Three ways to approach a bylaw review
There are three ways to approach a review of your society’s bylaws.
- Option 1: Revise your society’s existing bylaws to align with the new Societies Act.
- Option 2: Adopt the new model bylaws under the Act and revise them to fit your society’s needs.
- Option 3: Undergo a detailed review of your society’s vision and operations and use this opportunity to overhaul your bylaws.
The third option is the most ambitious. It also has the biggest payoff. You could think of it this way. Transitioning under the new Act presents an opportunity to do something that organizations rarely make time to do: take a detailed look at the organization’s governing documents and policies, and revise as needed to realize the organization’s vision.
While the third option is encouraged, we focus here on the first two options, recognizing that many non-profits are constrained by time and resources.
Three reasons why conducting a bylaw review is a very good idea:
1. To minimize confusion. Having bylaws that conflict with the new Act means that members and directors might be confused about what rules prevail.
2. To reduce risk. Effectively, you can’t trust your bylaws between November 28, 2016 and when you conduct a review to ensure they are harmonized with the new Act.
3. To take advantage of increased flexibility under the new Act. Even if you are generally satisfied with your society’s existing bylaws, you may want to take advantage of increased flexibility offered by the new Act in some areas.
Option 1: Revise your society’s existing bylaws
This option features working through your society’s current bylaws to consider whether provisions in the new Societies Act are at odds with the bylaws or offer options to adapt the bylaws to better fit your society’s needs.
If your society currently uses the model bylaws under the old Society Act, they may not need radical changes. The old model bylaws, often called Schedule B bylaws because they appeared in Schedule B of the old Act, are for the most part compliant with the new Act. That said, there are a few clauses in the Schedule B model bylaws that are somewhat in tension with the new Act: two are highlighted in the discussion below on conducting a clause-by-clause analysis.
As well, other clauses in the Schedule B bylaws don’t take advantage of the flexibility provided under new Act. For example, under the new Act a society’s directors have discretion to issue a debenture on borrowing funds, unless the bylaws restrict that discretion — which the Schedule B bylaws do, by requiring a special resolution of members to issue a debenture. So effectively that clause of the Schedule B bylaws curtails the flexibility introduced with the new Act.
For these reasons, even though those using the old Schedule B model bylaws may not need to make extensive changes, conducting a bylaw review is still recommended.
Alternatively, you could replace your bylaws with the new model bylaws, customizing them to your society’s needs. Which brings us to option 2.
If your society currently uses the model bylaws under the old Society Act, often called Schedule B bylaws, there may not be many changes needed to your bylaws. The Schedule B bylaws — available as a Word document on the Corporate Registry’s website — have a few clauses that are somewhat in tension with the new Act, and others that don’t take advantage of the flexibility provided under the new Act. The section below on key clauses to consider highlights clauses to pay particular attention to if you are currently using the Schedule B bylaws.
Option 2: Adopt the new model bylaws
An option available to societies with the introduction of the new Act, instead of preparing a consolidated set of existing bylaws (with or without further revisions), is to adopt a new set of bylaws entirely. The new set could be the new model bylaws found in Schedule 1 of the Societies Regulation; a Word version is available through the Corporate Registry website.
These model bylaws contain basic clauses for governing and operating a society — such as the conduct of meetings and the role of directors — that align with the new Act.
The model bylaws may be a good option for societies with a small membership that need a very simple structure or societies that need a temporary solution.
It is not recommended to adopt the model bylaws straight out of the box. The model bylaws will likely need several changes to reflect the specific needs of your society. Below in the section on conducting a clause-by-clause analysis are comments on provisions in the model bylaws to have a particularly close look at in considering whether they are a good fit for your society.