Authored by Philip Milley, Associate Director of Legal Affairs
The new British Columbia Societies Act (the “Act“) will replace the current Society Act on November 28, 2016. While it is, in many ways, similar to the outgoing Society Act, it also introduces a number of new changes. Some of the key changes have been reviewed in previous Noteworthy blog posts and can be found here and here.
Organizations currently incorporated under the BC Society Act will be required to transition under the Societies Act by November 28, 2018. Failure to transition by this time will allow the registry to dissolve the society. Prior to transitioning, societies must have their filings up to date.
As part of this transition process, a society must file with the registry its constitution and by-laws, including any amendments online. Certified copies of the society’s original constitution, by-laws, and special resolutions are available from the Registry in a transition package for a fee of $40. This transition package is aimed to assist societies with transition and is available here. It is important to note that is it not a requirement that societies order this transition package.
The numerous changes to the legislation can be reviewed at the BC Registry Services pages located here and here. While the changes are too numerous to list, some of the noteworthy changes that become effective on November 28, 2016 include:
Under the new Act unalterable provisions will no longer be permitted in corporate documents. Provisions that were previously ‘unalterable’ will now be subject to amendment in accordance with the Act. A society that adopts new bylaws on transition cannot change or delete any unalterable provisions that were in its constitution. These provisions must be transitioned under the new Act and be identified as ‘previously unalterable’. Once transitioned, a society can then alter those provisions by complying with the appropriate amendment procedure.
Publicly-Funded vs Member-Funded Societies
The new Act distinguishes between publicly-funded societies and member-funded societies. Publicly funded societies include organizations such as charities and others that receive significant public funding. Member-funded societies, on the other hand, are societies funded mainly by its members to carry on activities for the benefit of its members. Member-funded societies may take the form of sports clubs or professional organizations. A variety of societies are prohibited from being member-funded societies, including registered charities and societies authorized under the Independent School Act and have received a grant for the previous school year.
The Act requires publicly-funded societies, including registered charities, to have a minimum of three directors, at least one of whom is ordinarily resident in British Columbia. The Act prescribes director qualifications but expressly allows societies to impose additional qualifications in their by-laws. The Act requires that directors who do not meet the qualifications, either under the Act or under a society’s by-laws, must resign.Directors and senior managers will be obliged to disclose to the directors all material interests in matters that may conflict with their duties to the society
The previous Act required five members for incorporation and three members thereafter; however, the Act permits a society to incorporate with as few as one person. The Act also permits different membership classes and allows different rights and obligations to apply to each class.
Governance/Annual General Meeting and Resolutions
The Act allows a society’s annual general meetings to be carried out by written consent instead of in-person meetings and to provide electronic notice of participation in meetings. The threshold for approving a special resolution has been reduced from 75% of votes cast to the lesser 66% of votes cast. However, a higher voting threshold for special resolutions can be established in the by-laws. Special resolutions will become effective immediately and will not need to be filed prior to becoming effective.
Applicable Nov. 28, 2016 financial statements issued by a publicly-funded society must include a note setting out remuneration paid to its directors, in all capacities, and its 10 highest paid employees and contractors on its financial statements prepared after Nov. 28, 2016. Only those employees and contractors that are paid in excess of $75,000 must be noted. In addition, a society must set out the details respecting any financial assistance given outside of the ordinary course of its activities such as loans or guarantees.
A further change in the Act relates to the borrowing powers of societies and applies to all societies as of November 28, 2016, whether or not they have transitioned. The previous Act had restricted a society from borrowing unless authorization by a special resolution, which required approval by at least 75% of the society’s voting members, was received. The borrowing powers under the Act gives the directors the general power to authorize a society to borrow money, subject only to any restrictions or prohibitions in the society’s by-laws.
Corporate Record Requirements
Finally, the Act clarifies the corporate record-keeping and access requirements for societies. Section 20 of the Act prescribes the records that must be kept and include, among others:
- financial statements
- resolutions (including special)
- minutes of members and directors meetings
- register of members, register of directors including consent to act as director
- certificate of incorporation, constitution, by-laws, and statement of directors
- court, tribunal, or government orders
Records may be kept in physical or electronic form provided that necessary precautions are taken and they are available for inspection at the society’s registered office through a computer or other electronic technology. The Act also provides some guidance as to how long certain corporate records must be maintained. Under the Act certain corporate documents must be made available for inspect to members and the public upon request unless the by-laws impose a restriction on this practice.
The new elements of the Societies Act are intended to improve and simplify the functioning of societies, while strengthening the accountability of charities to the public. Societies are encouraged to familiarize themselves with the changes and prepare for the transition to the Societies Act. Societies will have until November 28, 2018 to transition, which is when the next wave of he provisions will come into effect.
Noteworthy is provided for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.