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The author would like to acknowledge the contributions of Jane Huang.
Some of Ontario’s not-for-profit and charitable corporations may be wondering whether and how the end of the COVID-19 Emergency in Ontario changes their ability to hold virtual members and directors meetings, even if their by-law or their letters patent contain restrictions. Others may wonder how much of the extension to the deadline for holding annual general meetings remains in place.
Bill 195, Reopening Ontario (A Flexible Response to COVID-19) Act, 2020 (« Bill 195« ) formally ended the declared COVID-19 Emergency in Ontario on July 24, 2020. This obviously impacted the forty-nine emergency orders were made under the Emergency Management and Civil Protection Act (the « Emergency Act ») during the declared emergency. Not-for-profit corporations incorporated under the Ontario Corporations Act were granted specific relief by Ontario Regulation 107/20, Order Under Subsection 7.1 (2) Of The Act – Corporations, Co-Operative Corporations and Condominium Corporations (the “Corporation Meetings Order”). That Order provided relief from both the 15-month deadline for holding the next annual general meeting of the members and any prohibitions against holding virtual members and directors meetings.
While Bill 195 continued the majority of the emergency orders despite the termination of the declared COVID-19 Emergency, the Corporation Meetings Order is no longer in force.
Temporary Relief Already Baked into Ontario Corporations Act
The Order was not continued because the province had already, on May 12, 2020, integrated COVID-19 rules directly into the Corporations Act. Bill 190, COVID-19 Response and Reforms to Modernize Ontario Act, 2020 added a new Part VIII to the Corporations Act, entitled “Special Rules During Emergency” and Schedule 2 to that Part contains temporary relief for corporations subject to the Corporations Act.
That relief is to last for what these Special Rules call the “temporary suspension period,” which is not the same as the period of the declared COVID-19 Emergency. The “temporary suspension period” runs from March 17 (the date the emergency was declared) to 120 days after the declared emergency was terminated. The “temporary suspension period” is thus March 17, 2020 to November 21, 2020.
As a result, until November 21, 2020, meetings of members and directors may be held by telephonic or electronic means despite any provision in the letters patent, supplementary letters patent or by-laws of the corporation that provides otherwise; and at such a meeting, the voting or election by ballot of directors can be held by any means the chair may direct, if the by-laws prescribe voting or balloting procedures that are “not feasible” because the meeting is being held virtually. In addition, during that period, the electronic filing of documents and electronic signatures are always permitted.
The Special Rules are quite specific about how long an Ontario Corporations Act corporation may postpone its annual meeting. The Rules apply differently to corporations whose annual meeting deadline fell during the period of the declared emergency and those whose meeting deadlines fall just outside of it (i.e. 30 days) or even later. Most corporations would not have known that the declared COVID-19 emergency would end on July 24, 2020 and would not have known to give notice for their annual general meeting. The new deadline for an Ontario Corporations Act corporation to hold its next annual general meeting depends on when a corporation’s last annual general meeting was held and whether the deadline (15 months from that date) falls within the declared Emergency Period, within thirty days of July 24, 2020 or later. If 15 months from the date of the last annual general meeting is:
- between March 17 and July 24, 2020, the deadline for the next annual general meeting is October 22, 2020;
- between July 25 to August 24, 2020, the deadline for the next annual general meeting is November 21, 2020;
- On or after August 24, 2020, the deadline is not extended.
Stage 3 Restrictions on Physical Meetings
All of Ontario is currently (as of the date of this article) subject to the Rules for Areas in Stage Three (Ontario Regulation 364/20). Those Rules do not yet permit corporations with memberships greater than 100 to host physical meetings at which all of their members can attend. There remains a 50-person limit on indoor meetings and a 100-person limit on outdoor meetings. The Rules have additional requirements with respect to physical distancing (two metres).
There are separate rules for religious services, rites and ceremonies, which allow up to 30% of the capacity of the room in which the service is being conducted, instead of a simple cap of 50 persons. It may thus be possible for a corporate meeting to be held as part of a religious service with more people in attendance, if it is factually and truly subsidiary to the service, rite or ceremony. Factors such as whether the religious service has been conducted regularly in the past at that time and place and the percentage of time devoted to the meeting in that service will be of importance. Certain religious traditions may also have theological reasons for asserting that the meeting of their members is an integral part of their religious activities. Nonetheless, the Rules go on to require compliance with “public health guidance on physical distancing,” which is, at this time, uniformly a minimum of two metres and may include other criteria. Our previous article discusses the capacity implications arising from the interplay of these rules and what 30% of “capacity” can mean.
If an Ontario corporation wishes to hold its meeting after November 21, it may not be able to bring all of its members together for a physical meeting. That leaves it with two options.
- Amend its by-laws or letters patent to remove any restrictions that may prevent a totally virtual meeting; or
- Hold a hybrid meeting at which some of the members attend in person and others do so by telephone or other electronic means. Careful attention will need to be given to how voting and other matters can be accommodated in accordance with the corporation’s by-law and letters patent, and perhaps modification to the by-law and letters patent will be required in any event.
Permanently Dealing with the Need for Virtual Meetings
The COVID pandemic has demonstrated how things can change quickly and corporations should probably consider whether their by-laws should be reviewed for any impediments to virtual meetings. It may make sense to eliminate those in their entirety now. However, some corporations may want to limit when virtual meetings are permitted, with the default being in-person meetings.
Implementing Limits on Virtual Meetings
The governance model of some not-for-profit organizations is reliant upon the members being able to meet together in person. In fact, the larger the membership, the more likely it is that their voices are best heard through a physical meeting, often employing parliamentary style rules to allow disparate and dissenting voices to be heard. A corporation that significantly relies upon Roberts Rules of Order in practice probably falls into that category. These corporations will find electronic meetings inadequate. Challenges and procedural rules typically rely upon the chair being able to see and hear someone standing to interrupt a speaker. The chair and the rest of the members will likely find it difficult to notice and recognize those wishing to interrupt in a virtual meeting. A virtual meeting is thus undesirable for that type of organization.
Those organizations will need to consider carefully how to amend their by-laws to mandate a virtual meeting environment that is as close as possible to their normal proceedings if the meeting must be held virtually in whole or in part and what limits or situations must exist before a virtual meeting can be held. Those organizations which value the robustness of physical meetings for dialogue and debate amongst its members also tend to have motivated members involved in committees, often including a governance or by-law committee. While there is sufficient time between now and November 21, 2020 to amend a corporate by-law or seek Supplementary Letters Patent, the process of engaging legal advice, circulating drafts or even discussion papers, and processing the draft amendments through the corporation’s various committees, executives and Board of Directors can quickly eat up all of that time.