompanyMain.aspx
A copy of the Corporations Act may also be helpful. Once incorporated, an organization must comply with the Act and its regulations. The Act can be purchased from the Queen’s Printer or can be viewed online at the above link. Part XXI (Sections 418 to 430) of the Act deals specifically with non-profit organizations.
Queen’s Printer
Telephone: (709) 729-3649
Fax: (709) 729-1900
Step 2 - Pick a Name
The name of an organization must be cleared with the Registry of Companies before its incorporation documents are sent to the Registry. A number of conditions apply to names before they are approved by the Registry.
Basically, the name must:
- be distinct to avoid confusion with any other organizations;
- clearly describe the purpose of the organization, for example, Environmental or Athletic;
- include either Corporation (Corp.) or Incorporated (Inc.) as the last word of the name.
Step 3 - Write up your incorporation documents
Before completing the forms for incorporation, an organization will need to clearly define its structure and goals by writing them down in documents called 1) Articles of Incorporation, which are filed with the Registry, and 2) By-laws, which an organization keeps on record.
Articles of Incorporation are filed with the Commercial Registrations Division. All documents must be originally signed with signatures witnessed by an individual authorized to administer an oath, such as a lawyer.
The information required for these Articles is:
- the name of the organization, as approved by the Registry;
- the address of the organization;
- the names and addresses of at least 3 directors, who are 19 years of age or more;
- a list of the purposes and activities of the organization. Some people would call this its mission statement, or its goals and objectives.
By-laws
By-laws clearly set out the fundamental principles and rules, not covered by the Corporations Act, by which the organization will be governed. These by-laws are required and must be kept on record, although they are not filed with the Registry.
The by-laws may include:
- a statement on how the board of directors was formed; when and how future directors will be elected; an outline of the board’s powers and duties; and the process for setting up committees and their powers;
- a statement that defines who the members are: the qualifications, terms and conditions of their membership; their voting rights; and the process for termination of their membership;
- a statement that outlines how meetings will be carried out, for example: the notice to be given; the frequency; how decisions will be made; the required quorum for decision-making, and the requirements for proxy votes;
- a statement on the rules for preparing and submitting financial statements;
- a statement that outlines procedures for hiring employees;
- rules for borrowing money;
- rules to avoid conflict of interest within the organization;
- a wind-up clause specifying that if the organization disbands in the future, its asset will go to another non-profit organization; and
- the date the document becomes effective.
By-laws, and any amendments, must be approved by 2/3rds of the members of the organization before they become effective.
Once incorporated, an organization must file an annual return with the Registry, stating its name, address and directors.
Will you need a lawyer to incorporate?
Writing by-laws can be difficult for some organizations. Some hire a lawyer to help them through the process of incorporation. An organization may be able to find a lawyer who will volunteer services to help it become incorporated.
If an organization cannot get legal counsel, an examination of the Articles of Incorporation and By-laws of other non-profit organizations may be helpful. Those documents can be adapted to meet the needs and goals of the organization that wishes to incorporate.
What will it cost to incorporate?
A non-profit organization must pay a one-time fee of $70 to become incorporated with the Registry.
Forms and other related information about incorporating your organization can be found at the Government Services website: https://cado.eservices.gov.nl.ca/Company/CompanyWhatsIncluded.aspx#section2.
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Copyright 2003 Community Services Council Newfoundland and Labrador
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