February 26, 2007

Feb. 26, 2007: Foundations

Membership Transparency, Anonymity, Audit Committee

It appears that a foundation may have one member, may have no audit committee, and may have anonymous donors.

House of Commons CANADA Standing Committee on Industry, Natural Resources, Science and Technology NUMBER 022 1st SESSION 38th PARLIAMENT EVIDENCE Tuesday, February 22, 2005 -- here


Prof. Warren Grover: I'm not sure I'm understanding exactly.

There is a lot of stuff in here about members, and the act, to my way of thinking, clearly thinks you're going to have a list of members, that there are going to be many members of the corporation, and those members will have the right to elect the directors. That's how the act seems to be set up, as I read it.

Now, can you distort a corporate act by having only one person as the only person in it? Sure you can. I can be the only holder of Grover's Holdings, which is my investment company; I don't need three people. I tend to agree with my friend that in a not-for-profit corporation it's very unusual, but there are some foundations where somebody such as Li Ka-Shing is setting up a foundation, and if only he wants to be there, bless him. He's setting up a charity for the whole of Canada, and it's only he. He's the only person contributing. He's put in, I think, $4 billion. If that has one person...? Yes.

[....] Mr. Michael Chong: I have a number of very quick questions. My first quick question is for Mr. Grover. You mentioned in your notes that the CBCA requires an audit committee to be formed. The current proposal uses the word “may”. I take it you don't want to see that whole clause taken out of the proposed legislation; it's just that you don't want to see it made mandatory. Is that correct?

Prof. Warren Grover: That is correct. I don't think you need an audit committee, basically.

Mr. Michael Chong: Yes, but there's no problem leaving that section in, because it says the board “may” form an audit committee. That's what it currently says. You don't have a problem with that?

Prof. Warren Grover: I don't have a problem with anything facilitative.

Mr. Michael Chong: Okay.

The next question I had concerns access to the membership lists, the registered members. Does anybody on the panel here have any concerns regarding access to the membership list? [....]

Mr. Werner Schmidt:
Referring back to the members and classes of membership, and specifically with the access to membership lists, as it ties in with classes, there are classes of members who are automatic members because of the donations they might make to an organization like this, but they want to be anonymous in terms of their membership existence with the organization.

Under the provisions of this act, it seems to me the transparency provision makes it impossible for anyone to be an anonymous donor or member of such an organization. Is that correct? [....]

Mr. David Skinner: I've looked at a couple of sets of bylaws and organizational structures on my own outside of CSAE. This act would not actually prevent any organization from structuring their classes of participation in the organization such that an anonymous donation could be made outside of the bylaws stipulating what constituted a membership. [....]

I think there is adequate leeway and opportunity for organizations to structure their bylaws in order to protect some of that anonymity. [....]

Within the last year, I have found some intriguing information on anonymous donors and their donations for political purposes, perhaps not termed that; nevertheless, in effect, political. Maybe you had better read this for yourself.

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