View source for Reviewing Your Non-profit Society's Bylaws

{{REVIEWEDPLS | reviewer = [[Mary Childs]], [[Michael Blatchford]] and [[Steve Carey]] |date= November 2016}}
{{Transitioning an Existing Society TOC}}A non-profit society's bylaws set out the rules for governing and operating the society. When the new ''[[Societies Act]]'' became law on November 28, 2016, most existing societies had some bylaws that were inconsistent with the new Act. As of that date, those bylaws ceased to have effect. If you haven't yet had a chance to do so, conducting a review of your society's bylaws is highly recommended to harmonize them with the new Act. It also presents an opportunity to make positive organizational change.

==Options for reviewing your bylaws==

There are three ways to approach a review of your society's bylaws:

* '''Option 1:''' Revise your society's existing bylaws to align with the new Act.
* '''Option 2:''' Adopt the new model bylaws and revise them to fit your society's needs.
* '''Option 3:''' Undergo a detailed review of your society's vision and operations and use this opportunity to overhaul your bylaws.

The third option is the most ambitious. It also has the biggest payoff. You could think of it this way. Transitioning under the new Act presents an opportunity to do something that organizations rarely make time to do: take a detailed look at the organization’s governing documents and policies, and revise as needed to realize the organization's vision.

While the third option is encouraged, this guide focuses on the first two options, recognizing that many non-profits are constrained by time and resources.

{{PLSTipsbox
| text = <p>Why review your bylaws now?
* '''To minimize confusion.''' Having bylaws that conflict with the new ''Societies Act'' means that members and directors might be confused about what rules prevail.
* '''To reduce risk.''' Effectively, you can’t trust your bylaws between November 28, 2016 and when you conduct a review to ensure they are harmonized with the new Act.
* '''To take advantage of increased flexibility under the new Act.''' Even if you are generally satisfied with your society’s existing bylaws, you may want to take advantage of increased flexibility offered by the new Act in some areas.</p>
}}

===Option 1: Revise your society's existing bylaws===

This option features working through your society's current bylaws to consider whether provisions in the new ''Societies Act'' are at odds with the bylaws or offer options to adapt the bylaws to better fit your society's needs.

If your society currently uses the model bylaws under the old ''Society Act'', they may not need radical changes. The old model bylaws, often called '''Schedule B bylaws''' because they appeared in Schedule B of the old Act, are for the most part compliant with the new Act. That said, there are a few clauses in the Schedule B model bylaws that are somewhat in tension with the new Act: two are highlighted in the discussion below on [[Reviewing Your Non-profit Society's Bylaws#Conducting a clause-by-clause analysis|conducting a clause-by-clause analysis]].

As well, other clauses in the Schedule B bylaws don't take advantage of the flexibility provided under new Act. For example, under the new Act a society's directors have discretion to issue a debenture on borrowing funds, unless the bylaws restrict that discretion – which the Schedule B bylaws do, by requiring a special resolution of members to issue a debenture. So effectively that clause of the Schedule B bylaws curtails the flexibility introduced with the new Act.

For these reasons, even though those using the old Schedule B model bylaws may not need to make extensive changes, conducting a bylaw review is still recommended.

Alternatively, you could replace your bylaws with the new model bylaws, customizing them to your society's needs. Which brings us to option 2.

{{PLSTipsbox
| text = <p>If your society currently uses the model bylaws under the old ''Society Act'', often called Schedule B bylaws, there may not be many changes needed to your bylaws. The Schedule B bylaws – available as a [https://www2.gov.bc.ca/assets/gov/employment-business-and-economic-development/business-management/permits-licences-and-registration/registries-other-assets/schedule_b_bylaws.docx Word document] on the Corporate Registry's website – have a few clauses that are somewhat in tension with the new Act, and others that don't take advantage of the flexibility provided under the new Act. The section below on [[Reviewing Your Non-profit Society's Bylaws#Key clauses to consider|key clauses to consider]] highlights clauses to pay particular attention to if you are currently using the Schedule B bylaws.</p>
}}

===Option 2: Adopt the new model bylaws===

An option available to societies with the introduction of the new ''Societies Act'', instead of preparing a consolidated set of existing bylaws (with or without further revisions), is to adopt a new set of bylaws entirely. The new set could be the '''new model bylaws''' found in [https://canlii.ca/t/8z1m Schedule 1 of the Societies Regulation]; a [https://www2.gov.bc.ca/assets/gov/employment-business-and-economic-development/business-management/permits-licences-and-registration/registries-other-assets/model_bylaws.docx Word version] is available through the Corporate Registry website.

These model bylaws contain basic clauses for governing and operating a society – such as the conduct of meetings and the role of directors – that align with the new Act.

The model bylaws may be a good option for societies with a small membership that need a very simple structure or societies that need a temporary solution.

'''It is not recommended to adopt the model bylaws straight out of the box.''' The model bylaws will likely need several changes to reflect the specific needs of your society. Below in the section on [[Reviewing Your Non-profit Society's Bylaws#Key clauses to consider|key clauses to consider]] are some comments on provisions in the model bylaws to have a particularly close look at in considering whether they are a good fit for your society.

==Conducting a clause-by-clause analysis==

Whether you are working from your society's existing bylaws or the new model bylaws, you should work through each clause with an eye to two factors:

* Step 1: Does the clause align with the new Act?
* Step 2: Does the clause support the needs of your society?

===Example 1: Expelling a member===

Let’s look at an example. Bylaws often include a clause dealing with expelling a member.

The relevant provision in the new ''[[Societies Act]]'' reads:

<blockquote>'''Discipline and expulsion of member'''

'''70''' (1) The bylaws of a society may provide for the discipline or expulsion, or both, of members.

(2) Unless the bylaws provide otherwise, a member of a society may be disciplined or expelled by special resolution.

(3) Before a member of a society is disciplined or expelled under subsection (2) or the bylaws, the society must
:(a) send to the member written notice of the proposed discipline or expulsion, including reasons, and
:(b) give the member a reasonable opportunity to make representations to the society respecting the proposed discipline or expulsion.
</blockquote>

Let's assume the relevant provision in the society's existing bylaws was drawn from the old Schedule B model bylaws under the old ''Society Act'', which read:

<blockquote>'''Part 2 – Membership'''

'''8''' (1) A member may be expelled by a special resolution of the members passed at a general meeting.

(2) The notice of special resolution for expulsion must be accompanied by a brief statement of the reasons for the proposed expulsion.

(3) The person who is the subject of the proposed resolution for expulsion must be given an opportunity to be heard at the general meeting before the special resolution is put to a vote.</blockquote>

The new model bylaws do not address the expulsion or discipline of a member.

==== Step 1: Does the clause align with the new Act? ====

The wording in the existing bylaws is similar but slightly different from provision in new Act. The bylaw deals only with expulsion; the new Act deals with expulsion and discipline. The bylaw provides the member with "an opportunity to be heard at the general meeting"; the new Act provides the member with "a reasonable opportunity to make representations to the society", which is broader wording, not restricted to the general meeting or to an opportunity to say something.

There's an argument to make that the existing bylaw and the Act don't fully conflict; that is, that the Act '''extends''' the wording of the bylaw. But to whatever extent that the existing bylaw and the Act are in conflict, the Act would prevail.

==== Step 2: Does the clause support the needs of the society? ====

The new Act provides that a member can be disciplined or expelled by special resolution '''unless the bylaws provide otherwise'''. Consider whether the needs of your society would be better met by having a different procedure spelled out in the society bylaws, such as one involving a board of directors process.

If you are revising the existing bylaws, the options would be to:

* Delete the provision from the existing bylaws (and let the matter of expulsion or discipline of a member be governed by the provision in the Act).
* Revise the provision in the existing bylaws to provide a different procedure for dealing with expulsion or discipline of a member.

If you are working from the new model bylaws, the options would be to:

* Do nothing (and let the matter of expulsion or discipline of a member be governed by the provision in the Act).
* Add a provision outlining a different procedure for dealing with expulsion or discipline of a member.

===Example 2: Quorum at general meetings===

Let's look at a second example, dealing with quorum at general meetings.

The relevant provision in the new ''[[Societies Act]]'' reads:

<blockquote>'''Quorum'''

'''82''' (1) Subject to subsections (3) and (4), the quorum for the transaction of business at a general meeting is
:(a) 3 voting members, unless paragraph (b) of this subsection applies, or
:(b) if the bylaws provide for a quorum greater than 3 voting members, that quorum.

(2) The bylaws of a society may, for the purposes of subsection (1)(b), provide for a quorum that is greater than 3 voting members, by doing either of the following:
:(a) specifying the number of voting members that constitutes a quorum;
:(b) requiring that the quorum be calculated as a specified percentage of voting members or on another basis.

(3) If a society has fewer voting members than the quorum provided for in subsection (1), the quorum for the transaction of business at a general meeting is all of the voting members.

(4) The bylaws of a society may provide that if a general meeting is adjourned until a later date because a quorum is not present, and if, at the continuation of the adjourned meeting, a quorum is again not present, the voting members present constitute a quorum for the purposes of that meeting.
</blockquote>

Let's say the provision in the society's existing bylaws was drawn from the old Schedule B model bylaws, and reads:

<blockquote>'''16''' (3) A quorum is 3 members present or a greater number that the members may determine at a general meeting.</blockquote>

The provision in the new model bylaws reads:

<blockquote>'''3.7''' The quorum for the transaction of business at a general meeting is 3 voting members or 10% of the voting members, whichever is greater.
</blockquote>

==== Step 1: Does the clause align with the new Act? ====

There are some issues arising from the society's existing bylaws when read together with the relevant provision in the new Act:

* The existing bylaws refer to "members present". The provision in the new Act refers to "voting members".
* The provision in the new Act contemplates the bylaws specifying the number of voting members or requiring a calculation as a percentage of voting members or on another basis. Yet the existing bylaws say "or a greater number that the members may determine at a general meeting". That wording does not specify a number of voting members or a calculation. Which places the wording in the existing bylaws somewhat in tension with the wording of the new Act.

==== Step 2: Does the clause support the needs of the society? ====

Let's turn our attention to the quorum provision in the new model bylaws. The bylaw provides for a quorum of 3 voting members or 10% of voting members, whichever is greater. Consider whether 3 voting members is too few for your society, what percentage of voting members might be a good fit for your society, and whether a different mechanism to determine quorum (so long as it complied with the Act) would be preferable.

For example, for societies with larger memberships, 10% can be hard to achieve. For a society with 2,000 members, 10% is 200 people – a very large number to try to get out to an AGM. A higher fixed number and a lower percentage – say, 20 voting members or 2% of voting members – could be a better fit for a society of that size.

==Key clauses to consider==

This section covers some of the key clauses to consider in conducting a bylaw review. It is organized based on the parts in the new model bylaws. '''This list is not intended to be exhaustive''', but rather to help you get started on your bylaw review.

===Members===

{|  class="wikitable"
!  | <b>Item</b>
!   | <b>Provision in new Act</b>
!  | <b>Scope of what bylaws can or must do</b>
!   | <b>Implications for your bylaws </b>
|-  valign="top"
| style="width:100px"|<b>Classes of membership</b>
| Society can have more than one class of members. If it does, at least one class must be voting members.
| Bylaws must set out rights and obligations of each class of members.
| Under old Act, non-voting members had to be fewer in number than voting members. That restriction has been removed in new Act.
|-   valign="top"
| <b>Application for membership</b>
| Bylaws must provide for how members are admitted to membership.
| Bylaws must provide procedure.
| New model bylaws provide that a person may apply to board and becomes a member on board’s acceptance of application. Consider whether more formal application and approval process is needed.
|-  valign="top"
| <b>Age of members</b>
| An individual under age 19 may be admitted as a member.
| Bylaws may provide otherwise.
| 
|-   valign="top"
| <b>Membership dues</b>
| Bylaws must provide any rights and obligations arising from membership.
| If there are membership dues, bylaws must provide for how they are determined.
| New model bylaws provide that directors determine annual membership dues. Old Schedule B model bylaws provided that directors determined first annual membership dues, and after dues were determined by members at AGM.
|-  valign="top"
| <b>Transferability</b>
| Membership is non-transferable.
| Bylaws may provide otherwise.
| 
|-   valign="top"
| <b>Expulsion of members</b>
| Member may be disciplined or expelled by special resolution. Society must send member notice, including reasons, and give member opportunity to respond.
| Bylaws may provide otherwise.
| New model bylaws are silent. Old Schedule B model bylaws had provisions that were similar but slightly different from wording in new Act.
|}

=== Members' meetings === 
{|  class="wikitable"
!  | <b>Item</b>
!   | <b>Provision in new Act</b>
!  | <b>Scope of what bylaws can or must do</b>
!   | <b>Implications for your bylaws </b>
|-  valign="top"
| style="width:100px"|<strong>Timing of AGM</strong>
| An AGM must be held in each calendar year (requirement under old Act that AGM be held within 15 months of last AGM is removed).
| New model bylaws say timing of AGM is at director's discretion. Old Schedule B model bylaws included requirement that AGM be held within 15 months of last AGM.
| If using old Schedule B model bylaws, consider removing requirement that AGM be held within 15 months of last AGM.
|-   valign="top"
| <strong>Notice of general meetings</strong>
| Notice of date, time and location of general meeting must be sent to every member at least 14 days before meeting.
| Bylaws may provide a different notice period of at least 7 days and not more than 60 days before meeting. For societies with more than 250 members, bylaws may permit a new alternate notice mechanism (featuring emailing members and publishing notice on society website).
| Consider reducing notice period for general meetings to as few as 7 days. For societies with more than 250 members, consider adding clause permitting new alternate notice mechanism.
|-  valign="top"
| <strong>Quorum at general meetings</strong>
| Quorum is 3 voting members or a greater number if bylaws provide.
| Bylaws may provide for a quorum that is greater than 3 voting members by specifying the number of voting members or that it be calculated as a percentage or on another basis. New model bylaws provide for quorum of 3 voting members or 10% of voting members, whichever is greater.
| If considering the new model bylaws provision, consider whether 3 voting members is too few for your society, and what percentage might be a good fit for your society (e.g., for societies with larger memberships, 10% can be hard to achieve).
|-   valign="top"
| <strong>Participation at general meetings</strong>
| Members may participate by telephone or other communications medium if all persons participating are able to communicate with each other.
| Bylaws may provide otherwise. For example, bylaws could restrict or prohibit electronic participation at members' meetings.
| Act already states that society is not obligated to provide means for electronic participation to occur. Decision to hold a meeting by electronic means is at discretion of board.
|-  valign="top"
| <strong>Proxy voting</strong>
| Bylaws must specify whether proxy voting is permitted.
| Bylaws may permit proxy voting. Unless bylaws provide otherwise, a proxy is valid only at the meeting for which it is given.
| If you decide to permit proxy voting, consider establishing requirements in bylaw for proxies to be effective.
|-   valign="top"
| <strong>Voting threshold for a special resolution</strong>
| Voting threshold to pass a special resolution is 2/3 of votes cast at a member's meeting (under old Act, voting threshold was 3/4 of votes cast).
| Bylaws may set a higher voting threshold than 2/3, either generally or for specific resolutions. The voting threshold must be spelled out as unanimous, a fraction or percentage of votes cast, or as a formula.
| If your bylaws currently set a voting threshold of 3/4, that threshold prevails - unless you alter the bylaw. The exception is for a vote to remove a director from office - the new default threshold of 2/3 applies regardless of what bylaws say.
|}

===Directors===
{|  class="wikitable"
!  | <b>Item</b>
!  | <b>Provision in new Act</b>
!  | <b>Scope of what bylaws can or must do</b>
!  | <b>Implications for your bylaws </b>
|-  valign="top"
| style="width:100px"|<strong>Number of directors</strong>
| Society must have at least 3 directors, no maximum.
| Bylaws may set minimum and maximum number of directors (can't go below 3 directors, unless a member-funded society, which can have as few as 1 director).
| New model bylaws set minimum number of directors at 3 and maximum at 11. Old Schedule B model bylaws set minimum at 5 directors. A society is <b>not </b>required to set a minimum or maximum number of directors.
|-   valign="top"
| style="width:100px"|<strong>Election or appointment of directors</strong>
| Bylaws must provide for how directors are elected or appointed. New Act provides more flexibility for how directors are elected or appointed.
| Bylaws must provide procedure.
| New model bylaws provide that at each AGM, voting members elect or appoint board.
|-  valign="top"
| <b>Director's age </b>(effective in 2018 for existing societies)
| Individuals aged 16 or 17 can act as directors or senior managers, so long as majority of directors are at least age 18.
| Bylaws may set out additional qualifications for directors.
| If society wishes to have 16- or 17-year-old directors or senior managers, bylaws must provide authorization as of 2018 - consider adding this clause now.
|-   valign="top"
| <b>Director's  qualifications </b>(effective in 2018 for existing societies)
| Directors cannot be declared incapable, be undischarged bankrupt, or have committed certain crimes within last 5 years.
| Bylaws may set out additional qualifications for directors.
| 
|-  valign="top"
| <b>Director's term of office</b>
| Director's term of office expires at the close of the next AGM after election or appointment.
| Bylaws may provide otherwise.
| Bylaws could set different terms of office, such as two-year terms or staggered terms. If your society uses a board policy to set terms for longer than one year, that provision will need to be added to bylaws.
|-   valign="top"
| <b>Indemnification</b>
| Directors and senior managers who are found legally liable (e.g., for negligence) can be indemnified by society in certain situations.
| Bylaws may restrict society’s ability to indemnify directors and senior managers.
| Bylaws could prohibit the payment of indemnity, restrict the circumstances for its payment, or cap the amounts that may be paid.
|-  valign="top"
| <b>Removal of directors</b>
| Director may be removed by special resolution of members (despite any provision of bylaws) or by any method provided in bylaws. (Under old Act, director could only be removed by special resolution.)
| Bylaws may provide any method for removing directors.
| If bylaws don't currently have a mechanism for removing a director, consider adding a provision allowing directors to remove a director.
|}

=== Directors' meetings ===
{|  class="wikitable"
!  | <b>Item</b>
!  | <b>Provision in new Act</b>
!  | <b>Scope of what bylaws can or must do</b>
!  | <b>Implications for your bylaws </b>
|-  valign="top"
| style="width:100px"|<strong>Proceedings of directors</strong>
| Directors may pass directors' resolution without a meeting if all directors consent in writing.
| Bylaws can provide for a written consent resolution to be passed by a fewer number of directors or "in any other manner".
| New model bylaws are silent. Old Schedule B model bylaws require all directors to sign written consent resolution. Consider whether to take advantage of flexibility in new Act to have a fewer number of directors pass a written consent resolution.
|-   valign="top"
| <strong>Borrowing of funds</strong>
| Society may borrow funds at director's discretion. (Under old Act, issuing a debenture on borrowing funds required a special resolution of members.)
| Bylaws may limit directors' ability to borrow funds – e.g., by requiring an ordinary or special resolution of members before borrowing can occur.
| Old Schedule B model bylaws require a special resolution of members to issue a debenture (effectively curtailing the increased flexibility provided under new Act).
|-  valign="top"
| <strong>Investment of funds</strong>
| Society may invest its funds in any prudent investment.
| Bylaws may expand or limit society's power to invest – e.g., by expanding the permissible types of investment to include more risky ones.
| New model bylaws and old Schedule B model bylaws are both silent on investment of funds.
|}

=== Remuneration of directors and signing authority ===
 
{|  class="wikitable"
!  | <b>Item</b>
!  | <b>Provision in new Act</b>
!  | <b>Scope of what bylaws can or must do</b>
!  | <b>Implications for your bylaws </b>
|-  valign="top"
| style="width:100px"|<b>Director's remuneration</b> (effective in 2018 for existing societies)
| Directors can not be paid for being directors unless remuneration is authorized by society's bylaws.
| If society wishes to remunerate directors for being directors, bylaws must provide authorization. Bylaws could cap remuneration or impose conditions on payment.
| Given that in 2018, a society wishing to remunerate directors for being directors will require bylaw authorization to do so, it makes sense to consider such a bylaw now.
|-   valign="top"
| <b>Reimbursement of expenses</b> (effective in 2018 for existing societies)
| Directors' expenses, so long as they are reasonable, may be reimbursed.
| Bylaws may restrict or prohibit reimbursement. Bylaws could cap reimbursement or impose conditions on payment.
| New model bylaws are silent. Old Schedule B model bylaws require that directors "must be reimbursed for all expenses necessarily and reasonably incurred".
|}

=== Inspection of records ===

{|  class="wikitable"
!  | <b>Item</b>
!  | <b>Provision in new Act</b>
!  | <b>Scope of what bylaws can or must do</b>
!  | <b>Implications for your bylaws </b>
|-  valign="top"
| style="width:100px"|<b>Member access to records</b>
| Members are entitled to inspect all records of a society (as are directors).
| Bylaws may restrict member access to some records (accounting records and records of directors’ meetings except relating to conflicts disclosures).
| If your bylaws currently restrict member access to records more than is permitted by the new Act, you may want to remove or amend the bylaw.
|-   valign="top"
| <strong>Public access to records</strong>
| Public is entitled to receive a copy of society’s financial statements and auditor’s report.
| Bylaws may grant public access to more of the society's records (e.g., minutes of members' and directors' meetings, accounting records, and conflict disclosures), but not to society's register of members.
| New model bylaws and old Schedule B model bylaws are both silent on public access to records.
|}

== Bylaws that can't be amended ==

Note that on transition, there are two types of bylaws that cannot be amended:
* previously unalterable provisions, and
* reporting society provisions.

=== Previously unalterable provisions ===

On transition, any provisions that are in a society's constitution other than the name or purposes must be moved to the society’s bylaws. Any "unalterable" provisions must be identified as having been "previously unalterable". <strong>The unalterable provisions must not be changed on transition.</strong> Once a society has transitioned, the previously unalterable provisions can be altered by a special resolution of members. But on transition, the previously unalterable provisions cannot be amended.
{{PLSTipsbox
| text = <p>Any amendments to previously unalterable provisions must be approved by a special resolution passed or consented to <b>after </b>the society has filed its transition application. In other words, societies cannot approve changes to previously unalterable provisions to be effective after transition in a members' meeting held before the completion of the transition process. This two-step process (transition first, then consider amendment later) is intended to ensure that members have the opportunity to consider any amendments to these previously unalterable provisions, which typically incorporate fundamental principles or values of a society.</p>
}}

=== Reporting society provisions === 

If a society was a reporting society under the old <i>Society Act</i>, it must incorporate new reporting society provisions into its bylaws. Reporting societies under the old Act include hospitals, insurance societies and other societies that require government consent to incorporate, as well as any society that has a subsidiary. (A society is not reporting just because it files annual reports with the Corporate Registry.)

The new reporting society provisions, which are in [http://canlii.ca/t/8z1m Schedule 3 of the Societies Regulation], contain special rules, such as the requirement to have an auditor. These provisions <b>must be included without alteration </b>in the bylaws filed with the transition application. Once the provisions have been included in a society’s bylaws on transition, they can be altered like any other bylaw.

== How to amend bylaws or adopt new ones == 

To amend existing bylaws or adopt new bylaws on transition requires member approval by special resolution.

Changes made to bylaws before November 28, 2016 required approval by 3/4 of the votes cast at a members' meeting. After that date, changes to bylaws require approval by 2/3 of votes cast. The exception is if a society has a higher voting threshold for special resolutions (such as 3/4) set out in their bylaws. In that case, the higher threshold will apply, as increased thresholds are permitted under the new Act.

{{Transitioning an Existing Society Navbox}}

{{Creative Commons for Drew Jackson
|title = Transitioning an Existing Society: A How-to Guide for Non-profits in BC
|author = 
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