In the spring of 2015, the new Societies Act (British Columbia) (the “New Act”) was passed which will replace the current Society Act (British Columbia) (the “Current Act”). The New Act will come into force on November 28, 2016, at which time societies will have two years to transition from the Current Act to the New Act by filing a transition application containing a Constitution and Bylaws.
Despite this transition period, many provisions of the New Act will become immediately applicable on November 28, 2016 and any Bylaw provisions that are inconsistent with the New Act will not be enforceable. Therefore, societies will need to review their Constitution and Bylaws prior to November 28, 2016 to determine whether changes need to be made immediately upon the New Act coming into force. The following are some of the significant changes that will come into effect:
The Constitution of a society will only be able to contain the name of the society and its purpose. If a society has any other provisions in its constitution, these will need to be moved into the Bylaws to ensure compliance with the New Act.
Increased Disclosure for Charities and Publicly Funded Societies
The New Act contains increased disclosure obligations for publicly funded societies – societies that obtain funding from the government or public in excess of an external funding threshold set by the regulations to the New Act – and charities. Members of charities and publicly funded societies will have access to all corporate records, but the Bylaws may restrict access to director’s meeting records and accounting records. Further, charities and publicly funded societies must disclose the remuneration paid to the directors and the ten highest paid employees or contractors receiving at least $75,000 in wages per annum. This disclosure can pool salaries being disclosed together and list positions rather than personal names.
The New Act will make significant changes pertaining to directors. A director must be at least 18 years old (subject only to the exceptions set out in the regulations). If the society is a charity or publicly funded society, the majority of a society’s directors must not be employees or contractors of the society. In addition, societies will be prohibited from remunerating directors unless authorized to do so by the Bylaws.
New Corporate and Governance Procedures
The New Act will include corporate and governance procedures substantially similar to those in the Business Corporations Act (British Columbia) and other corporate legislation for companies. For instance, the threshold to pass a special resolution will be reduced from 3/4 of votes cast by voting members to 2/3, unless the society’s Bylaws create a higher threshold; voting by proxy will be allowed if it is written into the society’s Bylaws; and the existing requirement that non-voting members outnumber the voting members will be removed.
The concept of non-director “senior managers” – individuals who oversee the activities of the whole or a principal unit of the society or perform a policy-making function – is introduced in the New Act. Senior managers can either be appointed by the society or deemed to be such by operation of the legislation. Senior managers are deemed to have fiduciary duties and other liabilities similar to directors, despite not actually sitting on the Board of the society.
Electronic Filing System
Concurrently with the coming into force of the New Act, the Registrar of Companies will implement a mandatory electronic filing system for incorporation, Bylaw changes and other filings at the corporate registry. This electronic filing system will allow the corporate registry to maintain a single database of societies and society Bylaws. Additionally, when existing societies transition from the Current Act to the New Act, they will be required to input their constitutions and Bylaws into an electronic database.
The above changes are designed to allow for flexibility and greater ease in how societies operate. Upon the coming into force of the New Act on November 28, 2016, Societies must begin making the necessary transitions and attention must be given to the foregoing changes. It is important to start considering how the New Act will impact the structure and organization of your society.
By: Juliet Sadr