A new Societies Act (the “Act”) will come into force in British Columbia on November 28, 2016 replacing the existing Society Act. Some of the notable changes under the new Act are as follows:
- Who can be a director? Under the new Act, an individual must be “qualified” to act as a director of the society. The Act imposes qualifications (Ex. being at least 18 years of age) and disqualifications (Ex. being an undischarged bankrupt or being recently convicted of fraud). A society may also set out additional requirements in its bylaws that an individual must meet in order to be qualified to be a director of the society. The society may also provide in its bylaws for “ex officio” directors – ie. individuals may become directors of the society without being elected because of an attribute or office held by such individuals. If a director does not meet the qualifications set out in the Act, and the bylaws (if applicable), the director must resign as a director.
- Senior managers. The new Act introduces the role of “senior managers”. Senior managers are individuals appointed by the directors of a society and are permitted to exercise the directors’ authority to manage the activities or internal affairs of the society in whole or in part. Senior managers owe certain duties to the society, including the duty to disclose any conflicts of interest.
- No more unalterable provisions. A society may no longer have unalterable provisions in its constitution or bylaws. All existing provisions that are unalterable will become marked as “previously unalterable” upon transition to the new Act. Further, any provisions other than the society’s name and purpose will be moved from the society’s constitution to the society’s bylaws upon transition to the new Act
- Special resolutions. To offset the elimination of unalterable provisions, the Act introduces greater flexibility for the threshold required to approve special resolutions. Previously, special resolutions required 75% approval. Under the new Act, the default threshold is 66%. Societies are, however, able to set a higher threshold for special resolutions up to unanimous approval.
- Voting. Generally, a voting member has 1 vote and can vote on all matters put before the members. However, the new Act permits giving only members with a specified attribute the right to elect or appoint certain directors (Ex. paying members versus non-paying members) if such right is included in the society’s bylaws.
- Member proposals. Under the new Act, the 10% threshold required to requisition a special meeting may be lowered in the bylaws of the society. Further, member proposals signed by at least 5% of the members must be added to the agenda of an existing members’ meeting. However, the if the proposal is substantially similar to an issue that has already been proposed at an annual general meeting in the past 2 years, the society does not have to add such proposal to the agenda of an existing members’ meeting.
- Remuneration Disclosure. The remuneration of certain individuals must be disclosed in the financial statements of a society. Specifically, a society must disclose the remuneration of the society’s directors, 10 highest paid employees and contractors paid over a prescribed amount, if any. The names of the directors, employees and contractors do not need to be included in such disclosure.
- Member-Funded Societies. The Act introduces a new designation for “member-funded societies”. A member-funded society is a society that is funded primarily by its members to carry on activities for the benefit of its members. For example, sports clubs and professional associations. Member-funded societies are unique in that:
(a) assets may be distributed to their members upon winding up;
(b) only 1 director is required;
(c) there are no restrictions on the number of board members employed by the society;
(d) the public does not have the right to obtain copies;
(e) there is no requirement to disclose the remuneration of paid directorsand/or highly paid employees; and
(f) they may be converted into companies.
The following societies are examples of societies prohibited from being member-funded societies: publicly funded societies (ie. funded by public donations or the government above a prescribed amount), registered charities, student societies and hospital societies.
There are, of course, many other changes under the new Act. If you have any questions regarding how the new Act will affect your society, please do not hesitate to contact us.
Further, the Act requires that all existing societies will have to file a Transition Application with the Corporate Registry to “transition” to the new Act. This transition must be completed by November 28, 2018. We are happy to assist in the preparation and filing of the Transition Application of existing societies. In order to do so, we require the following:
- the society’s constitution and bylaws, including all amendments thereto;
- confirmation that the society’s statement of directors and registered office is up to date;
- confirmation that the society’s annual reports are up to date; and
- confirmation whether or not the society is a member-funded society.
Author: Danielle (Dani) Brito
This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of business law at the following:
Una Gabie: firstname.lastname@example.org
Jennette Vopicka: email@example.com
Danielle (Dani) Brito: firstname.lastname@example.org