As your non-profit achieves its goals, as shifting societal needs make its mission less relevant, or as you encounter other challenges, you may find it necessary to permanently put an end to your non-profit organization and cease its activities. This process, called “dissolution”, involves several essential steps.
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Important! The information in this article only applies to incorporated non-profits created under Quebec law. To learn more about federally incorporated non-profits, check out our article Non-profits: Incorporate With the Quebec Government or the Federal Government? or Corporation Canada’s website. Note that the law allows Quebec non-profits to put different rules in their letters patent or by-laws in certain cases. If non-profits do this, the rules in these documents apply to it instead of the legal rules described in this article. |
Preparing for dissolution
Step 1 – Preliminary step
In practice, the first step to preparing your non-profit’s dissolution is for the board of directors to agree to propose the dissolution to the non-profit’s members.
Following this decision, the secretary or a director must call a special general meeting for the purpose of dissolution by sending a notice to the members. The notice of the meeting must be sent at least 30 days before the date of the meeting. However, the notice period must not exceed 45 days.
Step 2 – Special general meeting of the members and liquidation
The first formal steps to dissolution are to hold the special general meeting, cease activities and liquidate your non-profit’s property and assets. In practice, these actions do not have to follow a specific order.
Special general meeting
At the special general meeting, the members will vote on whether to dissolve the non-profit. They will also decide on an authorized representative of the non-profit to complete the forms required for dissolution. The decision must be approved by at least 2/3 of the members present at the meeting and recorded in a written resolution. The secretary of the organization must sign the resolution.
If all members of the non-profit agree with the dissolution, they can choose to sign a written resolution detailing their decision instead of voting at a special general meeting.
Liquidation
Ceasing your non-profit’s activities involves its liquidation. This process involves paying the non-profit’s debts and dividing its remaining property among the members. Your letters patent may suggest an alternative way to liquidate your organization’s property.
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Important! Different rules apply to registered charities. Registered charities cannot distribute remaining property among their members. They must transfer all remaining property to qualified donees. |
In its application for dissolution, your non-profit will have to confirm that:
- it no longer owns any property, having distributed everything equally among its members, and
- it has no outstanding debts, responsibilities, or commitments towards anyone. Alternatively, your non-profit can confirm that someone else has settled its debts, responsibilities, and commitments, or that its creditors or their successors have consented to waive them.
The Registraire des entreprises du Québec (REQ or business registrar) may request documents to verify these claims.
In the process of settling your remaining debts, responsibilities, and commitments, you need to verify that your non-profit is in good standing with the REQ. This means that you must have filed the initial return and all annual and current updating declarations, as well as paid all the required fees and expenses. If any required fees have not been paid, your request for dissolution may be refused.
Step 3 – Notice of intention to dissolve
You must file a notice that indicates your non-profits’ intention to apply for its dissolution with the REQ. You can do so online or by completing the notice of intention form (which can be found on the first page of the RE-602 form, French only) and sending it to the REQ by mail. The notice must be completed and signed by an authorized representative of the non-profit.
Alternatively, you can also declare your intention to dissolve to the REQ by filing a current updating declaration online.
The non-profit must also announce its intention to dissolve by publishing a notice of intention in a newspaper that serves the locality of the non-profit’s head office or the nearest locality. The newspaper article must:
- contain the name of the non-profit,
- have a clear statement that the non-profit intends to apply for its dissolution,
- be in a newspaper that is weekly or daily (not a parish newspaper),
- be in French, unless it’s published in an English-language newspaper.
For more information on how to announce your non-profit’s intention to dissolve, see the Guide concernant la declaration d’intention de dissolution et la demande de dissolution (French only).
Step 4 – Applying for dissolution
Once your notice of intention is filed, you can file for dissolution by mailing the signed application for dissolution (RE-602 form, French only) to the REQ:
Registraire des entreprises
Services Québec
C. P. 1153, succursale Terminus
Québec (Québec) G1K 7C3
The application itself is free. However, make sure that your non-profit does not have outstanding fees to pay to the REQ. If it does, your application may be refused.
To apply for dissolution, you will also need to file
- A signed copy of the resolution of the members authorizing the dissolution (see step 2).
- The full page of the newspaper on which the notice of intention of dissolution appears or an excerpt containing the name of the newspaper, the date and the place of publication (see step 3).
- The declaration of intention to dissolve, if it has not already been filed with the REQ (see step 3).
- Declarations, notices or any other document that the non-profit has not filed in the past, as well as the payment of any required fees (see step 2).
- If requested by REQ, a written statement from the auditor or the person in charge of your non-profit’s finances attesting that the non-profit’s debts, responsibilities and commitments have been met, that payment has been secured, or that its creditors or their successors consent to waive them, as applicable (see step 2).
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Important! The application must be completed and signed by an authorized representative of the non-profit. The authorized representative will also be required to sign an affidavit. This is a declaration included in the application form that must be signed before a commissioner for oaths. |
The consequences of voluntary dissolution
The REQ will accept your application if it complies with all requirements and is complete. It will set the date on which the non-profit will be dissolved. On that date, the REQ will draw up an act of dissolution and file it, resulting in the automatic end of your non-profit.
A notice of the dissolution of your non-profit will be published on the REQ’s website and a copy of the act of dissolution will be sent to the authorized representative who signed the forms for the non-profit’s dissolution.
The voluntary dissolution of your non-profit is permanent and cannot be reversed. This means that, your non-profit will not be able to resume its activities in the future; a new non-profit would need to be created.
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Directors’ responsibility Directors can avoid paying these fees if they prove their good faith, meaning that the dissolution of the non-profit must not have been to avoid paying creditors or to bypass responsibilities, among others. |
What about involuntary dissolution?
Your non-profit could also be dissolved against your will for any reason mentioned in the non-profit’s by-laws, its constituting act or the law.
For example, a court has the power to dissolve a non-profit if it is does not comply with the law.
The REQ can also dissolve a non-profit if the non-profit has failed to file an annual updating declaration for two consecutive years or if it fails to comply with the law despite receiving a notice to do so by the REQ.