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Reviewing Your Non-profit Society’s Bylaws - Conduct a clause-by-clause review

Conducting a clause-by-clause analysis

Factors to consider

Whether you are working from your society's existing bylaws or the new model bylaws, you should work through each clause with an eye to two factors:

  • Step 1: Does the clause align with the new Act?
  • Step 2: Does the clause support the needs of your society?

Example: Expelling a member

Let’s look at an example. Bylaws often include a clause dealing with expelling a member.

The relevant provision in the new Societies Act reads:

Discipline and expulsion of member

70 (1) The bylaws of a society may provide for the discipline or expulsion, or both, of members.

(2) Unless the bylaws provide otherwise, a member of a society may be disciplined or expelled by special resolution.

(3) Before a member of a society is disciplined or expelled under subsection (2) or the bylaws, the society must

(a) send to the member written notice of the proposed discipline or expulsion, including reasons, and

(b) give the member a reasonable opportunity to make representations to the society respecting the proposed discipline or expulsion.

Let's assume the relevant provision in the society's existing bylaws was drawn from the old Schedule B model bylaws under the old Society Act, which read:

Part 2 – Membership

8 (1) A member may be expelled by a special resolution of the members passed at a general meeting.

(2) The notice of special resolution for expulsion must be accompanied by a brief statement of the reasons for the proposed expulsion.

(3) The person who is the subject of the proposed resolution for expulsion must be given an opportunity to be heard at the general meeting before the special resolution is put to a vote.

The new model bylaws do not address the expulsion or discipline of a member.

Step 1: Does the clause align with the new Act?

The wording in the existing bylaws is similar but slightly different from provision in new Act. The bylaw deals only with expulsion; the new Act deals with expulsion and discipline. The bylaw provides the member with "an opportunity to be heard at the general meeting"; the new Act provides the member with "a reasonable opportunity to make representations to the society", which is broader wording, not restricted to the general meeting or to an opportunity to say something.

There's an argument to make that the existing bylaw and the Act don't fully conflict; that is, that the Act extends the wording of the bylaw. But to whatever extent that the existing bylaw and the Act are in conflict, the Act would prevail.

Step 2: Does the clause support the needs of the society?

The new Act provides that a member can be disciplined or expelled by special resolution unless the bylaws provide otherwise. Consider whether the needs of your society would be better met by having a different procedure spelled out in the society bylaws, such as one involving a board of directors process.

If you are revising the existing bylaws, the options would be to:

  • Delete the provision from the existing bylaws (and let the matter of expulsion or discipline of a member be governed by the provision in the Act).
  • Revise the provision in the existing bylaws to provide a different procedure for dealing with expulsion or discipline of a member.

If you are working from the new model bylaws, the options would be to:

  • Do nothing (and let the matter of expulsion or discipline of a member be governed by the provision in the Act).
  • Add a provision outlining a different procedure for dealing with expulsion or discipline of a member.

Example: Quorum at general meetings

Let's look at a second example, dealing with quorum at general meetings.

The relevant provision in the new Societies Act reads:

Quorum

82 (1) Subject to subsections (3) and (4), the quorum for the transaction of business at a general meeting is

(a) 3 voting members, unless paragraph (b) of this subsection applies, or

(b) if the bylaws provide for a quorum greater than 3 voting members, that quorum.

(2) The bylaws of a society may, for the purposes of subsection (1)(b), provide for a quorum that is greater than 3 voting members, by doing either of the following:

(a) specifying the number of voting members that constitutes a quorum;

(b) requiring that the quorum be calculated as a specified percentage of voting members or on another basis.

(3) If a society has fewer voting members than the quorum provided for in subsection (1), the quorum for the transaction of business at a general meeting is all of the voting members.

(4) The bylaws of a society may provide that if a general meeting is adjourned until a later date because a quorum is not present, and if, at the continuation of the adjourned meeting, a quorum is again not present, the voting members present constitute a quorum for the purposes of that meeting.

Let's say the provision in the society's existing bylaws was drawn from the old Schedule B model bylaws, and reads:

16 (3) A quorum is 3 members present or a greater number that the members may determine at a general meeting.

The provision in the new model bylaws reads:

3.7 The quorum for the transaction of business at a general meeting is 3 voting members or 10% of the voting members, whichever is greater.

Step 1: Does the clause align with the new Act?

There are some issues arising from the society's existing bylaws when read together with the relevant provision in the new Act:

  • The existing bylaws refer to "members present". The provision in the new Act refers to "voting members".
  • The provision in the new Act contemplates the bylaws specifying the number of voting members or requiring a calculation as a percentage of voting members or on another basis. Yet the existing bylaws say "or a greater number that the members may determine at a general meeting". That wording does not specify a number of voting members or a calculation. Which places the wording in the existing bylaws somewhat in tension with the wording of the new Act.

Step 2: Does the clause support the needs of the society?

Let's turn our attention to the quorum provision in the new model bylaws. The bylaw provides for a quorum of 3 voting members or 10% of voting members, whichever is greater. Consider whether 3 voting members is too few for your society, what percentage of voting members might be a good fit for your society, and whether a different mechanism to determine quorum (so long as it complied with the Act) would be preferable.

For example, for societies with larger memberships, 10% can be hard to achieve. For a society with 2,000 members, 10% is 200 people — a very large number to try to get out to an AGM. A higher fixed number and a lower percentage — say, 20 voting members or 2% of voting members — could be a better fit for a society of that size.

Bylaws that can't be amended

Note that on transition, there are two types of bylaws that cannot be amended:

  • previously unalterable provisions, and
  • reporting society provisions.

Previously unalterable provisions

On transition, any provisions that are in a society's constitution other than the name or purposes must be moved to the society’s bylaws. Any "unalterable" provisions must be identified as having been "previously unalterable". The unalterable provisions must not be changed on transition. Once a society has transitioned, the previously unalterable provisions can be altered by a special resolution of members. But on transition, the previously unalterable provisions cannot be amended.

Any amendments to previously unalterable provisions must be approved by a special resolution passed or consented to after the society has filed its transition application. In other words, societies cannot approve changes to previously unalterable provisions to be effective after transition in a members' meeting held before the completion of the transition process. This two-step process (transition first, then consider amendment later) is intended to ensure that members have the opportunity to consider any amendments to these previously unalterable provisions, which typically incorporate fundamental principles or values of a society.

Reporting society provisions

If a society was a reporting society under the old Society Act, it must incorporate new reporting society provisions into its bylaws. Reporting societies under the old Act include hospitals, insurance societies and other societies that require government consent to incorporate, as well as any society that has a subsidiary. (A society is not reporting just because it files annual reports with the Corporate Registry.)

The new reporting society provisions, which are in Schedule 3 of the Societies Regulation, contain special rules, such as the requirement to have an auditor. These provisions must be included without alteration in the bylaws filed with the transition application. Once the provisions have been included in a society’s bylaws on transition, they can be altered like any other bylaw.