The provincial legislation that creates and governs all
societies in British Columbia is receiving an overhaul. The current
Society Act dates from 1977 and while outdated in some respect
remains the legislation of choice for not-for-profit organizations
in BC. The new Societies Act (the "Act") was driven by a
growing need to modernize the regulatory scheme governing societies
in BC. On April 22, 2015, the Act received third reading at the BC
legislature. The replacement legislation will likely come into
force within a year.
Below is a brief summary of five of the most significant
features under the Act.
Directors – The Act creates certain qualifications
that all directors of societies must meet. Among other things,
directors must have no recent convictions for fraud, be bankrupt
and be (with some exceptions) be at least 18 years of age. A
director who does not meet these qualifications will be required to
resign. A society is free to set out additional qualifications in
its bylaws. The Act also expressly allows for "ex
officio" directors – that is, directors who become
directors because of a particular attribute or position they have
or hold, and not as a result of an election.
Unalterable Provisions &
Special Resolutions – Most societies are well aware
of the threshold for special resolutions, currently set at 75% or
more of votes cast. The Act reduces the threshold to pass a special
resolution at a meeting from 75% to 66%. However, it also allows a
society set a higher threshold for special resolutions, up to
unanimous approval! This flexibility for special resolutions can be
used to offset the fact that under the Act, there can be no
unalterable provisions of a society's constitution. Upon
transitioning a society under the Act, currently unalterable
provisions will become alterable and must be moved from a
society's constitution into its bylaws.
– Members of a society have always been able to requisition a
special meeting for a specific purpose, provided that at least 10%
sign the requisition. The Act will add to this, creating a right
for members to add specific issues to the agenda of an existing
members' meeting. A "member proposal" must be added
to the agenda if the proposal is signed at least 5% of the
society's voting members. A society's board of directors
have the discretion to reject the proposal if it is substantially
similar to an issue that has already been proposed at an annual
general meeting in the past two years.
Societies – The Act creates a new concept that did
not exist under the former legislation - it differentiates between
publicly funded societies and "member funded" societies.
A member funded society is a society that is funded primarily by
its own members to carry on activities for the benefit of its
members. Due to the private nature of its funding, the Act outlines
relaxed standards regarding corporate governance, financial
disclosure, and distribution of assets upon dissolution for member
funded societies. Sports clubs and professional organizations are
anticipated as the types of organizations intended to fit into this
new category, although others may meet the criteria. A publicly
funded society is a society that obtains funding from the public or
government in excess of a monetary threshold to be prescribed by
regulation. Registered charities, student societies and hospital
societies cannot be member funded societies.
– The Act will introduce the concept of a "senior
manager", which is any individual that has been appointed by
the directors to manage the activities or affairs of the society. A
senior manager may be an employee, contractor or volunteer. The Act
imposes certain duties on all senior managers (including the duty
to disclose a conflict of interest) but also provides rules on
indemnification, insurance, and limitation of liability for such
persons. The purpose of regulating senior managers is to decrease
the potential for mismanagement.
Public Disclosure of
Remuneration – The Act requires a society to
disclose the remuneration, if any, paid to its directors and to its
ten highest paid employees and contractors earning over an amount
to be prescribed by regulation. This disclosure must be made in a
society's annual financial statements, which are available to
society members and to the public. To counterbalance any privacy
concerns, the names of the directors, employees and contractors
need not be included in the financial statements. This disclosure
of remuneration requirement is inapplicable to "member
The new Societies Act is expected to come into force in 2015 and
will contemplate a two-year grace period during which existing
societies will be expected to transition.
Originally published in Vantage Point's May 14,
2015 blog post.
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.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
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.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).