by Geoffrey Lim
The new Societies Act (the “Act”) will come into force on November 28, 2016 and will apply to almost every not-for-profit organization formed in the province. This post looks at some of the key changes under the new Act.
A shift to electronic filings
Under the new Act, a society’s constitution and bylaws will now be in a new online filing system.
The provisions allowed in its constitution and bylaws
According to the new Act, a society must not contain in its Constitution provisions other than the name of the society and the purpose of the society. Unless caught by some limited exceptions, a society transitioning into the new Act can have previously unalterable provisions in its bylaws changed by way of special resolution. This effectively eliminates a society’s ability to have unalterable bylaws.
Moreover, if a provision of the bylaws is inconsistent with the Act then the provision will cease to have effect. This makes it imperative that a society review its bylaws before it transitions to the new Act.
The default minimum for votes required to pass a special resolution
Under the old Society Act, the default voting threshold for passing a special resolution was set at three-quarters vote (75%). With the new Act, the default number of votes to pass a special resolution is set at two-thirds vote (66.6%). However, the new Act permits a society in its bylaws to increase the number of votes required to pass a special resolution.
The minimum requirements for its board and qualifications for its director
Firstly, a society’s directors must expressly consent in writing to act as a director. Additionally, the majority of a society’s board must be at least 18 years old, but the new Act permits a 16 or 17 year old to act as a director so long as the society’s bylaws allows it. The new Act also changes the rules on whether a director can be paid by the society he or she governs. Previous legislation was silent on the matter, however, under the new Act the majority of directors must not be entitled to receive remuneration from the society under contracts of employment or service.
The manner which directors are indemnified for personal liability
Under the old Society Act a society could indemnify a director’s liability with court approval. With the new Act, a society can indemnify a director without court approval. This ability to indemnify its directors can be limited by the society’s bylaws.
The distinction between publicly funded societies and member-funded societies
The new Act states that a member-funded society is a society “funded primarily by its members to carry on activities for the benefit of its members.” In general terms, a society is a publicly funded society if it receives more than $20,000 or 10% of its gross income from public donations or government funding.
Member-funded societies are subject to fewer regulations related to accountability and financial transparency. By way of some examples, a member-funded society (a) does not have to disclose remuneration paid to its 10 most highly paid employees, (b) may only have one director (this director does not have to be a resident of BC), and (c) may distribute its money and other property to its members when it dissolves.
These are only a few of the things you will need to consider to successfully transition your society under the new Act. If you have any questions regarding the new Act and what your society should be specifically concerned with, please contact us and we’d be happy to help.