Dissolving a not-for-profit corporation
Learn how to prepare a request to dissolve a not-for-profit corporation under the Canada Not-for-profit Corporations Act (NFP Act).
Although the information provided here will assist you in completing the dissolution process quickly and accurately, it is not intended to replace legal advice. You may wish to consult a lawyer or other professional advisor to ensure that the specific needs of your not-for-profit corporation are met.
What is dissolution?
Dissolution is the legal termination of a corporation. In other words, dissolution is the act of ending the existence of a corporation. A corporation is dissolved when a Certificate of Dissolution is issued by Corporations Canada. The effective date is shown on the Certificate of Dissolution.
When can a corporation apply for dissolution?
A corporation can apply to dissolve when it has no property or liabilities. The exception is a bankrupt corporation. Bankruptcy does not end a corporation's existence. A bankrupt corporation can only apply to dissolve three years after the trustee or interim receiver has been discharged.
If the corporation owns property or has liabilities, refer to How can a corporation dissolve if it owns property or has any liabilities?
Can a bankrupt or insolvent corporation dissolve under the NFP Act?
A corporation that is bankrupt, has a trustee under a proposal or an interim receiver under the Bankruptcy and Insolvency Act (BIA), cannot voluntary dissolve until three years after the trustee or interim receiver in bankruptcy has been discharged.
A corporation is bankrupt if it has made an assignment into bankruptcy under the Bankruptcy and Insolvency Act (BIA), or against whom a bankruptcy order has been made under the BIA, and who has not been discharged from bankruptcy
A corporation is insolvent under the BIA if:
- it is unable to meet its obligations as they generally become due;
- it has ceased paying current obligations in the ordinary course of activities as they become due; or
- the corporation's property is not sufficient, at a fair valuation, to allow payment of all obligations (i.e., even if all of the property was to be disposed of, there would not be sufficient cash to allow payment of all obligations, due or soon to become due.)
Do members need to approve the dissolution?
If the corporation has members but no property or liabilities, members can approve the dissolution by special resolution. If there is more than one class or group of members, each class or group must pass a special resolution to authorize the dissolution even if these members are not otherwise entitled to vote.
If the corporation has no members because no memberships were issued, the directors can pass a resolution to authorize its dissolution.
How can a corporation dissolve if it owns property or has any liabilities?
A corporation can be dissolved only when its property has been distributed and its liabilities have been discharged.
There are two ways to proceed:
- Liquidation before starting the dissolution process
The members can pass a special resolution authorizing the directors to distribute any property and discharge any liabilities in accordance with the articles of the corporation and the requirements under the NFP Act. If there is more than one class or group of members, each class or group must pass a special resolution to authorize the dissolution even if these members are not otherwise entitled to vote. The directors must then dispose of any property and liabilities before applying for a Certificate of Dissolution.
- Starting the dissolution process before the liquidation process
If the corporation will cease carrying on business while it is in the process of liquidation, it may wish to apply for a Certificate of Intent to Dissolve. Members must authorize the liquidation and dissolution of the corporation by special resolution. If there is more than one class or group of members, each class or group must pass a special resolution to authorize the dissolution even if these members are not otherwise entitled to vote. The Certificate of Intent to Dissolve serves as public notice that the corporation is no longer carrying on its activities, except to the extent necessary for the liquidation.
When a Certificate of Intent to Dissolve is issued, the corporation must cease to carry on its activities except to the extent needed for the liquidation. It must also:
- notify creditors of its intent to dissolve;
- give notice of the intent to dissolve in each province in Canada where the corporation was carrying on activities at the time it sent the Statement of Intent to Dissolve to Corporations Canada;
- do all the acts required for the liquidation of property in accordance with the NFP Act and to discharge all the corporation's liabilities; and
- distribute the corporation's remaining property among the members according to the articles or the provisions of the NFP Act.
Can a corporation decide not to dissolve once a Certificate of Intent to Dissolve is issued?
Yes. The corporation would have to apply for a Certificate of Revocation of Intent to Dissolve by submitting a completed and signed Form 4020 — Statement of Revocation of Intent to Dissolve. (See available instructions.) There is a filing fee.
Once the Certificate of Revocation of Intent to Dissolve is issued, the corporation can resume carrying on its activities.
If the Certificate of Dissolution has been issued, the Certificate of Intent to Dissolve cannot be revoked. However, it is possible to revive the corporation. Please see the document titled Reviving a Not-for-profit Corporation for more information
What documents must be filed to dissolve a corporation?
To obtain a Certificate of Dissolution, a completed and signed copy of Form 4017 — Articles of Dissolution must be submitted to Corporations Canada. (See available instructions.) There is no filing fee.
To obtain a Certificate of Intent to Dissolve, a completed and signed copy of Form 4019 — Statement of Intent to Dissolve must be submitted to Corporations Canada. (See available instructions.) There is no filing fee.
Copies of the directors' resolution or members' special resolution should not be submitted with the application.
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