The founders of non-profit organizations usually have the best of intentions when they set up such organizations. They may desire to improve the well-being of members of less privileged social groups, to promote the culture and heritage of various communities, or even to organize activities for people with similar interests or hobbies.
Despite the noble intentions of their founders, non-profits need financial liquidity and competent management to grow and thrive. Attaining these resources is often a challenge, and in the absence of thereof, many organizations crumble.
Running a non-profit is often a thankless job. Still, whenever one falls apart, the directors cannot choose to just walk away simply because the organization was not geared towards generating a profit. The directors of non-profit organizations must follow the prescribed procedure for dissolution.
Let us briefly overview the process of dissolving a non-profit organization.
The decision to dissolve
The members of a non-profit organization must vote on whether or not to dissolve the organization. Before dissolving a non-profit constituted under Quebec law, the Registraire des entreprises du Quebec requires an attestation that at least two-thirds of the members present at the special meeting called to discuss the dissolution must have voted in favour of dissolution. A certified copy of the resolution whereby the members have voted to dissolve the organization must be given to the Registraire des entreprises as part of the dissolution process.
Notifying of intention to dissolve
In addition to obtaining the members’ approval of the dissolution, the non-profit in question must inform the public of its intention to dissolve. To do so, the organization must publish a notice in a newspaper that circulates in the locality where it has established its headquarters.
Settling debts
The non-profit organization must pay off its debts before it can be dissolved. If it is unable to do so, it must show that its creditors have forgiven its debts or that the eventual payment of the debts has otherwise been assured. For example, that its directors have guaranteed the payment of the debts. If, once its debts have been paid, the organization still owns assets, it must dispose of them. Sometimes the organization’s letters patent (sometimes referred to as the organization’s charter) will require that its assets be passed on to another organization, which has similar objectives.
For more information about the dissolution of a not-for-profit, you may contact Kelly Francis at (514) 802-7736 or at info@kellyfrancisavocate.com.
Disclaimer: This article merely gives readers an overview of the issues discussed therein and is not legal advice. Please do not take action based on this article alone without first seeking the legal counsel appropriate for your specific situation!
