Soliciting vs Non-Soliciting Corporation Canada: Key Differences
If a Canadian not-for-profit corporation receives more than $10,000 from public sources in a single financial year, it becomes a soliciting corporation and must follow stricter rules.
Non-soliciting corporations stay below this threshold and have more flexibility in how they operate.
The difference between these two types affects board size and financial reporting.
The distinction between soliciting and non-soliciting status determines key requirements like the minimum number of directors needed, what kind of financial review is required, and whether the organization must file financial statements with Corporations Canada.
These requirements exist because soliciting corporations receive public funds and need to maintain transparency and accountability to the public.
Understanding which category applies to a corporation helps directors and officers meet their legal obligations under the Canada Not-for-profit Corporations Act.
This article explains the criteria for each status, outlines the specific requirements soliciting corporations must follow, and covers how these rules affect day-to-day operations and long-term planning.
Defining Soliciting vs Non-Soliciting Corporations
The Canada Not-for-profit Corporations Act classifies not-for-profit corporations into two categories based on their funding sources and amounts.
This classification determines the regulatory requirements each corporation must follow.
Soliciting Corporation Definition
A soliciting corporation receives more than $10,000 from public sources in a single financial year.
Public sources include three main types of income.
The first type covers donations or gifts from people who are not members, directors, officers, or employees of the corporation. Under the CNCA Regulations, this also excludes “prescribed persons” — individuals related to the corporation by blood, marriage, common-law partnership, or adoption. This includes spouses, children, parents, siblings, and anyone who resides with a member, director, officer, or employee of the corporation.
The second type includes grants or similar financial assistance from federal, provincial, or municipal governments or their agencies.
The third type involves donations or gifts from another corporation or entity that itself received more than $10,000 from public sources in its most recent financial year.
The status takes effect at the annual meeting following the financial year when the corporation exceeded the $10,000 threshold.
This gives the corporation time to make necessary changes to comply with additional requirements.
Non-Soliciting Corporation Definition
A non-soliciting corporation receives no public funds or less than $10,000 in public funds during its previous financial years.
These corporations typically operate on membership fees, investment income, or private donations from members and their families.
A corporation is considered soliciting if it received more than $10,000 in public funds in any single financial year within its last three years. However, once a corporation becomes soliciting, it must remain below this threshold for two consecutive financial years before it can return to non-soliciting status.
Non-soliciting corporations face fewer regulatory requirements and less government oversight.
They do not need to file financial statements with Corporations Canada unless specifically requested by the Director.
Determining Status under the Canada Not-for-profit Corporations Act
Not-for-profit corporations must calculate their total public funding at each financial year-end to determine their status.
The calculation includes all three types of public sources outlined in the Act.
The $10,000 threshold applies to the combined total from all public sources, not each source individually.
Corporations should track donations, government grants, and transfers from other publicly funded organizations separately throughout the year.
Corporations Canada provides an assistance tool to help organizations determine whether they are soliciting or non-soliciting.
Directors and officers should review their funding sources carefully, as misclassification can lead to non-compliance with statutory requirements.
Legal or professional advice may be necessary when circumstances are unclear or complex.
Criteria and Thresholds for Soliciting Status
A corporation’s soliciting status depends on whether it receives more than $10,000 from public sources in a single financial year.
The timing of when this threshold is met and what counts as public funding determines the specific requirements a corporation must follow.
Public Funding Threshold and Timeframe
The public funding threshold sits at $10,000 per financial year.
A corporation becomes soliciting when its annual public funding exceeds this amount during any single financial period.
The calculation happens at the corporation’s financial year-end.
The requirements don’t take effect immediately when a corporation crosses the threshold.
They apply starting at the annual meeting of members following the financial year-end where the corporation exceeded $10,000 in public funds.
This timing gives the corporation a chance to make necessary changes to its governance structure.
A corporation remains soliciting until it stays below the $10,000 threshold for two consecutive financial years.
Only after two full years under the limit can it return to non-soliciting status.
Sources of Public Funding
Public sources include three main categories of income.
The first category covers donations and gifts from people who are not members, directors, officers, or employees of the corporation. Under the CNCA Regulations, the definition of “prescribed persons” (who are not considered public donors) includes individuals related to the corporation by blood, marriage, common-law partnership, or adoption. This encompasses spouses, children, parents, siblings, and anyone who resides with a member, director, officer, or employee of the corporation.
The second category includes government grants and similar financial assistance.
This covers funding from federal, provincial, or municipal governments and their agencies.
The third category involves donations or gifts from other corporations that themselves received more than $10,000 from public sources in their most recent financial year.
This creates a flow-through effect where public funding from one organization counts as public funding for the receiving organization.
Income that does not count as public funding:
- Membership fees from members
- Business income from regular operations
- Investment income from assets
- Donations from prescribed persons (family members and household residents of members, directors, officers, and employees)
- Private foundations (unless they received public funds)
- Corporate donations from companies without public funding
Calculating Gross Annual Revenue
Gross annual revenue serves two purposes in determining a corporation’s obligations.
First, it combines with soliciting status to set financial review requirements.
Second, it establishes the type of audit or review a corporation must conduct.
For soliciting corporations:
- Those with gross annual revenue under $50,000 default to a review engagement, but members can waive this requirement by unanimous resolution
- Corporations between $50,000 and $250,000 must have an audit by default, but members can opt for a review engagement instead through a special resolution
- Above $250,000, an audit becomes mandatory with no option to choose a review engagement
For non-soliciting corporations:
- Those with gross annual revenue under $1 million default to a review engagement, but members can waive this requirement by unanimous resolution
- Corporations with $1 million or more in gross annual revenue must have either an audit or a review engagement (members can choose by unanimous resolution), but cannot waive having a public accountant entirely
The gross annual revenue calculation includes all income sources, not just public funding.
This means membership fees, business income, investment income, donations, gifts, and government grants all factor into the total.
The financial year determines the period for measuring both the public funding threshold and gross annual revenue.
Transitioning Between Statuses
The transition from non-soliciting to soliciting status requires specific governance changes.
The corporation must increase its board to at least three directors, with two who are not officers or employees.
If the corporation’s articles are silent on the distribution of property upon liquidation, the Canada Not-for-profit Corporations Act automatically requires that any remaining property be distributed to a qualified donee under the Income Tax Act. While amending the articles to explicitly include this provision is not legally required, it is considered a best practice for clarity and transparency.
Filing requirements change at the first annual meeting after crossing the threshold.
The corporation must begin sending financial statements and any public accountant reports to Corporations Canada.
It must also eliminate any unanimous member agreement if one exists.
Moving from soliciting to non-soliciting status takes longer.
The corporation must stay below the $10,000 public funding threshold for two complete financial years.
During this time, it continues to meet all soliciting corporation requirements.
Only after the second consecutive year below the threshold can it adopt the less stringent non-soliciting requirements.
Some corporations may qualify for an exemption through a Director’s decision.
This allows a soliciting corporation to be deemed non-soliciting in exceptional circumstances where meeting the full requirements would not serve the public interest.
Legal Obligations and Reporting Requirements
Soliciting and non-soliciting corporations face different levels of scrutiny with financial reporting and public disclosure.
Soliciting corporations must file detailed financial statements with Corporations Canada and meet strict deadlines, while non-soliciting corporations have fewer requirements but still need to maintain basic compliance.
Filing Financial Statements
Soliciting corporations must prepare and file complete financial statements with Corporations Canada every year.
These statements need to include a balance sheet, income statement, statement of changes in net assets, and cash flow statement.
A qualified public accountant must conduct either an audit or review engagement of these documents before filing.
Non-soliciting corporations do not have to file their financial statements publicly.
They still need to prepare financial statements for their members and keep proper financial records, but these documents stay internal.
The organization can choose whether to hire an accountant to review their books.
The type of financial review required depends on the corporation’s soliciting status and annual revenue:
For soliciting corporations:
- Under $50,000: Review engagement (members can waive by unanimous resolution)
- $50,000 to $250,000: Audit required (members can opt for review engagement by special resolution)
- Over $250,000: Audit mandatory
For non-soliciting corporations:
- Under $1 million: Review engagement (members can waive by unanimous resolution)
- Over $1 million: Audit or review engagement required (members can choose by unanimous resolution, but cannot waive having a public accountant)
This creates higher compliance costs for soliciting corporations across all revenue levels.
Financial Reporting Deadlines
Soliciting corporations must send their financial statements to members at least 21 days before their annual meeting.
For the Director of Corporations Canada, the requirements are more detailed: financial statements must be sent not less than 21 days before the annual meeting. If members sign a resolution in lieu of holding a meeting, the corporation must send the financial statements to the Director as soon as possible after the resolution is signed. In all cases, statements must be filed no later than 15 months after the preceding annual meeting and within six months of the financial year-end.
Since the annual meeting must be held within six months (approximately 180 days) of the fiscal year-end, many organizations aim to file their statements within 160 days as a best practice. This gives adequate time for the public accountant to complete their work and still meet the 21-day requirement before the meeting.
If a corporation’s fiscal year ends on December 31, 2025, and they plan to hold their annual meeting in late June 2026, they would need to submit their statements to the Director by early June 2026 to meet the 21-day advance notice requirement, and in any event no later than mid-June 2026 (six months after year-end).
The filing happens through Corporations Canada’s online portal.
Non-soliciting corporations still need to hold annual meetings and present financial information to their members.
However, they don’t face the same strict filing deadlines with Corporations Canada.
They set their own internal timelines based on their bylaws and member needs.
Disclosure to Corporations Canada and the Public
Corporations Canada makes all soliciting corporation financial statements available to the public through their online database.
Anyone can request and view these documents.
This creates public accountability for organizations that receive donations, grants, or other public funds.
The public can see how the organization spends money and manages its resources.
The financial statements must show detailed revenue sources, expenses by category, and any significant transactions.
Soliciting corporations also need to disclose compensation paid to directors and officers if it exceeds certain thresholds.
This transparency helps maintain public trust in the non-profit sector.
Non-soliciting corporations keep their financial information private except to their own members.
They don’t appear in public databases unless someone specifically requests their corporate records through a formal process.
This gives them more privacy but also means less public oversight.
Penalties for Non-Compliance
Corporations Canada enforces compliance through administrative consequences rather than daily financial penalties.
Soliciting corporations that fail to file their financial statements on time will not receive a Certificate of Compliance.
Without this certificate, the corporation cannot demonstrate good standing, which can affect its ability to receive grants, enter contracts, or maintain relationships with funders.
More seriously, consistent failure to meet reporting requirements can lead to administrative dissolution.
If a corporation is more than one year late in filing its Annual Return, Corporations Canada can strike the corporation off the registry.
This means the organization can no longer operate legally, accept donations, or maintain its bank accounts.
The Canada Revenue Agency tracks compliance separately for charitable status purposes.
Organizations that are both soliciting corporations and registered charities need to meet requirements from both Corporations Canada and CRA.
Failing to comply with one can affect standing with the other.
Corporations Canada offers an assistance tool on their website to help organizations determine if they are soliciting or non-soliciting.
Using this tool doesn’t provide legal protection, but it helps organizations understand their obligations before problems arise.
Many corporations mistakenly classify themselves as non-soliciting and then face consequences when Corporations Canada discovers the error during a review.
Audit and Financial Review Standards
The level of financial scrutiny required for a not-for-profit corporation depends on whether it qualifies as soliciting or non-soliciting and its gross annual revenues.
Both types face distinct audit requirements designed to ensure financial transparency and proper financial controls.
Audit Requirements for Soliciting Corporations
Soliciting corporations face stricter financial review standards because they receive public funds.
The requirements change based on annual revenues.
Corporations with annual revenues over $250,000 must have their financial statements audited by a public accountant.
This audit provides assurance that the financial statements comply with Canadian accounting standards for not-for-profit organizations.
For soliciting corporations with revenues between $50,000 and $250,000, an audit is required by default. However, members can pass a special resolution to opt for a review engagement instead.
A review engagement offers moderate assurance rather than the comprehensive examination that an audit provides.
Soliciting corporations with revenues under $50,000 default to a review engagement, but members can waive this requirement by passing a unanimous resolution.
Even when a review is waived, the corporation must still maintain proper financial records and submit financial statements to Corporations Canada.
These heightened requirements exist to safeguard public funds and ensure accountability to donors and the broader community.
Audit Requirements for Non-Soliciting Corporations
Non-soliciting corporations face less stringent financial review standards because they do not receive significant public funding.
The thresholds for required financial oversight are much higher for these organizations.
Corporations with annual revenues of $1 million or more must have a public accountant conduct either an audit or a review engagement. Members can choose between these options by passing a unanimous resolution, but they cannot waive having a public accountant entirely at this revenue level.
Corporations with revenues under $1 million default to a review engagement, but members can waive this requirement by passing a unanimous resolution.
Members can also choose to require a full audit even when revenues are below the mandatory threshold.
This tiered approach recognizes that non-soliciting corporations operate with private funds and need less regulatory oversight while still maintaining some accountability at higher revenue levels.
Role of Public Accountant and Review Engagements
A public accountant conducts both audits and review engagements, but the scope is different for each service.
An audit involves detailed testing of financial controls, verification of assets and liabilities, and examination of transactions.
The public accountant provides positive assurance that financial statements are accurate and complete.
A review engagement is less intensive.
The public accountant performs analytical procedures and asks questions but does not verify information as thoroughly as in an audit.
This service provides moderate assurance, rather than a conclusive opinion.
Both services improve financial transparency and help organizations show accountability to members, donors, and regulators.
The public accountant’s report must be submitted with financial statements to the Director of Corporations Canada when required.
Governance and Board Structure
Soliciting and non-soliciting corporations have different governance requirements under Canadian corporate law.
The main differences relate to the number of directors, who can serve, and what agreements members can make.
Minimum Number of Directors
Non-soliciting corporations need at least one director to operate legally.
This allows small organizations to keep simple corporate structures.
Soliciting corporations must have at least three directors.
This rule applies after the corporation receives more than $10,000 from public sources in a financial year.
The higher threshold exists because soliciting corporations manage public funds and need broader oversight.
A corporation determines its status at the end of each financial year.
If it crosses the $10,000 threshold, it has until its next annual meeting to add the required directors.
Board Composition and Independence
Non-soliciting corporations have no restrictions on who serves as directors.
All board members can be employees, officers, or connected to the organization.
Soliciting corporations must keep independence within their board.
At least two of the minimum three directors cannot be officers or employees of the corporation or its affiliates.
This means a soliciting corporation can have only one director who is also an employee or officer.
The independence requirement prevents conflicts of interest and ensures objective oversight.
It gives donors confidence that someone outside the organization monitors how funds are used.
Restrictions on Unanimous Member Agreements
A unanimous member agreement lets members transfer some or all powers from directors to members.
Non-soliciting corporations can use these agreements to change governance as members choose.
Soliciting corporations cannot have a unanimous member agreement.
This rule protects public accountability by keeping authority with the board of directors.
Organizations that become soliciting corporations must end any existing unanimous member agreement.
They need to pass a resolution to make this change, depending on what their bylaws require.
Articles and Bylaws Requirements
If a soliciting corporation’s articles are silent on the distribution of property upon liquidation or dissolution, the Canada Not-for-profit Corporations Act automatically requires that any remaining property be distributed to a qualified donee under the Income Tax Act, not to members.
While corporations are not legally required to amend their articles to explicitly include this provision, doing so is considered a best practice. It provides clarity for directors, members, and stakeholders, and ensures compliance is transparent.
If a corporation chooses to amend its articles to include this provision explicitly, changes typically require a special resolution, usually approved by two-thirds of voting members.
Non-soliciting corporations have no such automatic restrictions in their articles and bylaws.
They can structure their documents as needed without mandatory asset distribution clauses, unless they are also registered charities (which have separate CRA requirements).
Impacts of Soliciting Status on Operations and Compliance
Soliciting status affects how nonprofits raise funds, report to stakeholders, and keep their charitable registration.
Organizations face different compliance costs, accountability standards, and options depending on their classification under the Canada Not-for-profit Corporations Act.
Funding Flexibility and Fundraising Methods
Soliciting corporations can pursue public fundraising without restrictions.
They can run campaigns for community donors, apply for government grants, and accept funding from other soliciting organizations.
Non-soliciting corporations have a strategic limit.
Any public fundraising that brings in more than $10,000 in a year changes their status.
Organizations must either limit public appeals or prepare for the compliance requirements of soliciting status.
Organizations that want to stay non-soliciting often focus on:
- Member dues and fees
- Private donations from prescribed persons (family members and household residents of board members)
- Revenue from selling goods or services
- Grants from private family foundations
- Investment income from endowments
This limits fundraising reach but keeps administrative costs lower.
Organizations planning public fundraising must budget for audit fees, reporting systems, and extra governance procedures before launching campaigns.
Public Accountability and Donor Confidence
Soliciting corporations must make their financial statements available to anyone who asks.
This transparency builds donor confidence but requires good financial systems and professional accounting support.
Public donors expect to see how their contributions are used.
Organizations that provide clear reporting build stronger relationships with supporters.
The audit or review engagement requirements for soliciting corporations give donors independent checks on management of funds.
Registered charities face extra accountability through the Income Tax Act.
Charitable registration requires meeting standards set by the Canada Revenue Agency regardless of soliciting status.
Soliciting charities benefit from alignment between NFP Act requirements and CRA expectations for transparency.
Organizations listed as qualified donees under the Income Tax Act must keep public trust to maintain their status.
Proper financial reporting helps show compliance with both the NFP Act and charitable registration rules.
Transitioning Back to Non-Soliciting Status
Organizations can return to non-soliciting status by keeping public funding under $10,000 for two consecutive financial years.
The transition requires careful tracking of all revenue.
Organizations must monitor donations from public donors, government funding, and grants from other soliciting corporations.
Even one year over the threshold during the two-year period keeps soliciting status.
Some organizations reduce public fundraising to lower compliance costs.
They might decline government grants, limit donation campaigns, or focus only on private funding sources.
This strategy works for smaller organizations with steady private funding.
The decision should consider long-term sustainability.
Giving up public funding sources may limit growth and community impact.
Implications for Charitable Registration and Taxation
Soliciting status under the NFP Act is separate from charitable registration under the Income Tax Act.
An organization can be a registered charity without being a soliciting corporation if it keeps public funding under $10,000 each year.
Most registered charities go over the soliciting threshold through their fundraising.
Charitable registration lets organizations issue tax receipts to donors, which usually leads to public donations over $10,000 quickly.
Registered charities that are soliciting corporations must comply with both:
- CRA requirements: Annual T3010 filing, proper receipting, spending quotas
- NFP Act requirements: Financial statement audits, public disclosure, governance standards
The compliance burden is higher but necessary for organizations relying on public support.
Non-soliciting registered charities are rare because most charities depend on public funding sources above the threshold.
Organizations should match their corporate structure to their fundraising strategy before seeking charitable registration.
The combined requirements affect budgeting for professional fees, accounting systems, and administrative staff time.
Conclusion
Knowing whether an organization is a soliciting or non-soliciting corporation shapes every part of compliance under the Canada Not-for-profit Corporations Act.
The $10,000 threshold from public sources determines reporting requirements, governance standards, and how much transparency is owed to donors and the public.
Organizations need to track public funding carefully across multiple years and set up the right financial controls based on their classification.
Navigating these requirements can be complex, especially when funding sources change or the organization nears the soliciting threshold.
Getting the classification wrong can create serious compliance risks, including administrative consequences and possible director liability.
Professional guidance helps organizations understand their obligations and set up proper systems from the start.
B.I.G. Charity Law Group helps Canadian charities and nonprofits determine their correct status and meet all regulatory requirements.
Our firm offers practical advice on compliance, governance, and strategic planning for organizations of all sizes.
Contact us at dov.goldberg@charitylawgroup.ca or call 416-488-5888 to discuss your organization’s situation.
Visit CharityLawGroup.ca or schedule a free consultation for expert support on soliciting versus non-soliciting corporation requirements.
Frequently Asked Questions
Non-profit corporations in Canada have specific requirements based on whether they receive public funding.
The $10,000 threshold determines which rules apply to a corporation’s governance and reporting.
What is a non-solicitation corporation in Canada?
A non-soliciting corporation receives less than $10,000 in public funds during its previous financial years.
Public funds include donations from non-members (excluding prescribed persons), government grants, and money from other corporations that also received public funding.
Prescribed persons include individuals related to the corporation’s members, directors, officers, or employees by blood, marriage, common-law partnership, or adoption — such as spouses, children, parents, siblings, and anyone residing with them.
These corporations need only one director to operate.
They do not have to file financial statements with Corporations Canada, though they must still prepare them for their members.
Non-soliciting corporations can create unanimous member agreements.
They also have no automatic restrictions on where their property goes if they dissolve, unless they are registered charities.
How does the receipt of public funds affect the classification of corporations in Canada?
The $10,000 threshold is the dividing line between soliciting and non-soliciting corporations.
A corporation becomes soliciting when it receives more than this amount from public sources in a single financial year.
Public sources include three types of income.
The first is donations from people who are not members, directors, officers, employees, or prescribed persons (family members and household residents related by blood, marriage, common-law partnership, or adoption).
The second is grants from federal, provincial, or municipal governments or their agencies.
The third is donations from other corporations that received more than $10,000 in public funds during their most recent year.
A corporation must calculate its total public funding at the end of each financial year to determine its status.
What are the different financial reporting requirements for soliciting and non-soliciting corporations in Canada?
Soliciting corporations must file their financial statements with Corporations Canada each year.
Non-soliciting corporations do not need to file unless the Director specifically requests them.
The type of financial review depends on soliciting status and revenue levels.
Non-soliciting corporations with under $1 million in gross annual revenues default to a review engagement but members can waive this by unanimous resolution.
Those with $1 million or more must have either an audit or a review engagement (members can choose by unanimous resolution), but they cannot waive having a public accountant entirely.
Soliciting corporations follow stricter rules.
Those with under $50,000 in gross annual revenues default to a review engagement but members can waive this by unanimous resolution.
Corporations with revenues between $50,000 and $250,000 must have an audit by default but members can opt for a review engagement instead through a special resolution.
Soliciting corporations with over $250,000 in gross annual revenues must have an audit with no option to choose otherwise.
They must also send their financial statements and the public accountant’s report to the Director.
What are the implications of being a soliciting corporation for corporate governance practices in Canada?
Soliciting corporations must have at least three directors on their board.
At least two of these directors cannot be officers or employees of the corporation or its affiliates.
These corporations cannot enter into unanimous member agreements.
This rule ensures that decision-making power stays with the board rather than being transferred to members.
If a soliciting corporation’s articles are silent on the distribution of property upon dissolution, the Canada Not-for-profit Corporations Act automatically requires that any remaining property go to a qualified donee under the Income Tax Act.
While not legally required to amend the articles, doing so explicitly is considered a best practice for clarity and transparency.
This restriction does not automatically apply to non-soliciting corporations unless they are registered charities.
How does the transition from a non-soliciting to a soliciting corporation affect an entity’s obligations under the Canada Not-for-profit Corporations Act?
The new requirements do not take effect immediately when a corporation receives more than $10,000 in public funds.
The corporation determines the total amount of public funding at its financial year-end.
If the total exceeds $10,000, the soliciting requirements apply when the corporation holds its next annual meeting of members.
This gives the corporation time to make changes to comply with the new requirements.
The requirements continue to apply until the corporation stays below the $10,000 threshold for two consecutive financial years.
The corporation must assess its revenue at each annual members’ meeting.
What steps must be taken to change the status of a corporation from non-soliciting to soliciting under Canadian corporate law?
The corporation must first increase its board to at least three directors.
Two of these directors must be independent from employment or officer roles within the corporation or its affiliates.
If the corporation’s articles are silent on property distribution upon dissolution, the Act automatically applies the qualified donee requirement. While amending the articles to explicitly include this provision is not legally required, it is a best practice to provide clarity and ensure transparent compliance.
Any existing unanimous member agreement must be terminated.
The corporation must also arrange for the appropriate level of financial review based on its revenue.
The required documents should be sent to Corporations Canada.
These changes must be completed before the annual meeting following the financial year when the corporation exceeded the $10,000 threshold.
The corporation should consult legal counsel to ensure proper compliance with all requirements.
Legal Sources & References
- CNCA Regulations, Part 11; Corporations Canada: Financial Statements and Review.
- Corporations Canada: Steps to Dissolve a NFP.
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