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Bulletin

New Amendments to the Societies Act – A Potpourri of Changes

Fasken
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Overview

Charities, Not-for-Profit & Corporate Commercial Bulletin

On October 28, 2021, the Societies Amendment Act, 2021 received royal assent. It implements changes to the Societies Act that were first proposed by the B.C. government in 2019 in connection with a public consultation process (for more information, please see our bulletin: Public Consultations on Proposed Amendments to British Columbia Statutes).

Many of the proposed changes, which will affect the more than 30,000 British Columbia societies governed by the Societies Act, will be brought into force by regulation or after a transitional period. Some of the key changes introduced by Bill 19 are summarized below.

Protecting Member Information

  • All societies must maintain a register of members. Going forward, the information that may be recorded in the register will be limited to the name, member class and contact information of each member. Contact information includes email addresses. Societies should carefully review their member registers and remove all information inconsistent with these restrictions.
  • Registers of members are accessible to members for inspection and members can request copies of the registers. Bill 19 clarifies that any such information or copies can only be used for a limited number of purposes directly related to the society, namely requisitioning or calling a general meeting, submitting a member proposal or efforts to influence the voting of members.

Changes Affecting Member Meetings

Earlier in 2021, the B.C. government enacted changes permanently permitting electronic meetings (for more information, please see our bulletin: COVID-19 May Eventually Go Away, But Electronic Meetings Are Here to Stay). Bill 19 implements further changes relevant to member meetings:

  • Societies must only maintain minutes of general meetings, not other (informal) gatherings of their members.
  • The threshold for societies to send notices of general meeting to members by email (in addition to posting on a website maintained by or on behalf of the society or publishing in an appropriate newspaper) will be reduced from 250 to 100 members. That means more societies can utilize this modern notification method by adopting appropriate bylaw amendments.
  • The new rules relating to the register of members are also relevant for societies that have adopted bylaws permitting notice by email or plan to do so. Such email notices must be sent to the email addresses shown in the register of members. This restriction overrides any inconsistent bylaw provisions. Bylaws should therefore be amended as required to ensure compliance.
  • Member proposals and meeting requisitions may in the future include longer supporting statements. The current word limit will be increased to 500. Further, members who have submitted a valid proposal for consideration at a general meeting will be permitted to present the proposal personally.

New Disclosure Rules on Employee Remuneration in Financial Statements

Most societies must currently disclose the remuneration paid to its top ten highest paid employees and contractors in their financial statements. Going forward, societies must report the remuneration paid to all employees and contractors above a certain threshold (presently $75,000 annually per recipient).

These changes will apply to financial statements prepared for presentation at annual general meetings held one year after this requirement comes into force.

Changes Affecting Directors and “Senior Managers”

Bill 19 is introducing new rules affecting society directors and “senior managers” (senior officers) in several areas: qualifications, conflicts of interest, terms of office and voting:

  • Individuals who are determined to be incapable of managing their own affairs (including, going forward, incapable of managing their financial affairs under the Adult Guardianship Act) do not qualify as directors or "senior managers" and must step down from their positions in societies. However, Bill 19 now clarifies that if a person has regained capacity to manage their own affairs, they may once again serve as directors or “senior managers” of societies.
  • Another common sense clarification relates to the disclosure of conflicts of interest required from directors and “senior managers”. Such disclosure is not required if the director or “senior manager” did not know of the conflict or could not reasonably have known of the conflict. Directors should note that they have a corresponding obligation to make reasonable inquiries to determine whether a conflict may exist. The legislative amendments will also allow a conflicted director or senior manager to remain in a board meeting for the purpose of providing information as long only one other director requests their presence. Bylaws, however, may set a greater number of directors for such requests.
  • The default term for any director of a society, no matter whether they are first directors, elected or appointed, now ends at the close of the next annual general meeting. This rule may be modified by bylaws, for example by setting multi-year terms. Societies should carefully review their bylaws to determine whether they set term limits for directors or, if directors serve without term limits (such as is often the case for ex officio directors), whether the bylaws include provisions when such directors cease to hold office. If no such provisions are set out in the bylaws, the default rules would apply and such directors may inadvertently cease to hold office.
  • Finally, Bill 19 now clarifies that directors may not vote by proxy. Any bylaw provision inconsistent with this rule will be ineffective.

New Record Keeper Requirement for Dissolving Societies

Going forward, a society that wishes to dissolve voluntarily, must appoint a “record keeper” by ordinary resolution of its members. The record keeper must take into custody and maintain all of the societies’ corporate records for three years after dissolution. Record keepers must also provide access to society records for inspection and copying as required by the Societies Act.

Dissolution of Societies That Have Failed To Transition to the Societies Act

When the Societies Act first came into force in 2016, societies were given two years to transition to the new legislation. Although the vast majority of societies completed this step in a timely manner, as of August 2021 approximately 1,200 active societies had not done so.

The grace period for filing a transition application under the Societies Act will be extended to November 28, 2022. After that date, the Registrar of Companies for British Columbia may take steps to dissolve non-compliant societies.

For more information on the transition process, please see our bulletin: The New British Columbia Societies Act: What Happens Next?

Testamentary Dispositions to Member-Funded Societies

“Member-funded societies” are societies that are funded primarily by their members to carry on activities for the benefit of the members and which have included in their constitution a statement to this effect (for more information on member-funded societies, please see our bulletin: A New BC Advantage: Member-funded Societies under the Societies Act). Societies may qualify as member-funded societies under the Societies Act for as long as they do not receive more than the prescribed amount of government funding and “public donations.” Bill 19 will permit donations by testamentary dispositions from individuals affiliated within certain time periods without affecting the status of a member-funded society. This change is being made as societies cannot control the value of testamentary donations received, and also allows members, directors and other related persons to support member-funded societies after their deaths.

Further Information or Questions

If you have any questions on the proposed amendments or need assistance in reviewing your society’s bylaws, please contact Dierk Ullrich (dullrich@fasken.com).

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