On November 23, 2015, the Lieutenant Governor in Council issued Order No. 673, which provided that the British Columbia Societies Act (the “New Act”) will come into force on November 28, 2016, replacing the existing Society Act (the “Existing Act”). Order No. 673 also introduced the new Societies Regulation (the “Regulation”) which provides model bylaws for societies under the New Act and clarifies the funding threshold for a society to qualify as a “member-funded society”, among other things. The Regulation will also come into force on November 28, 2016.
The New Act is intended to provide greater flexibility to the internal governance of not-for-profit organizations, while enhancing accountability measures among charities and publicly-funded societies. For further details on the New Act, please see our previous article here, well as the following overview released by the British Columbia Registry summarizing the changes to be implemented by the New Act.
Existing societies are required to transition under the New Act by November 28, 2018, being two years after the New Act comes into force. To transition, a society will need to file a transition application consisting of the society’s constitution and bylaws (modified to comply with the New Act), and a statement of directors and registered office for the society.
Any society incorporated on or after November 28, 2016 will be incorporated under the provisions of the New Act.
The Regulation addresses a number of important issues, including:
- the fees payable for the inspection of records and financial statements;
- the manner in which societies must report on the remuneration of directors, employees and contractors (a new requirement for publicly-funded societies);
- the threshold amount of remuneration for an employee or contractor (being $75,000)which will require a society to include such remuneration in its financial statements;
- clarification of the funding threshold for certain societies to be considered member-funded societies (which are subject to fewer reporting requirements and which exist for the benefit of their members);
- prohibitions on certain types of societies being considered member-funded societies
- providing specific provisions relating to reporting societies under the New Act; and
- providing new model bylawswhich may be adopted by an existing or new society.
Member-Funded Societies versus Publicly Funded Societies
An important distinction under the New Act is between member-funded and publicly funded societies. Publicly funded societies, such as charities, will be subject to greater accountability and transparency measures from a corporate governance perspective. Societies should consider how they are currently classified and whether they wish to transition (if permitted) as a member-funded or publicly funded society.
Section 12 of the Regulation clarifies the type and amount of funding which distinguishes a member- funded society from a publicly funded society. A society will not be considered a member-funded society under the New Act if it receives public donations or government funding (or a combination of both) in excess of $20,000 or 10% of the society’s gross income (whichever is greater) over the course of the society’s two previous financial years.
Further, the Regulation states that the following types of societies will not be considered to be member- funded societies under the New Act:
- societies that receive loans or grants from the British Columbia Housing Management Commission;
- societies that are or have been service providers under the Community Living Authority Act; and
- societies that are authorities under the Independent School Act, and have received a grant under that Act for the previous school year.
Similar to the Existing Act, the legislature has seen fit to provide model bylaws. These are intended to provide existing and prospective societies acting on a limited budget the option to adopt basic bylaws while ensuring compliance with the New Act. A society is free to adopt the new model bylaws in whole or in part, or may choose to draft and adopt its own completely unique bylaws.
There are a number of substantial changes between the old model bylaws and the new version, and it will be for each society to decide whether they want to adopt any changes not strictly required by the New Act. Any society wishing to adopt the new model bylaws should review them in detail to ensure they do not conflict with the current or intended objects and operations of the society. Some of the changes in the new model bylaws include:
- annual membership dues are determined by the directors (previously these were determined, after the first year, by the members at the annual general meeting);
- members are held to be not in good standing if they have failed to pay their annual membership dues only (previously this also applied to any unpaid debt due and owing to the society);
- the membership of a member not in good standing terminates after 6 months (previously 12 months);
- there is no provision in the new model bylaws dealing with the expulsion of a member; and
- members at a general meeting can request for a vote to be by secret ballot (previously voting was always by show of hands).
Lawson Lundell looks forward to assisting both existing clients and new clients with respect to the new regime, including advising existing societies on the transition of their organizations under the new legislation.
A full copy of Bill 24, setting out the text of the New Act, may be found here.
A full copy of the Societies Regulation, including the model bylaws, may be found here (under Order in Council 673).
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