George Bryce, barrister & solicitor
The new Societies Act will come into force on November 28, 2016, and the current Society Act will then be repealed. Now that we know this critical date, societies should be considering several issues and taking steps now to ensure their eventually transition to the new Act will be as painless as possible.
1) Need to amend the existing bylaws now?
If a society needs to amend its existing bylaws to address any urgent problems, such amendments should be completed before November 28, 2016 under the current Act. If not, the society may have to wait until well into 2017 before it would then able to make the desired changes under the new Act.
Under the current Act, it can take six weeks or longer for the Registrar’s office to file the Form 10 (documenting the special bylaw amendment resolutions) after it has been received. Therefore, the membership of a society should approve any needed bylaw amendments before October 1, 2016.
It is also worth noting that, after November 28, 2016, a society will not be able to amend its bylaws under the new Act until it has completed its transition (details below). Therefore, the society should decide in the near future if any changes need to be made to the current bylaws before the start of the transition period.
2) What is the transition period?
On November 28, 2016, societies will be able to start the process to transition their registration from the old Act to the new Act, but transition must be completed within two years. If a society fails to transition to the new Act by November 28, 2018, it could be struck from the registry and thus cease to be a registered society. If a BC society is also a registered charity under the Income Tax Act, being de-registered in BC would result in the loss of their federal charitable status.
3) What are the steps in the transitioning process?
BC Registry Services will be sending out transition packages to all registered societies by the end of August 2016 that will contain more information. While all the details have not yet been worked out, the following is what societies will likely need to do to complete their transitions to the new Act before November 2018.
(a) A society must be in good standing: A society will not be allowed to transition to the new Act if it is not “in good standing.” This means that a society must be up-to-date with the filing of all its annual reports before it can take the next step.
(b) Reviewing the constitution and bylaws: For a $40 fee, BC Registry Services will provide a certified true copy of the BCAMP’s constitution and bylaws, as well as any amendments that have been filed since the Association was first registered. The society can then decide if it needs to take the next two steps in the transition process.
(c) Simplified constitution: Under the new Act, a society’s constitution should contain only two sections; one that states the society’s name, and the other that states the society’s purposes. Other types of provisions, including any which state that something is “unalterable”, will have to be removed. If necessary, a simplified version of the society’s constitution setting out only its name and purposes would then have to be filed as part of its transition package.
(d) Declaring if the society is “member funded”: The transition process will allow a society that is primarily funded by its members to also state in its constitution that it is a “member-funded society”. If this step is not taken at the time of transition, it can be done later, but the society may then need to obtain a court order, as well as membership approval of a special resolution.
This last step raises an important question:
4) Are we a member-funded or a public-funded society?
As summarized under the next heading, the new Act sets out different rules that will apply to member-funded societies versus societies that receive public funding. Therefore, it is important to understand how the new Act defines these two types of societies.
In brief, under the new Act and Regulations, a member-funded society is a society that is primarily funded by its members to undertake activities for the benefit of its members. On the other hand, a public-funded society is one that receives more than (a) $20,000, or (b) 10% of its gross income, which ever is greater, over the previous two fiscal periods, from public or government sources.
Other limitations and exclusions under the new Act may need to be considered. For example, BC societies that are also registered charities under the Income Tax Act, cannot declare that they are member-funded societies.
It is important for every society to know before it transitions to the new Act if it is a member-funded or a public-funded society.
5) What are the rules for member-funded vs. public-funded societies?
Under the new Act, a series of rules apply to member-funded societies that are different for public-funded societies. For example, the majority of directors on the Board of a public-funded society must be “unaffiliated” (i.e. they must not be employed by the society or provided services to the society under contract). No such restrictions apply to member-funded societies.
Also, the public will have a statutory right to obtain a copy of a public-funded society’s financial statements (for a reasonable fee). On the other hand, the public does not have a right to obtain a copy of a member-funded society’s financial statements; howver, its bylaws could grant public access.
In turn, a public-funded society’s financial statement must disclose the amount of remuneration that it has paid to its directors, and to employees or contractors earning over $75,000 annually. But a member-funded society does not have to disclose this information, unless its bylaws adopt a similar rule.
In brief, under the new Act, public-funded societies will have to make more information available to the public than will be required of member-funded societies.
6) Other major changes
The new Act will bring about other changes, many of which should be positive. For example:
(a) Going paperless: The vast majority of filings that a society will complete once the new Act comes into force will have to be done “electronically”. This includes filing the annual report, and any amendments to the society’s constitution or bylaws.
(b) Stream-lining the bylaw: The new Act will set out rules on a number of topics that will effectively replace or over-ride similar provisions that a society may currently have within its existing bylaws. It is possible that the society’s current bylaws may contain a number of unnecessary provisions, and therefore – despite section 11(3) of the new Act – it may be useful to remove those redundant bylaws, and rely instead on the primay provisions of the new Act.
(c) Using a consolidated legislation package: A society may find it useful to create a consolidated legislation package that would set out in a single document the provisions from the new Act and Regulation that apply to its structure and operation, as well as its constitution and a stream-lined set of bylaws. This is not a requirement under the new Act, but it should be a useful resource for the society going forward, in particular to ensure its board and members are aware of and correctly apply the new rules within the new Act.
Societies wanting more information on the new Societies Act and how they can transition in a timely fashion are invited to contact George Bryce at email@example.com or 604-733-5027.