In early August of 2014, the British Columbia Ministry of
Finance released a White Paper containing policy recommendations
for a new Society Act to regulate the governance,
organization and operation of non-share capital entities
incorporated in British Columbia. The White Paper includes the full
text of the proposed new Society Act, and includes
annotations setting out background information on the proposed
legislation, including the policy intention behind the new
The proposed legislation maintains and builds upon the basic
framework of the current Society Act. Societies will
continue to have constitutions and bylaws that are filed at the
corporate registry, and restrictions on share capital and the
distribution of assets. However, the proposed legislation provides
a degree of modernization and adopts a more user-friendly drafting
Significant proposals in the White Paper include the
New Corporate and Governance Procedures
The proposed legislation adopts specific corporate and
governance procedures from the Business Corporations Act
(British Columbia) and other corporate legislation. While these new
provisions include default governance procedures, they also provide
societies with a greater ability to use their own bylaws to
structure their governance for their specific needs. For instance,
societies will have more options around matters such as proxy
voting, the holding of general meetings and the creation of
multiple classes of membership (including the ability to create
classes of non-voting membership).
Reduced Regulatory Burden for Member Funded Societies
The most significant change under the proposed legislation is
the distinction between member funded societies and those that are
charities or otherwise rely on government funding. Because they are
not funded by public donations or government grants, member funded
societies will be subject to fewer accountability measures. For
example, they will only be required to have one director (as
opposed to three that are required for other societies), they will
not need to provide the public access to their financial
statements, and they will not be subject to the same asset lock on
dissolution as are ordinary societies.
Increased Regulatory Burden for Charities & Publicly Funded
British Columbia societies that have charitable status or that
receive significant public funding will continue to be subject to
the current Society Act's requirements respecting the
number of directors, financial statements and distributions on
dissolution. Additionally, a majority of their directors must not
be entitled to receive remuneration under contracts of employment
or service. These societies will also be required to publicly
disclose the amount of remuneration paid to their directors and
their ten highest paid employees and contractors.
Other key proposals set out in the White Paper include:
Implementing a mandatory online filing system for
incorporation, bylaw changes and other filings at the corporate
registry. Existing societies will also be required to input their
constitution and bylaws into an electronic, searchable data
Streamlining the process for incorporation by allowing a single
subscriber to form a society (as opposed to five subscribers
required under the current legislation). This will make British
Columbia legislation consistent with the new federal not-for-profit
Removing the existing requirement for court approval of
director indemnity payments;
Clarifying record-keeping and access to records;
Clarifying directors' liability for improper payments;
Providing greater protection for directors, who are often
volunteers, including court-ordered relief in legal proceedings and
a defense for reasonable reliance on expert reports;
Clarifying that bylaw authorization is needed if directors are
to be paid; and
Giving societies greater flexibility to meet changing needs by
enabling unalterable provisions in a society's bylaws to be
altered by special resolution.
Submissions for Comments:
The proposed legislation is still in draft form and is subject
to revision as a result of further consultation and comments from
stakeholders. Comments on the White Paper may be submitted to the
Ministry of Finance up until October 15, 2014.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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