canada civil-law litigation non-profit interpretation
Question about corporations established through legislation in Canada
<p><a href="https://www.parl.ca/DocumentViewer/en/35-2/bill/C-93/third-reading/page-29#3" rel="nofollow noreferrer">PART I of BILL C-93 from February 1997</a> described the establishment of a corporation and some definitions related to it. The concept of a corporation being established in <em>legislation</em> is new to me, so I do not feel completely confident in knowing how the legislation works.</p>
<p>For example, one of the first definitions provided on that page (linked above) is the legislation's definition of &quot;eligible&quot;, where it defines what types of institutions would be &quot;eligible&quot; to work with the newly established corporation, and lists hospitals, universities, colleges, and non-profit organizations under the definition of &quot;eligible&quot; recipients. <strong>What if the corporation were to one day decide that hospitals are no longer eligible, would the corporation be breaking the law? What recourse would hospitals have in this case?</strong></p>

<p>The corporation referred to in the OP is the <a href="https://www.innovation.ca" rel="nofollow noreferrer">Canada Foundation for Innovation</a> (CFI) <a href="https://en.m.wikipedia.org/wiki/Canada_Foundation_for_Innovation" rel="nofollow noreferrer">established</a> to:</p>
<blockquote>
<p>help build and sustain a research landscape in Canada that will
attract and retain the world's top talent, train the next generation
of researchers, support private-sector innovation and create
high-quality jobs that strengthen Canada's position in today's
knowledge economy.</p>
</blockquote>
<p>The CFI awards grants to eligible institutions as per the terms and conditions detailed in an Award Agreement - see para 6.3.1 of the <a href="https://www.innovation.ca/awards/policy-and-program-guide-and-supplemental-information" rel="nofollow noreferrer">Policy and Programme Guide 2019</a> pdf.</p>
<p>As this is a contractual arrangement, if the CFI decided to revoke the eligibility status of hospitals and withdraw funding outside of these terms and conditions it may be open to civil action for <a href="https://www.west-legal.ca/contract-law/what-is-breach-of-contract/#:%7E:text=In%20Canada%2C%20the%20most%20common,to%20fulfill%20its%20contractual%20obligations." rel="nofollow noreferrer">breach of contract</a> brought by the affected hospitals. If successful, the courts may award damages to the hospitals and/or order the CFI to fulfil its contractual obligations.</p>
<p>(However, the application process appears to be quite lengthy and comprehensive so this scenario is probably unlikely to occur that often.)</p>
<p>The particular reasons why the CFI was established in this way are not readily available, but government-created private companies are not that uncommon (in England and Wales anyway).  One example may be to ensure an arms-length independence from party politics and political influence.</p>

<blockquote>
<p>What if the corporation were to one day decide that hospitals are no longer eligible, would the corporation be breaking the law?</p>
</blockquote>
<p>Probably not.</p>
<p>Section 19 of the law authorizes (&quot;may&quot;) the foundation to provide funding to eligible recipients but it does not require it (&quot;must&quot; or &quot;shall&quot;). It is a restrictive provision that does not give the eligible recipients any entitlement to the fund.</p>
<blockquote>
<p>19 (1) From and out of its funds, the foundation <em><strong>may</strong> make grants to eligible recipients</em> to be used by them solely for the purposes of eligible projects in accordance with any terms and conditions specified by the foundation in respect of the grants.</p>
</blockquote>
<hr />
<blockquote>
<p>What recourse would hospitals have in this case?</p>
</blockquote>
<p>First, it is very unlikely for the foundation to exclude hospitals specifically, there is literally no reason to do so. To effect this change, someone would need to convince the 8 of the 15 directors.</p>
<p>But if somehow they were to make this change (non-retroactively), the hospitals and affected employees or other persons can petition and pressure the federal government, who appoints 7 directors on the board and can replace these directors at will. 7 is not a majority but it's one person short to reverse such decision.</p>
<p>The Parliament can of course also legislate the issue.</p>
