By: George Bryce, lawyer | Website: www.BryceLaw.ca
On March 25th, the Hon. Michael de Jong, BC’s Minister of Finance, introduced Bill #24 (2015) to bring into law a new Societies Act to replace the current Society Act. The Bill received third reading on April 22nd and Royal Assent on May 14th.
The new Act remains to be proclaimed into force, and – at this point in time – we do not know the specific date when that will take place (but indications are this will occur by the end of 2016). The new Act also contains transition provisions that will require all pre-existing societies to complete certain steps within two years of proclamation.
BC’s new Societies Act replaces legislation that has been on the books since 1977 with only a few changes. Given developments in the law, society and technology, most notably the use of electronic means of communications and our growing reliance on websites, many of the 1977 Society Act’s requirements were out-of-date and needed substantial change.
While most societies will find many of the new provisions are useful for their own specific purposes, many will also face a similar set of procedural if not legal challenges. Certain of these changes may require the assistance of organizational experts if not BC lawyers to ensure they are completed properly. For example:
Electronic meetings and voting
The new Act will allow the Society to hold membership meetings (in whole or in part) by electronic means, such as by webinars. And the membership will be able to vote by electronic means, such as on-line voting, rather than having to attend a meeting in person or by proxy. However, to ensure there is proper legal authority for these new initiatives, the Society may have to amend its bylaws accordingly.
Senior manager
The new Act will allow a Board to appoint a senior manager who would, in turn, be given certain statutory authorities to manage the activity of the Society and exercise the director’s authorities. However, a Society’s Board should ensure that the job description it would prepare for this new position does not conflict with or otherwise undermine the new duties and responsibilities for the senior manager as set out under the new Act.
Director compensation
The new Act will allow a Society’s Bylaws to provide remuneration to directors. But such bylaws should be carefully drafted so that they would not put the Society outside the scope of the new rules. And the new rules regarding disclosure of director remuneration may also have to be taken into consideration.
Inspection of records
New rules will be set out in the new Act that will govern the sort of information that the Society will have to make accessible to its directors, to its membership, if not the public at large. While the bylaws can restrict membership and public access to certain documents, any such additions to the current bylaws should be carefully drafted with the new statutory provisions in mind.
Member funding societies:
A new concept is being added to BC’s legislation called a “member funded society”. A MFS would be funded primarily from members. Once so designated (by an amendment to the constitution), the MFS would be exempt from public accountability/disclosure provisions, with certain exceptions. To see if a Society can take advantage of this new status, it should look closely at its sources of funding and consider amendments to its constitution.
Transition challenges
Perhaps the most significant requirement will be that, within two years of the new Act coming into force, every society that existed prior to that date must file a transition application. Section 240(2) of the new Act prescribes what such an application must contain (in summary):
(a) the society’s constitution that sets out only the name and purposes of the society;
(b) a consolidated set of the society’s bylaws, based on the society’s pre-transition bylaws, plus any provisions from the constitution other than the name and purposes, and any reporting society provisions;
(c) a list of directors and the location of the society’s registered office.
The “simplification” of a society’s constitution and the need to create a new “consolidated” set of bylaws may require legal advice. It may be useful to ensure that the revised foundation documents reflect modern legislative drafting techniques and that the subsequent filing of the transition application itself would not be rejected.
The need for a Society to transition to the new Act can also provide an opportunity for its Board to address some long-standing problems with the current constitution and bylaws, such as to remove the “unalterable” provisions from the constitution.
Plan now
While it may be another year before the new Act comes into force, and upward of three years before a Society must complete its transition to the new Act, it would be better to prepare now for the future and plan well ahead. Boards may benefit from consulting with governance experts and legal counsel as they work to take full benefit of the new Act and to prepare their eventual transition application.
The current timeframe also gives a Society’s Board the opportunity to consult with its membership about what the new Act will now allow or require, and – in particular – to discuss how the constitution and bylaws should be changed to fit under the new Act.
