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Business and non-profit corporations are the main types of corporation. Within non-profits, there are different types. The type depends on its purpose and activities.
A business corporation is formed to make a profit. The profit comes from the specific business venture that the business is engaged in. This profit is then distributed to its owners.
The goal of a non-profit corporation, on the other hand, is not personal financial gain. A non-profit corporation can earn a profit, but the profit must be used to further the goals of the group. Most activities of a non-profit corporation are not of a commercial nature. Examples of non-profit corporations are:
The Non-profit Corporations Act, 2022 is the law that governs non-profit corporations in Saskatchewan. These corporations are also still subject to all laws of contract, tort, employment standards and so on.
There are two types of non-profit corporations:
Each type has different rules and responsibilities.
A membership corporation is formed primarily for the benefit of its members. Its purpose is not the direct financial gain of its members. Instead, the purpose is to put its income into a particular activity. It is supported by its members through fees, donations, loans, or any combination of these. Examples of membership corporations are:
Membership corporations:
Remember, both membership and charitable non-profits have members. A corporation is not a membership corporation just because it has members. A charitable corporation has members too.
A charitable corporation exists to pursue some charitable purpose that is primarily of benefit to the public. Its income goes toward that charitable purpose. For example, a charity may exist to raise money for a specific hospital.
Charitable corporations:
Even if it did not designate itself as charitable, a non‑profit will be considered to be a charitable corporation under the Act if it does any of the following:
If this happens, the corporation must comply with the rules of charitable corporations. Alternatively, they can apply to court for an order that they not be deemed a charitable corporation.
Non-profit organizations are not required to incorporate, but doing so has some benefits. Deciding to incorporate can depend on the group’s activities and how they are organized.
When a non-profit incorporates, it becomes a legal entity. At this point, it is essentially the same as an individual at law. An incorporated organization do things in its own name, such as:
If a non-profit is not incorporated, one or more people involved with the group would have to do these things in their own name.
Advantages to incorporating include:
An unincorporated association is created by an agreement between individuals and has no legal status. The members are personally liable to the creditors for the full amount of any debts. An unincorporated body cannot sue or be sued. Members must sue or be sued in their personal capacity. Title to property must be in all the members' names if the group is not incorporated. This can make selling the property difficult. It could also be in just one member’s name, but then it is the member who owns the property at law, not the group.
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