Preparing for Transition under the New Societies Act
|This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Mary Childs, Michael Blatchford and Steve Carey in November 2016.|
All existing societies in BC are required to "transition" within a two-year period from when the new Societies Act came into effect on November 28, 2016. Transitioning involves filing an application online. This section covers the steps a society should take to prepare for filing the transition application.
Optional preliminary step: Order a transition package
To file the transition application, you will need to submit an electronic version of the society's constitution and consolidated bylaws. To put this material together, you may want to order a transition package from the Corporate Registry for $40. This step is optional.
A transition package for a society includes certified copies of any documents that the Registry has on file for the society, including the original constitution, the original bylaws, and any special resolutions amending the society's constitution or bylaws. You can use the filings to create complete, consolidated versions of the constitution and bylaws (see steps 3 and 4 below).
You can order a transition package online.
Step 1. Consider member-funded society status
On transition, a society will be asked whether it wishes to designate itself as a member-funded society. A member-funded society is one that is funded primarily by its members to carry on activities for the benefit of its members.
To become a member-funded society, a society must meet a qualification test and get the approval of its members in a special resolution. If a society doesn’t adopt the member-funded society designation on transition, it will need a court order to do so later.
See the section "You need to decide whether to become a member-funded society" for the issues to consider in whether to adopt this designation.
Step 2. Update Corporate Registry filings
Ensure the society is up-to-date in its annual report filings with the Corporate Registry. If annual reports are outstanding, the society will not be able to transition.
Also ensure that the information on file with the Corporate Registry about the society's directors and registered office is up to date. The most current directors and registered office information will be automatically included in the society's transition application. If this information is inaccurate at the time of transition, it will need to be changed by making a separate filing after the society's transition is completed.
Under the new Act, it is no longer required that you provide the Corporate Registry with the residential address of each director. You can provide another address at which the director can usually be served with records during normal business hours (between 9 am and 4 pm, Monday to Friday).
Step 3. Prepare the society's constitution
To file the transition application, you will need to submit an electronic version of the society's constitution, with these modifications:
- The constitution must consist of only the society's name and purposes – which cannot be changed on transition. The name and purposes must be word-for-word as they appear in the society's constitution on file with the Corporate Registry.
- If the constitution currently includes any other provisions, these must be moved to the society's bylaws. For example, a society may have a provision in its constitution about remuneration of board members or about the disposition of its assets on dissolution. Such provisions must be moved to the society's bylaws as part of preparing for transition – see step 4 for more detail.
- If the society chooses to become a member-funded society (see step 1), add this statement to the constitution:
This society is a member-funded society. It is funded primarily by its members to carry on activities for the benefit of its members. On its liquidation or dissolution, this society may distribute its money and other property to its members.
Step 4. Prepare the society's consolidated bylaws
To file the transition application, you will need to submit a single, consolidated set of the society's bylaws in electronic form. In other words, you must create one document that reflects the original bylaws as well as all subsequent amendments to the bylaws filed with the Corporate Registry.
The document can be a word processing document or a PDF. If your society's constitution and bylaws are currently in a single document, you will need to separate them into two documents; the bylaws must be in a single, consolidated document.
To assemble this document, the transition package described in the optional preliminary step above can be very helpful. For societies that use the model bylaws in Schedule B of the old Society Act, a Word version of the Schedule B bylaws available on the Corporate Registry website can be used as a starting point to assemble your society’s consolidated bylaws. You will need to update that document with any amendments to the society's bylaws that were filed with the Corporate Registry.
Moving provisions from the society's constitution
For any provisions in the society’s constitution other than the society's name and purposes, move those provisions to the society's consolidated bylaws. You can add them to a new part at the end of the bylaws under a separate heading such as "Provisions from the Society's Pre-Transition Constitution" or "Former Constitutional Provisions".
If you are moving an "unalterable" provision from the society's constitution to the bylaws, mark that provision as having been "previously unalterable". For example, a society might have an unalterable provision in its constitution about remuneration of board members:
3. The society shall be carried on without purpose of gain for its members. No member of the board shall be paid any remuneration for services rendered to the society but may be paid his reasonable expenses. This paragraph is unalterable.
On moving this provision to the consolidated bylaws, it could look like this:
Provisions from the Society's Pre-Transition Constitution
40. The society shall be carried on without purpose of gain for its members. No member of the board shall be paid any remuneration for services rendered to the society but may be paid his reasonable expenses. This provision was previously unalterable.
Note that on transition, any previously unalterable provisions cannot be amended. Other provisions you move from your society's constitution to your bylaws (and other bylaws for that matter), can be amended on transition – with member approval. But any potential amendments to previously unalterable provisions must wait until after the society has filed its transition application.
If the society was a reporting society
If the society was a reporting society under the old Society Act, incorporate the new reporting society provisions into the consolidated bylaws.
Reporting societies under the old Society Act include hospitals, insurance societies and other societies that require government consent to incorporate, as well as any society that has a subsidiary. Approximately 1% of BC's 27,000 societies are reporting societies, and most can expect to be notified of this status by the Corporate Registry by November 2016. (A society is not reporting just because it files annual reports with the Corporate Registry.)
The new reporting society provisions are in Schedule 3 of the Societies Regulation. They contain special rules, such as the requirement to have an auditor.
A reporting society under the old Society Act must include these provisions without alteration 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.
Step 5. Review the society's bylaws
A society that rearranges its constitution and prepares consolidated bylaws as outlined above without any other amendments can proceed directly to file the transition application. The society does not require member approval and can proceed with the transition without holding a general meeting of members.
It is a best practice to seek board of directors approval at this stage.
There is one more step, though, that is highly recommended before filing a transition application. This is an ideal time to conduct a review of your society’s existing bylaws.
When the new Societies Act came into force on November 28, 2016, any provision in a society’s bylaws that is inconsistent with the new Act ceased to have effect. The matter is governed by the new Act.
Having bylaws that are inconsistent with the new Act is a 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. There are also opportunities to take advantage of the increased flexibility offered by the new Act.
The next section covers reviewing your society’s bylaws, including options, examples, and key clauses to consider in reviewing your bylaws.
|Transitioning an Existing Society: A How-to Guide for Non-profits in BC © Drew Jackson is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 Canada Licence.|