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Every once in a while, my phone reminds me that it’s time to update its operating system. As I have learned the hard way, ignoring those updates can only cause headaches later.
Phones on older operating systems not only miss out on the newest features; they are also increasingly weighed down by old software bugs and glitches. In my case, after tapping “Remind me later” one too many times, my phone simply became unusable!
A society’s bylaws are the society’s operating system. And with the passage of the Societies Amendment Act, 2021 (the “Amendment Act”), it may be time for many British Columbia societies to update their operating systems.
The Amendment Act received Royal Assent on October 28, 2021 and introduced a number of wide-ranging changes to the Societies Act [SBC 2015] Chapter 18 (The “Societies Act”).
Like any good software update, the amendments clarify and clean up rules, patch up holes, and respond to the public’s concerns since the Societies Act was first enacted in 2016.
Some of these amendments took effect on October 28, 2021, while many others will come into force at a future date to be announced by regulation.
There are a lot of updates. For the purposes of this article, summarized below are the more substantive changes that may be of interest to societies. Note: All pinpoints mentioned below refer to current or new provisions the Societies Act.
Amendments effective on October 28, 2021
The following amendments to the Societies Act took effect on the date of Royal Assent (October 28, 2021):
- Minutes of General Meetings (s. 20(1)(i)) – Societies are required to keep records of minutes “of general meetings” only. The previous wording had required societies to keep records of minutes of “each meeting of members”, which arguably captured all gatherings of members.
- Limits on Uses of Copies of Registers (ss. 25(7), 27.1) – Under the existing rules, a member who has inspected a society’s register of directors or register of members is required to use the information obtained from the inspection for only certain limited purposes relating directly to the society. The Amendment Act clarifies that these same limitations apply to any information that a member has obtained from a copy of a society’s register of directors or register of members (and not just information that a member has obtained from an inspection of those registers).
- Directors and Capacity (s. 44) – The Amendment Act fixes the director qualification rules by clarifying that a finding of incapacity by a court does not prevent an individual from serving or re-serving as a director of a society, provided that a court has subsequently determined that the individual is capable.
- Disclosing Conflicts of Interest (ss. 56(1), 62(1)) – In a reasonable clarification of the conflicts of interest rules, directors and senior managers are only required to disclose a conflict of which they are aware or reasonably ought to have known. Please note, however, that directors continue to be under a common law duty to make reasonable inquiries to ascertain whether a conflict may exist.
- Word Limits for Requisitions (s. 75(3)(c)) – The word limit for describing any business to be considered at a requisitioned meeting is increased from 200 words to 500 words.
- No Proxy Voting at General Meetings (s. 85(1)) – The Amendment Act clarifies and confirms that members cannot vote by proxy at general meetings, unless a society’s bylaws provide otherwise.
- Transition of Pre-Existing Societies (s. 240(1)) – For British Columbia societies that have not already transitioned under the Societies Act, the Amendment Act extends the deadline for filing a transition application from November 28, 2018, to November 28, 2022.
Amendments not yet in force
The following amendments to the Societies Act have been approved, but will come into effect at a later date to be decided by regulation:
- Directors’ Terms of Office (s. 11(1)) – Unless the bylaws provide otherwise, all directors without a term of office will cease to hold office at the end of the first annual general meeting after becoming a director.
- Directors’ and Members’ Information (s. 20(1)(e) and (h)) – Registers of directors must provide information about when a director starts and ceases to be a director. In a move intended to protect and limit the kinds of member information that can be collected, the Amendment Act clarifies that registers of members can only contain the name, contact information, and class of membership (if applicable) of each member and no other information. In light of this change, societies should review their registers of directors and members and add or remove any information to comply with these changes.
- Notice for Records Available for Pick-up (s. 29) – If a society’s bylaws provide that a record may be sent by making the record available for pick-up, the society must notify the intended recipient.
- Disclosure of Employee Remuneration (s. 36(1)(b)) – Societies will need to disclose the remuneration of any employee or contractor that exceeds the prescribed amount (currently $75,000). This change applies to financial statements prepared for annual general meetings that are held one year after this requirement comes into effect. Presently, societies are only required to disclose the remunerations of the top ten highest-paid employees and contractors that exceed the prescribed amount.
- Errors in the Statement of Directors and Registered Office (ss. 51 and new 51.1) – Societies must file a notice of correction with the registrar if they become aware of an error in their statement of directors and registered office. Additionally, in a new process introduced by the Amendment Act, any person who claims not to be a director may also apply to the registrar to remove their name from a statement of directors and registered office.
- Directors’ Meetings (s. 54) – Directors can pass a directors’ resolution without a meeting if a copy of the resolution is sent to all the directors and if all of the directors (or a lesser number, if the bylaws so provide) consent to the resolution in writing or in any other manner provided for in the bylaws. Under the existing rules, there is no requirement to send a copy of the resolution to all directors. Directors will not be able to vote by proxy at directors’ meetings.
- Conflicted Persons Remaining at Meetings (ss. 56 and 62) – Directors and senior managers who are in a conflict can remain in a meeting for the purpose of providing information so long as one director, or a greater number of directors if the bylaws so require, requests that the conflicted person remains.
- Member Threshold for Email Notices (s. 77) – Societies with at least 101 members (and not a minimum of 501 members, as is the current threshold) will be able to give notice to members of a general meeting by emailing members and by posting the notice in a newspaper or website, should their bylaws allow. The email only needs to be sent to every member for whom the society has an email address in the register of members.
- Content of Notice of General Meeting (s. 78) – Notices of general meetings must be in writing and contain the date and time and, if applicable, the location of the meeting and the text of any special resolution to be submitted to the meeting.
- Members’ Proposals (s. 81) – The Amendment Act clarifies that, for a members’ proposal to be valid, (i) the proposal must contain the names of and be signed by not fewer than the number of voting members that meet the proposal threshold for the society; (ii) the proposal must include any special resolution that is required to be considered; and (iii) the proposal (and any statement in support of the proposal) cannot exceed 500 words in total. Additionally, one of the voting members who submitted the proposal must be personally present at the annual general meeting where the proposal is being made; however, the society does not need to consider a proposal if it relates to substantially the same matter that was considered at a recent general meeting.
- Record Keeper (new s. 122.1) – In a new requirement, any society seeking to dissolve voluntarily will need to appoint a “record keeper” by ordinary resolution of its members. The record keeper must keep and maintain the society’s corporate records for a period of three years after the date of the society’s dissolution and provide access to the records for inspection and copying during such time.
- Member-Funded Societies and Gifts on Death (s. 190) – Member-funded societies will be able to receive a testamentary disposition from a current or former voting member, director, senior manager, employee, or a relative of these individuals, under certain circumstances, without losing or jeopardizing their status as a member-funded society.
While these latter amendments are not yet in force, any prudent society thinking of updating its bylaws should take into account all amendments in the Amendment Act and not only those that came into effect on October 28th.
Don’t get left behind or deal with even bigger headaches later. Now is the time to update the operating system.
If you have any questions about these recent or upcoming changes or would like a lawyer in our Social Impact Group to review and update your bylaws, please contact Sarah Fitzpatrick or Stephen Hsia in our Vancouver office.