Canada: Societies Act Comes into Force: Indepth Analysis

Bill-24, the Societies Act (the "New Act"), received Royal Assent on May 4, 2015 and comes into force today, November 28, 2016. Every society incorporated under the predecessor to the New Act (the Society Act, the "Old Act") must transition under the New Act before November 28, 2018 (2 years from the coming into force of the New Act, the "Transition Deadline"). The New Act, save certain exceptions discussed below, will apply to societies in British Columbia, whether they have transitioned or not, as of today.  As such, some societies' bylaws may contain provisions that are of no effect under the New Act, and therefore must make decisions about amending certain provisions in their bylaws to comply with, or to supersede (where possible), the New Act after their transition.


Simple Transition

A society may perform a simple transition on or after November 28, 2016. In order to transition, a society must prepare a "word-for-word" version of their constitution in electronic format (Word format) listing only the name and purposes of the society. Any other parts of the constitution (namely, previously unalterable provisions) must be relocated to the society's bylaws, word-for-word, followed by the phrase: "This provision was previously unalterable." The society must also prepare a word-for-word version of their bylaws in electronic format. These documents must be filed with the BC Registry's new "Evergreen" system. These "changes" to the society's constitution and bylaws do not require approval from the members.

No other changes can be made to the bylaws while effecting this simple transition unless such amendments are approved by a special resolution of the members of the society. As of today, no changes to a society's bylaws or constitution, other than the ones required under this simple transition, may be made until the society has transitioned. Therefore, until a society effects its transition and then amends its bylaws, a society may have provisions in it's bylaws that are of no effect under the New Act.

One of the advantages of the simple transition is that once the society has transitioned, it may then amend its bylaws by special resolution (2/3 vote as opposed to 3/4 under the Old Act, unless its bylaws state otherwise). Further, this simple transition does not require member approval. The disadvantage is that until the society has transitioned and approved a bylaw change by special resolution, it may go through a period where its current bylaws are inconsistent with the New Act. The filing fee for a special resolution to amend a society's bylaws must be paid ($50) after the transition has occurred.

This simple transition is best suited to a society that does not need or wish to change any provisions of its bylaws, and whose bylaws are consistent with the provisions of the New Act.

Transition with Bylaw Amendment

A society may amend its bylaws at the time of transition on or after November 28, 2016. The society may change its bylaws by special resolution (2/3 vote unless its bylaws state otherwise) and submit its new bylaws along with its transition documents (electronic format constitution and bylaws). The new bylaws must, however, still include the unalterable provisions from the constitution (if any) followed by the phrase: "This provision was previously unalterable."

The advantage of amending bylaws at the time of transition compared to waiting until after the society has transitioned, is that the society will avoid having to pay the extra fee for filing the obligatory special resolution which amends the bylaws. Another advantage, it that the special resolution required to amend the bylaws will be 2/3 as opposed to 3/4 (if the society's bylaws do not stipulate the vote required to pass a special resolution). The disadvantage is that the society may have a period where its current bylaws are inconsistent with the New Act, if it is not prepared to transition on November 28, 2016 or soon thereafter.

Societies that have not amended their bylaws to comply with the New Act before its coming into force that wish to amend their bylaws in any event and wish to avoid the extra filing fees, or who wish to enjoy the lower special resolution voting-threshold of 2/3 should amend their bylaws at the time of transition.

Changes under the New Act

Member-funded Societies

The New Act provides an option for societies to become "member-funded" societies at the time of transition (subject to member approval by special resolution), or after transition (subject to member approval AND court order). Member-funded societies are societies that are primarily funded by their members (i.e. they are not primarily funded through public donations or government funding) to carry on activities for the benefit of their members (e.g. professional associations, sports clubs, golf courses, etc.). A society may become a member-funded society if it has received less than $20,000 in public funding, or, if it has received more than $20,000 from the public, that $20,000 must constitute less than 10% of its gross income over the previous two financial years.

A member-funded society has certain advantages in terms of reporting and oversight compared to non-member-funded societies, which are outlined below. Societies contemplating becoming a member-funded society should carefully consider the pros and cons of such decision before effecting any transition under the New Act. Societies should also carefully review their bylaws, and if they so happen to decide to become a member-funded society, do so at the time of transition (not afterwards, so as to avoid having to seek a court order).

Key differences between member-funded and non member-funded societies are summarized as follows:

Member-funded Societies:

  • No restrictions on distribution of assets on winding up (can go to members)
  • One director is sufficient (no residency requirements)
  • No restrictions on number of board members who are also employed by society
  • No public rights to obtain copies of financial statements
  • No disclosure of remuneration paid to directors, contracts, and employees required
  • Can convert to a corporation

Non Member-funded Societies:

  • Assets can only be distributed to other societies, charities or community service cooperatives, at dissolution
  • Requires at least 3 directors (one of whom must be a resident of BC)
  • A majority of the board must be independent (not employed or under contract)
  • Public has rights to obtain copies of financial statements
  • Remuneration of directors, highly paid employees and contractors must be stated in financial statements
  • Cannot convert to a corporation

Financial Statements, Financial Assistance, and Financial Reporting

As of November 28, 2016, directors of societies will have to present financial statements and auditors' reports on the financial statements, if any, to the members of the society at each annual general meeting. There are no regulations setting out how financial statements must be prepared and therefor societies may wish to amend their bylaws to require that financial statement be prepared in a particular fashion or by particular persons (e.g. accountants or auditors).

Financial statements must now include:

  • information on remuneration paid by the society to directors during the financial statement's reporting period, for being a director and for acting in another capacity;
  • information on remuneration of employees and persons under a contract for services with the society who were paid $75,000 during the financial statement's reporting period (and if there are together more than 10 employees and contractors who were paid $75,000 in a reporting period, only the 10 highest remunerated persons need to be noted); and
  • information that sets out the nature and any amount of any financial assistance given by the society (including the provision of loans, guarantees, indemnities, security) in the reporting period, except for financial assistance given in the ordinary course of the society's activities in furtherance of the purposes of the society.

Information on the remuneration of directors, employees, contractors, as well as information on any financial assistance does not need to (but may, in the case of directors, employees, and contractors) identify the recipients of such remuneration or financial assistance by name. Information on remuneration of directors must include a list of all directors paid which includes: (i) the position or title of the director; (ii) the amount of remuneration for being a director; and (iii) the amount of remuneration for acting in another capacity and a description of the capacity.

Information on remuneration of employees and contractors must either have a list which includes (a) the employee's position and title or the nature of the contractor's services, respectively; and (b) the amount of remuneration paid to those persons in the reporting period; or (c) the total number of those persons and the total amount of remuneration paid during the reporting period to those persons.

Accounting records for each of the society's financial years including a record of each transaction materially affecting the financial position of the society must be kept for a period of 10 years from the (i) date the record was created, or (ii) if the record was altered, date the record was last altered. Additionally, any person who requests a copy of the financial statements of a society has a right, subject to a maximum fee of $10 and $0.10 for each page provided by email or $0.50 per hard copy page, to a copy of the statements within 14 days of a request for such copies.

Investment of Funds and Borrowing of Funds

A society may invest its funds in any "investment in which a prudent investor might invest" as long as such investment is in accordance with the bylaws. Societies may restrict or expand upon what a "prudent investment" constitutes in its bylaws and may, for example, restrict or expand upon the types of investment vehicles or types of companies, industries, or endeavours in which the society is permitted to invest.

A society may borrow money and issue securities (bonds, debentures, notes or other types of debt securities) as long as such borrowing is in accordance with the bylaws. The bylaws may restrict or prohibit the society's directors from causing the society to borrow money or issue securities, and restrict the amounts that may be borrowed as well as the types of securities that may be issued.

Disbursement of Funds

As of November 28, 2016, societies must not distribute any of their money or property other than:

  1. for valuable consideration;
  2. in furtherance of the society's purpose;
  3. to a qualified recipient;
  4. in accordance with the society's dissolution; or
  5. for a distribution authorized by and made in accordance with the Regulations (of which there are currently none).

Societies must ensure that, unless and until director remuneration is provided for in their bylaws, money paid to directors and officers falls within one of the allowable exceptions to distributions of money above.

As of November 28, 2016, directors who vote for a resolution passed at a meeting of directors or otherwise consent to a consent resolution of directors authorizing distribution of money or property contrary to the Act or their bylaws, are jointly and severally liable to restore the money or other property to the society that was distributed but not recovered by the society.

Directors' Remuneration

After the Coming Into Force, directors of newly incorporated societies may be paid for being directors and may be provided reimbursements for reasonable expenses, only if the society's bylaws provide for such remuneration and reimbursement of directors. However, the bylaws may impose restrictions and conditions on such payment. Further, even if the bylaws of the society allow remuneration and reimbursement of directors, a majority of the directors of the society must not receive remuneration from the society under contracts of employment or contracts for services, other than remuneration for being a director (i.e. the majority of the board of directors must be "independent directors").

Societies incorporated under the Old Act will not be subject to the requirement that a majority of the directors not be remunerated under contracts of employment or contracts for services, nor will they be subject to the provisions under the New Act restricting the remuneration and reimbursement of directors unless provided for in the society's bylaws until the Transition Deadline.

Disclosure of Conflicts

As of November 28, 2016, directors and "senior managers" (see below) who have a direct or indirect material interest in a contract or transaction (current or proposed) of the society or a matter that is the subject of consideration by the directors (if that interest could result in the creation of a duty or interest that materially conflicts with the director or senior manager's duty to the society) ("Conflict of Interest"), must fully disclose to the other directors the nature and extent of the interest and abstain from voting on the resolution in respect of the matter. A director or senior manager who is subject to a Conflict of Interest must also leave a directors' meeting when the matter is being discussed unless asked by the other directors to be present to answer questions concerning the matter, and must not be present when the directors vote on the matter.

Conflicts of Interest must be evidenced in at least one of the following records:

  1. minutes of the meeting of directors;
  2. a consent resolution of directors; or
  3. a record addressed to the directors delivered to the society from the conflicted director.

The conflict of interest provisions do not apply to matters in respect of:

  1. payments to directors by the society for being a director or reimbursements to directors for reasonable expenses incurred by directors;
  2. indemnification payments allowed pursuant to the New Act; and
  3. the purchase of insurance for the benefit of directors.

Access to Records by Members

As of November 28, 2016, societies must provide access to the society's records to members in order for members to inspect the records required to be kept under the New Act. However, a society's bylaws may restrict who may have access to accounting records and records of directors' proceedings.


Societies must now have three directors and at least one of whom must be ordinarily resident in British Columbia. Directors must consent in writing to being directors of the society unless the director is designated, elected or appointed at a meeting at which the director is present (and does not refuse to act as a director). Directors must be qualified to be directors according to the requirements of the New Act and the bylaws of the society (if applicable).

Directors must:

  1. be at least 18 years old (or 16 or 17 years old, only if specified in the bylaws);
  2. capable of managing their own affairs;
  3. not an undischarged bankrupt; and
  4. not have been convicted of an offence involving fraud within the last 5 years or unless a pardon has been granted.

Under the New Act, societies may appoint one or more "senior managers" of the society to exercise the directors' authority to manage the activities or internal affairs of the society as a whole or in respect of a principal unit of a society. Senior managers must be qualified in the same way as directors, and must disclose Conflicts of Interest in the same way as directors (see above). Unless the bylaws state otherwise, a director of the society may also be the society's senior manager. A person in a society who, before today held a position in the society which carried authority to exercise the directors' authority in a similar fashion as a senior manager under the New Act, will be deemed to be a senior manager as of today.

Luckily, societies incorporated under the Old Act will not be subject to the changes to qualifications of directors and senior managers above until the Transition Deadline.


The New Act changes many rights and duties of members and directors of societies. Pre-existing societies will have to carefully consider their actions going forward and before transitioning under the New Act to ensure compliance with the requirements of the New Act that are in force. A detailed review of the societies' current bylaws, in order to assess compliance before transitioning and to begin the process of preparing for bylaw amendments, is crucial for the directors' of societies to undertake.

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

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
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).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions