Published May 20, 2015
The new BC Societies Act is expected to come into force within 18 months (by November 2016) and will replace the existing BC Society Act – the legislation under which sport organizations in BC are incorporated. The new Act is expected to introduce many changes to how sport organizations in BC operate. Organizations will have two years to transition once the new Act is ‘in force’.
The BC Societies Act is a ‘made-in-BC’ piece of legislation that evolved after the provincial government hosted information sessions and received over 200 unique submissions in response to the proposed Act. The new Societies Act is very different from other new not-for-profit Acts including the federal NFP Act and Ontario’s ONCA.
We have added a BC-specific webpage to our site that will archive our updates and writings on the new Societies Act. BC organizations may also be able to learn lessons from the transition process that has completed federally and is continuing in Ontario.
The major change that will likely affect sport organizations is the special designation of “member-funded society” which may be applied if the organization is primarily funded by members for the benefit of members. An organization can obtain this special designation – by adding a statement to its Constitution when the organization transitions and not before – if the public funds accepted by the organization (i.e., funds from the government) are less than a certain yet-to-be-specified amount in the regulations.
Member-funded societies are not required to disclose their financial statements, and are not required to report on the remuneration for Directors and Employees. Notably, organizations that are publically-funded must disclose (without names or identifying information) the remuneration received by Directors and Employees if such amount is greater than a number yet-to-be-specified in the regulations. A member-funded society that is dissolved may distribute its funds to a single member or multiple members as the bylaws may specify.
Other important changes include:
- Special Resolution – the previous threshold for a special resolution was 75% of the votes cast. This number has been lowered to 2/3rds of the votes cast (or 66.6%) if the vote is held at a general meeting or, if the bylaws permit, by another means of communication (e.g., email or other electronic means)
- Directors – minimum qualifications have now been added for Directors and, unlike the federal NFP Act where (with few exceptions) Directors must be directly elected by the Members, the Societies Act permits ex-officio Directors – individuals may be a Director of the organization by virtue of having another office with another organization.
- Meetings and Proposals – members holding 10% of the votes of the organization may still call a meeting of the Members – but this number can now be lowered in the bylaws. Members may also submit a proposal (such as a bylaws amendment) at a meeting of the Members if the proposal is signed by 5% of the voting Members. The society can reject the proposal only under certain circumstances (e.g., if it was a repeat of a failed proposal from a previous meeting)
- Voting – the Societies Act retains the ‘one member, one vote’ provision of the old Act, but eliminates the provision that voting members must outnumber non-voting members. The new Act also specifies that an individual (or delegate) can represent the member at a meeting. The organization is also able, in its bylaws, to restrict voting for Directors only to members with a certain attribute. For example, an organization could have “paying members” and “non-paying members” and even though all those members could be considered voting members, the organization can restrict the election for certain Directors to only the “paying members”.
- Other Changes – there are many other minor changes that may affect the governance of BC sport organizations (such as record keeping, disclose of remuneration for employees (if applicable), the creation of a senior manager position (potentially an Executive Director or other steward who has the powers of a Director)), and possibly more once the regulations are released before the Act comes into force.
Filing and Transition
Many of the filing and transition provisions will be determined when the regulations are released. It is expected that the BC government will have an online (and searchable) registry to which organizations must upload their bylaws and other required documents. Amendments would also be added to the registry annually.
Based on our previous experience assisting over 80 federal organizations transition to compliance with the NFP Act, and our continued learning with helping Ontario-based organizations prepare for the ONCA, we are recommending that BC sport organizations START NOW in their preparation for the transition process. Further, while federal and Ontario organizations were given three years from the date their legislation came into force, BC organizations are only being given two years.
We recommend the following starting points for BC organizations:
- Identify a ‘Champion’. An individual, Director, or staff person who is familiar with governance issues, legislation compliance, and the organization’s current bylaws. Perhaps this person paid close attention to (or worked with) the national organization’s transition to compliance at the federal level. This person will ideally be leading the transition process over the next several years.
- Appoint a Governance Committee. Some organizations might already have one. This Committee should contain a minimum of three people (the Champion and two others) and we have experienced that any more than five people on such a committee becomes unworkable
- Read the Act. Remember that it is not yet in force.
- Determine how much work there is to be done. What work can/should be done before the Act comes into force? We recommend doing a lot of preliminary work to the point of preparing a working draft of newly-compliant bylaws that members agree with. Remember that once the Act comes into force, your organization will need the members to approve the transition documents and new bylaws. It’s possible they will not approve some proposed changes if they are not consulted beforehand. We’ve learned that organizations that work quickly to gain member support and consult stakeholders benefit greatly and end up transitioning much more smoothly
- Contact us! We have already worked with a couple of BC organizations in their governance restructuring and we have years of experience helping organizations transition to compliance with incorporation legislation. Our services are affordable and can include preparing a compliant bylaws draft, providing feedback on bylaws changes, assisting with member engagement, helping you figure out where to start, or simply guiding you along the way.
Kevin Lawrie – KRL@sportlaw.ca
Steve Indig – SJI@sportlaw.ca