Society AGMs in a Post-COVID Reality by Jordan Forsyth
In today’s difficult pandemic circumstances, BC’s non-profit societies are performing more critical work than ever to support front-line workers and all those impacted by COVID-19. However, just like all other organizations, societies are having to grapple with challenges presented by the pandemic in relation to normally routine operations and governance matters, including the question of how to go about holding an Annual General Meeting in compliance with a society’s Bylaws and the Societies Act (British Columbia) (the “Act”) while not violating social distancing requirements or otherwise compromising the safety and health of society members.
The Act does already permit society members to participate in a general meeting “by telephone or other communications medium if all of the persons participating in the meeting, whether by telephone, by other communications medium or in person, are able to communicate with each other” (s. 83(1)), as long as the Bylaws of the society do not state otherwise.
However, since many societies have Bylaws which do require a certain number of voting members to attend “in person” at a physical location in order for quorum to be achieved, many societies have had to consider the possibility of either holding general meetings with modified or difficult-to-implement social distancing measures, or simply breaching the requirements of their Bylaws in the interests of public health.
In order to address the above challenges, the provincial government released Ministerial Order No. M116 (the “Order”) under the Emergency Program Act (British Columbia) on April 21, 2020. The Order applies not only to societies under the Societies Act, but also to corporations incorporated under the BC Business Corporations Act and cooperatives under the Cooperative Association Act.
The Order states that regardless of existing legislation or Bylaw terms, a society member can participate in and vote at an AGM “by telephone or other communications medium if all of the persons participating in the meeting, whether by telephone, by other communications medium or in person, are able to communicate with each other and, if applicable, vote at the meeting”. This essentially allows all societies to take advantage of s. 83(1) of the Act even if their Bylaws would not normally permit that.
There are specific requirements to take advantage of the above procedure under the Order, however, including:
1. Notice of the meeting has to include instructions for how to attend at and participate in the meeting by the applicable communications medium. For example, providing clear instructions on how to access and login to the applicable program/software that will be used for the meeting;
2. Notice of the meeting also has to include instructions for how each person will be able to vote at the meeting. While voting by a show of hands will still work well for video meetings, what mechanism is in place for determining votes if a society’s bylaws require a confidential poll be carried out at the request of a member?; and
3. The society responsible for holding the meeting has to facilitate/control the use of the communications medium selected to hold the meeting.
If the above requirements are met, a fully virtual AGM is “deemed” to have validly occurred despite the absence of a physical location.
The Order took effect immediately on the date it was made and will continue in force until the declaration of state of emergency originally made on March 18, 2020 expires or is cancelled.
Even with the Order granting increased discretion to hold AGMs by videoconference, some societies may ask why not simply delay the AGM until in-person gatherings are once again permitted and safe in order to avoid the additional administrative and setup work involved with holding a new form of telephone or videoconference AGM? Section 71 of the Act does provide flexibility as to when societies hold their AGM (provided there is nothing specific in the Bylaws as to timing), as it permits the usual requirement to hold an AGM in each calendar year to be modified by the society filing a request online with the Corporate Registry between November 1 and December 31 of the applicable calendar year for an extension permitting the AGM to be held as late as March 31 of the following year.
However, as appealing as simply delaying the AGM may seem in such challenging times, it is important to be aware of s. 35(2)(b) of the Act, which requires financial statements to be presented at the AGM which are prepared for a period of time “ending not more than 6 months before the annual general meeting at which the financial statements are to be prepared”. Accordingly, if a society has paid for audited financial statements ending as of a certain period of time, extending the AGM back more than 6 months from the date those statements cover may require the society to incur the additional cost of preparing interim financial statements for a portion of a calendar year leading up to the AGM. With so many other challenges and additional costs being experienced by non-profits, including difficulties with holding fundraising events in the midst of the pandemic, the cost of preparing interim financial statements may not be justified if it can be avoided by going ahead with a video/remote AGM as permitted by the Ministerial Order.
Please note that the above is intended for informational purposes only and does not constitute legal advice or create a solicitor-client relationship. Baker Newby LLP would be pleased to assist with any legal advice required in relation to your specific situation.