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Reviewing Your Non-profit Society’s Bylaws - Key clauses to consider

Key clauses to consider

How this list of clauses is organized

This section covers some of the key clauses to consider in conducting a bylaw review. It is organized based on the parts in the new model bylaws. This list is not intended to be exhaustive, but rather to help you get started on your bylaw review.

Members

Item Provision in new Act Scope of what bylaws can or must do Implications for your bylaws
Classes of membership Society can have more than one class of members. If it does, at least one class must be voting members. Bylaws must set out rights and obligations of each class of members. Under old Act, non-voting members had to be fewer in number than voting members. That restriction has been removed in new Act.
Application for membership Bylaws must provide for how members are admitted to membership. Bylaws must provide procedure. New model bylaws provide that a person may apply to board and becomes a member on board’s acceptance of application. Consider whether more formal application and approval process is needed.
Age of members An individual under age 19 may be admitted as a member. Bylaws may provide otherwise.  
Membership dues Bylaws must provide any rights and obligations arising from membership. If there are membership dues, bylaws must provide for how they are determined. New model bylaws provide that directors determine annual membership dues. Old Schedule B model bylaws provided that directors determined first annual membership dues, and after dues were determined by members at AGM.
Transferability Membership is non-transferable. Bylaws may provide otherwise.  
Expulsion of members Member may be disciplined or expelled by special resolution. Society must send member notice, including reasons, and give member opportunity to respond. Bylaws may provide otherwise. New model bylaws are silent. Old Schedule B model bylaws had provisions that were similar but slightly different from wording in new Act.

Members' meetings

Item Provision in new Act Scope of what bylaws can or must do Implications for your bylaws
Timing of AGM An AGM must be held in each calendar year (requirement under old Act that AGM be held within 15 months of last AGM is removed). New model bylaws say timing of AGM is at director's discretion. Old Schedule B model bylaws included requirement that AGM be held within 15 months of last AGM. If using old Schedule B model bylaws, consider removing requirement that AGM be held within 15 months of last AGM.
Notice of general meetings Notice of date, time and location of general meeting must be sent to every member at least 14 days before meeting. Bylaws may provide a different notice period of at least 7 days and not more than 60 days before meeting. For societies with more than 250 members, bylaws may permit a new alternate notice mechanism (featuring emailing members and publishing notice on society website). Consider reducing notice period for general meetings to as few as 7 days. For societies with more than 250 members, consider adding clause permitting new alternate notice mechanism.
Quorum at general meetings Quorum is 3 voting members or a greater number if bylaws provide. Bylaws may provide for a quorum that is greater than 3 voting members by specifying the number of voting members or that it be calculated as a percentage or on another basis. New model bylaws provide for quorum of 3 voting members or 10% of voting members, whichever is greater. If considering the new model bylaws provision, consider whether 3 voting members is too few for your society, and what percentage might be a good fit for your society (e.g., for societies with larger memberships, 10% can be hard to achieve).
Participation at general meetings Members may participate by telephone or other communications medium if all persons participating are able to communicate with each other. Bylaws may provide otherwise. For example, bylaws could restrict or prohibit electronic participation at members' meetings. Act already states that society is not obligated to provide means for electronic participation to occur. Decision to hold a meeting by electronic means is at discretion of board.
Proxy voting Bylaws must specify whether proxy voting is permitted. Bylaws may permit proxy voting. Unless bylaws provide otherwise, a proxy is valid only at the meeting for which it is given. If you decide to permit proxy voting, consider establishing requirements in bylaw for proxies to be effective.
Voting threshold for a special resolution Voting threshold to pass a special resolution is 2/3 of votes cast at a member's meeting (under old Act, voting threshold was 3/4 of votes cast). Bylaws may set a higher voting threshold than 2/3, either generally or for specific resolutions. The voting threshold must be spelled out as unanimous, a fraction or percentage of votes cast, or as a formula. If your bylaws currently set a voting threshold of 3/4, that threshold prevails — unless you alter the bylaw. The exception is for a vote to remove a director from office — the new default threshold of 2/3 applies regardless of what bylaws say.

Directors

Item Provision in new Act Scope of what bylaws can or must do Implications for your bylaws
Number of directors Society must have at least 3 directors, no maximum. Bylaws may set minimum and maximum number of directors (can't go below 3 directors, unless a member-funded society, which can have as few as 1 director). New model bylaws set minimum number of directors at 3 and maximum at 11. Old Schedule B model bylaws set minimum at 5 directors. A society is not required to set a minimum or maximum number of directors.
Election or appointment of directors Bylaws must provide for how directors are elected or appointed. New Act provides more flexibility for how directors are elected or appointed. Bylaws must provide procedure. New model bylaws provide that at each AGM, voting members elect or appoint board.
Director's age (effective in 2018 for existing societies) Individuals aged 16 or 17 can act as directors or senior managers, so long as majority of directors are at least age 18. Bylaws may set out additional qualifications for directors. If society wishes to have 16- or 17-year-old directors or senior managers, bylaws must provide authorization as of 2018. Consider adding this clause now.
Director's  qualifications (effective in 2018 for existing societies) Directors cannot be declared incapable, be undischarged bankrupt, or have committed certain crimes within last 5 years. Bylaws may set out additional qualifications for directors.  
Director's term of office Director's term of office expires at the close of the next AGM after election or appointment. Bylaws may provide otherwise. Bylaws could set different terms of office, such as two-year terms or staggered terms. If your society uses a board policy to set terms for longer than one year, that provision will need to be added to bylaws.
Indemnification Directors and senior managers who are found legally liable (e.g., for negligence) can be indemnified by society in certain situations. Bylaws may restrict society’s ability to indemnify directors and senior managers. Bylaws could prohibit the payment of indemnity, restrict the circumstances for its payment, or cap the amounts that may be paid.
Removal of directors Director may be removed by special resolution of members (despite any provision of bylaws) or by any method provided in bylaws. (Under old Act, director could only be removed by special resolution.) Bylaws may provide any method for removing directors. If bylaws don't currently have a mechanism for removing a director, consider adding a provision allowing directors to remove a director.

Directors' meetings

Item Provision in new Act Scope of what bylaws can or must do Implications for your bylaws
Proceedings of directors Directors may pass directors' resolution without a meeting if all directors consent in writing. Bylaws can provide for a written consent resolution to be passed by a fewer number of directors or "in any other manner". New model bylaws are silent. Old Schedule B model bylaws require all directors to sign written consent resolution. Consider whether to take advantage of flexibility in new Act to have a fewer number of directors pass a written consent resolution.
Borrowing of funds Society may borrow funds at director's discretion. (Under old Act, issuing a debenture on borrowing funds required a special resolution of members.) Bylaws may limit directors' ability to borrow funds — e.g., by requiring an ordinary or special resolution of members before borrowing can occur. Old Schedule B model bylaws require a special resolution of members to issue a debenture (effectively curtailing the increased flexibility provided under new Act).
Investment of funds Society may invest its funds in any prudent investment. Bylaws may expand or limit society's power to invest — e.g., by expanding the permissible types of investment to include more risky ones. New model bylaws and old Schedule B model bylaws are both silent on investment of funds.

Remuneration of directors and signing authority

Item Provision in new Act Scope of what bylaws can or must do Implications for your bylaws
Director's remuneration (effective in 2018 for existing societies) Directors can not be paid for being directors unless remuneration is authorized by society's bylaws. If society wishes to remunerate directors for being directors, bylaws must provide authorization. Bylaws could cap remuneration or impose conditions on payment. Given that in 2018, a society wishing to remunerate directors for being directors will require bylaw authorization to do so, it makes sense to consider such a bylaw now.
Reimbursement of expenses (effective in 2018 for existing societies) Directors' expenses, so long as they are reasonable, may be reimbursed. Bylaws may restrict or prohibit reimbursement. Bylaws could cap reimbursement or impose conditions on payment. New model bylaws are silent. Old Schedule B model bylaws require that directors "must be reimbursed for all expenses necessarily and reasonably incurred".

Inspection of records

Item Provision in new Act Scope of what bylaws can or must do Implications for your bylaws
Member access to records Members are entitled to inspect all records of a society (as are directors). Bylaws may restrict member access to some records (accounting records and records of directors’ meetings except relating to conflicts disclosures). If your bylaws currently restrict member access to records more than is permitted by the new Act, you may want to remove or amend the bylaw.
Public access to records Public is entitled to receive a copy of society’s financial statements and auditor’s report. Bylaws may grant public access to more of the society's records (e.g., minutes of members' and directors' meetings, accounting records, and conflict disclosures), but not to society's register of members. New model bylaws and old Schedule B model bylaws are both silent on public access to records.