Introduction to Transitioning an Existing Society
Hi Elena, See the email I just sent about working on the page that I set up earlier. Thx! Drew
If you work at a non-profit society in British Columbia or sit on a board of directors, the new Societies Act affects your world as of November 28, 2016. Here are 10 changes in the new Act that you should know about:
1. There is greater access to a society’s records[edit]
Under the new Societies Act, members have greater access to a society’s records. The Act spells out the records a society must keep, including a register of members, minutes of members’ and directors’ meetings, accounting records, and financial statements.
By default under the Act, members are entitled to inspect all records of the society (as are directors). For some records, member access can be restricted. For example, a society’s bylaws can restrict members’ access to accounting records.
The public is entitled to receive a copy of a society’s financial statements and auditor’s report if requested. A society can choose to grant access to the public to more of its records. The only record that is excluded from public accessibility is the society’s register of members.
| Records a society must keep include these records (this list is not exhaustive) | Director access | Member access | Public access |
|---|---|---|---|
| Register of members | Yes | Yes, though directors may restrict | No |
| Minutes of members’ meetings and copies of all ordinary and special resolutions | Yes | Yes | Bylaws may permit |
| Minutes of directors’ meetings and copies of all consent resolutions of directors | Yes | Yes, though bylaws may restrict (except relating to conflicts disclosures) | Bylaws may permit |
| Any disclosures by directors or senior managers of a conflict of interest | Yes | Yes | Bylaws may permit |
| Accounting records, including a record of each transaction materially affecting the society’s financial position | Yes | Yes, though bylaws may restrict | Bylaws may permit |
| Financial statements and any auditor’s report on the financial statements | Yes | Yes | Yes |
2. Remuneration paid to directors and certain employees and contractors must be disclosed[edit]
Under the new Act, a society must disclose any remuneration paid to a director. Remuneration is money or other compensation paid for work or services performed. Amounts paid to a director for being a director and for acting in any other capacity must be disclosed separately. The disclosure must be made in a note to the annual financial statements, which are available to society members and to the public.
(In a change that takes effect in 2018, a society must not remunerate a director for being a director unless the bylaws expressly permit; see below.)
As well, societies must disclose the remuneration of any employees or contractors making over $75,000. If a society has more than 10 employees or contractors making over that amount, they must disclose the top 10.
To counterbalance privacy concerns, the names of the directors, employees and contractors need not be included in the financial statements. The disclosure can be done by position or contract; individual names don’t have to be disclosed. As well, a society can pool the information by disclosing the total number of employees and contractors making over $75,000 and the total amount of remuneration paid to them.
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The new rules relating to disclosure of remuneration paid to directors and certain employees and contractors apply as soon as the new Act comes into force. Any financial statements prepared or presented by a society after November 28, 2016 need to comply with these new requirements. |
3. There is greater flexibility in conducting members’ meetings[edit]
The new Act provides greater flexibility in conducting members’ meetings. Participating by telephone or other communications media is recognized as the norm. Unless a society’s bylaws provide otherwise, members can participate in meetings by phone or using other technology so long as all the people participating are able to communicate with each other.
An annual general meeting can now be held entirely in writing. All voting members must consent to a written resolution covering the matters that must be dealt with at the AGM, including the presentation of the financial statements and any auditor’s report.
4. The voting threshold for a special resolution has been lowered[edit]
The new Societies Act lowers the voting threshold for approving a special resolution. A special resolution approved by a society’s members is required to make fundamental changes to a society, including changing its name or bylaws.
Under the old Society Act, a special resolution required at least 3/4 of votes cast at a members’ meeting in order to be approved. Under the new Act, a special resolution requires 2/3 of the votes cast.
The new Act also allows societies flexibility in setting a higher threshold for special resolutions if they choose. In its bylaws, a society can provide a threshold of up to 100% of voting members. The higher threshold can apply generally or be set for specific special resolutions. For example, the bylaws can require a unanimous vote to change the bylaw that sets out where the society’s assets are to go on dissolution, while retaining the default threshold of 2/3 of the votes cast for other bylaw amendments.
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If your society’s bylaws currently require that a special resolution be approved by at least 3/4 of votes cast, then that threshold still applies under the new Societies Act. Under the new Act, the default voting threshold to pass a special resolution is 2/3 of the votes cast at a members’ meeting. But if a society’s bylaws impose a higher threshold, the higher threshold in the bylaws prevails. The exception is for a vote to remove a director from office – the new default threshold of 2/3 applies to that situation regardless of what the bylaws say. |
5. Members now have the right to bring a “member’s proposal”[edit]
Members of a society have always been able to requisition a member’s meeting for a specific purpose, provided that at least 10% of voting members sign the requisition. The new Act introduces a right for members to add specific issues to the agenda of an annual general meeting. A member proposal must be added to the agenda if the proposal is signed by at least 5% of the society’s voting members. The proposal must be received by the society at least 7 days before notice of the AGM is sent.
A society’s board of directors have the discretion to reject the proposal if it is substantially similar to an issue that has already been voted on at a member’s meeting in the previous two years.
6. Members have more remedies[edit]
Under the new Act, members are able to apply to court for a remedy if the society’s activities are oppressive or unfairly prejudicial to one or more members. In applying for such an oppression remedy, a member will need to show they had a reasonable expectation to be treated in a certain way. They will also need to show that the society’s conduct was burdensome, harsh and wrongful, or had an unjust and inequitable effect on them.
If a member’s oppression claim succeeds, the court has wide discretion to make things right, including by directing or prohibiting any act, removing or appointing a director, varying a transaction or a resolution, directing compensation, or appointing an investigator.
Also under the new Act, members may bring a derivative action. In such an action, a member can enforce rights of the society when the directors refuse to act.
