By now, most BC societies have received formal notice from BC Registry Services that the new BC Societies Act will come into force on November 28th, 2016 – less than two weeks. This blogpost will provide you with some practical guidance for transition.
Your organization has two years from that date to transition to comply with the new legislation but you will want to get everything done at your next Annual General Meeting. Why? After November 28th, 2016 your organization will be “paused” – meaning that you will not be able to make any amendments to your Bylaws until you apply for transition.
Steps Before Transition
“Transition” refers to your transition application. This is the formal application that your organization will make to BC Registry Services to become compliant with the new Societies Act. The application will include your Constitution, Bylaws, various forms, and an indication of whether your organization is “member-funded” or “public-funded”.
When you submit your transition application, the Constitution that you submit must contain only the Name and Purposes of your organization and these must match exactly what the government has on file. So, before you prepare for transition and to check what the government currently has on file, organizations should order a transition package from the government for $40. This is recommended.
Also, organizations will not be permitted to submit a transition application if their annual report filings are not up-to-date. Prior to applying for transition, each organization should make sure all recent annual report filings have been submitted.
Member-Funded vs. Public-Funded
Prior to transition, your organization should also determine whether it is “member-funded” or “public-funded” by reviewing your financials. We’ve written about the differences between these two types of societies in a previous blogpost.
In the transition application, you will be able to indicate whether your organization is member-funded or public-funded. Most sport organizations will want to be member-funded – which means there is less responsibility to disclose records and finances. However, many PSOs will almost certainly be public-funded. Being classified as “public-funded” may also be required in order to acquire grants or other funding. Also, member-funded societies cannot be charities – so if your organization is a charity and wants to maintain that designation then it will need to be a public-funded society.
The Constitution that you submit as part of the transition application must only contain your organization’s Name and Purposes. Any other clauses that are currently in your Constitution must be moved, unchanged, from the Constitution to the Bylaws. If any clause was previously tagged as “unalterable”, this clause must still be moved to the Bylaws but with an additional sentence: “This provision was previously unalterable”. You will be able to remove or modify these clauses at a future meeting of Members.
Importantly, the Name and Purposes that are in your Constitution cannot be changed during the transition application. We are working with one organization that believed they changed their Purposes in 2012. After receiving the transition package from the government, we learned that the 2012 updates to the Constitution were never formally submitted. So, we are required to use that organization’s original Purposes from 1976 – the Purposes that are on file – as part of their transition application. These Purposes can be changed at a later date but not during the transition application.
Transition can take two forms:
- You can ask the government for your transition package and view the current Bylaws the government has on file for your organization. Then, you can consolidate everything they have and create their version of your current Bylaws. Remember, the version of your Bylaws that you have been using is not necessarily the version of your Bylaws that the government has on file for your organization. After approval by the Members, you can submit the consolidated version of the Bylaws along with any updates and amendments needed to comply with the Societies Act; or
- You can prepare an entirely new set of Bylaws, have them approved by the Members, and submit them to the government to replace whatever they have on file for your organization
We recommend the second option.
We recommend the second option.
Amendments to Bylaws have been discussed in our previous blogposts on the topic. To summarize:
- A Special Resolution is now 2/3rds majority rather than 3/4ths majority
- New terminology – Special Meetings are now General Meetings
- The new Societies Act gives additional protections to an employee designated as a “Senior Manager” (e.g., an Executive Director or CEO)
- Proxy voting must be permitted by the Bylaws. If the Bylaws are silent, proxy voting is not permitted
- Members may make a “member proposal” to amend the Bylaws
- Record keeping requirements are more extensive
- Everyone has broader access to records (e.g., the public can obtain most financials of a public-funded society, and members have access to all records in both member-funded and public-funded societies – although some access can be restricted)
- Remuneration of employees making over $75,000 must be disclosed (but only for public-funded societies)
- Dissolution – member-funded societies can have assets distributed to members upon dissolution
- One member = one vote – this provision has not changed from the old Society Act
Transition should occur at the next scheduled Annual General Meeting of the members because organizations cannot make any changes or amendments to their Bylaws until transition has completed. The transition application can be passed at the meeting by 2/3rds special resolution – rather than 3/4ths. If your organization chooses to call a special meeting of the members (and not wait for the Annual General Meeting), the special meeting must be called with proper notice outlined in your current bylaws.
As part of your transition application, the government will automatically include your current Directors and registered address that they have on file for your organization. If this information is out-of-date, it can be changed prior to submitting the transition application, or after transition has been completed (by filing separate forms and paying a fee). This information cannot be changed as part of the transition application.
We have helped a number of BC sport organizations in their transition process and can certainly help your organization as well. Please contact KRL@sportlaw.ca with any questions.