ARCHIVED — Vol. 150, No. 11 — June 1, 2016

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Registration

SOR/2016-98 May 13, 2016

CANADA BUSINESS CORPORATIONS ACT
CANADA COOPERATIVES ACT
CANADA NOT-FOR-PROFIT CORPORATIONS ACT

Regulations Amending Certain Department of Industry Regulations

P.C. 2016-342 May 13, 2016

His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, pursuant to subsection 261(1) (see footnote a) of the Canada Business Corporations Act (see footnote b), section 372 (see footnote c) of the Canada Cooperatives Act (see footnote d) and section 293 of the Canada Not-for-profit Corporations Act (see footnote e), makes the annexed Regulations Amending Certain Department of Industry Regulations.

Regulations Amending Certain Department of Industry Regulations

Canada Business Corporations Act

Canada Business Corporations Regulations, 2001

1 (1) The definition Part V in section 70 of the Canada Business Corporation Regulations, 2001 (see footnote 1) is repealed.

(2) The definitions Canadian GAAP and Canadian GAAS in section 70 of the Regulations are replaced by the following:

Canadian GAAP means generally accepted accounting principles as set out in the CPA Canada Handbook – Accounting or the CPA Canada Public Sector Accounting Handbook, as amended from time to time. (PCGR canadiens)

Canadian GAAS means generally accepted auditing standards as set out in the CPA Canada Handbook – Assurance, as amended from time to time. (NVGR canadiennes)

2 Subsections 71(3) to (6) and (8) of the Regulations are repealed.

3 Subsections 71.1(2) and (3) of the Regulations are replaced by the following:

(2) For an SEC registrant that has prepared its financial statements in accordance with US GAAP and whose auditors are in compliance with the professional practice standards of the Public Company Accounting Oversight Board of the United States, the auditor’s report may be prepared in accordance with US GAAS.

4 Subparagraph 87(1)(a)(iii) of the English version of the Regulations is replaced by the following:

  • (iii) the Canada Oil and Gas Land Regulations and the Canada Oil and Gas Drilling and Production Regulations,

Canada Cooperatives Act

Canada Cooperatives Regulations

5 Sections 36 and 37 of the Canada Cooperatives Regulations (see footnote 2) are replaced by the following:

36 The financial statements referred to in paragraph 247(1)(a) of the Act of a distributing cooperative shall be prepared in accordance with the generally accepted accounting principles that are set out in the CPA Canada Handbook – Accounting or the CPA Canada Public Sector Accounting Handbook, as amended from time to time.

37 The auditor’s report referred to in section 261 of the Act shall be prepared in accordance with the generally accepted auditing standards that are set out in the CPA Canada Handbook – Assurance, as amended from time to time.

6 Subparagraph 53(1)(a)(iii) of the English version of the Regulations is replaced by the following:

  • (iii) the Canada Oil and Gas Land Regulations and the Canada Oil and Gas Drilling and Production Regulations,

Canada Not-For-Profit Corporations Act

Canada Not-For-Profit Corporations Regulations

7 Section 75 of the Canada Not-for-profit Corporations Regulations (see footnote 3) is replaced by the following:

75 For the purpose of paragraph 172(1)(a) of the Act, the comparative financial statements shall, except as otherwise provided by this Part, be prepared in accordance with the generally accepted accounting principles set out in the CPA Canada Handbook – Accounting or the CPA Canada Public Sector Accounting Handbook, as amended from time to time.

8 Section 83 of the Regulations is replaced by the following:

83 (1) For the purposes of subsections 188(1) and 189(2) of the Act, except as otherwise provided by Part 5, a review engagement shall be conducted, and for the purposes of section 191 of the Act, the report following the review engagement shall be prepared, in accordance with the generally accepted auditing standards set out in the CPA Canada Handbook – Assurance, as amended from time to time.

(2) For the purposes of subsections 188(2) and 189(1) of the Act, except as otherwise provided by Part 5, an audit engagement shall be conducted, and for the purposes of section 191 of the Act, the report following the audit engagement shall be prepared in accordance with the generally accepted auditing standards set out in the CPA Canada Handbook – Assurance, as amended from time to time.

Coming into Force

9 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The Standing Joint Committee for the Scrutiny of Regulations (SJCSR) has identified a minor error in the Canada Business Corporations Regulation, 2001 (CBCR) and the Canada Cooperatives Regulations (the Coop Regulations). The Chartered Professional Accountants Canada (CPA) have identified a need to update the name of the Canadian Institute of Chartered Accountants (CICA) Handbook in the CBCR, Coop Regulations and the Canada Not-for-profit Corporations Regulations (the NFP Regulations). Also there are spent provisions in the CBCR and a cross-reference error in the Coop Regulations.

Background

The affected regulations set out details including prescribed time periods, name granting rules and requirements for notices and forms of proxy that business corporations, cooperatives and not-for-profit organizations send to their shareholders or members. The CBCR apply to share corporations created or continued under the Canada Business Corporations Act. The Coop Regulations apply to cooperatives created or continued under the Canada Cooperatives Act. The NFP Regulations apply to not-for-profit corporations created or continued under the Canada Not-for-profit Corporations Act.

Objectives

The objectives of these amendments are to

  • address the issue raised by the SJCSR;
  • update the name of the standards handbook for accounting purposes;
  • repeal spent regulations; and
  • correct a cross-reference error.

Description

The amendments

  • delete the reference to “C.R.C., c. 1517” in the English version of paragraph 87(1)(b) of the CBCR and subparagraph 53(1)(a)(iii) of the Coop Regulations;
  • change the CICA Handbook references to the Chartered Professional Accountants Canada (CPA) Handbook in the CBCR, the Coop Regulations and the NFP Regulations;
  • delete the transition provisions, which are spent regulations, associated with the changes made in 2010 to the standards for producing financial statements and auditing those statements; and
  • change section 36 of the Coop Regulations to replace the reference to subsection 4(5) of the Act with the word “distributing.”

“One-for-One” Rule

The “One-for-One” Rule does not apply to this proposal, as there is no change in administrative costs to business.

Small business lens

The small business lens does not apply to this proposal, as there are no costs to small business.

Consultation

The Chartered Professional Accountants Canada was consulted on these amendments and is supportive of updates to the handbook title. The Co-operatives and Mutuals Canada, the national association of Canadian cooperatives, was consulted on the change to section 36 of the Coop Regulations and was supportive.

Rationale

The amendments are to correct minor errors in the regulations and to repeal spent regulations. Specifically, the amendments address four issues:

  • (1) The Standing Joint Committee for the Scrutiny of Regulations has noticed that there is a typographical error in the English versions of paragraph 87(1)(b) of the CBCR and subparagraph 53(1)(a)(iii) of the Coop Regulations. The reference to “C.R.C., c. 1517” needs to be removed. It is not in the French version.
  • (2) The Chartered Professional Accountants Canada (CPA) has noted that the current references to the CICA handbooks in the CBCR, the Coop Regulations and the NFP Regulations need to be updated. The CPA is the new association of professional accountants in Canada that replaces the Canadian Institute of Chartered Accountants. As a result, the names of the handbooks have changed. There has not been a change in the accounting rules, just in the names of the handbooks.
  • (3) In 2010, the CBCR were amended in response to changes being made to the Canadian generally accepted accounting principles (GAAP) by the Accounting Standards Board. The changes were to the requirement for public corporations to prepare their financial statements in accordance with the International Financial Reporting Standards (IFRS). Private companies were given the choice to use either the IFRS or the accounting standards developed for private enterprises. The regulatory amendments included transition provisions that covered financial years 2010 and 2011. The financial years associated with the transition provisions are complete so the transition provisions are spent regulations and should be repealed.
  • (4) In 1998, subsection 4(5) of the Canada Cooperatives Act was a definition of “distributing cooperative.” In 2001, the subsection was amended and the definition of “distributing cooperative” was added to the definitions in subsection 2(1) of the Canada Cooperatives Act. Section 36 of the Coop Regulations, which cross-referenced subsection 4(5) of the Canada Cooperatives Act, was not updated at that time. The regulatory amendment will correct the error by simply referring to “distributing cooperative.”

Contact

Coleen Kirby
Manager
Policy Section
Corporations Canada
Industry Canada
Telephone: 1-866-333-5556
Email: ic.corporationscanada.ic@canada.ca