The New Societies Act
The Society Act is the current governing legislation for approximately 27,000 societies in BC. Next year, it will be replaced with the new Societies Act, and there will be some significant changes to societies and their governance as a result. There is no need to be intimidated — the new Societies Act will introduce some positive changes that BC societies will welcome. However, every society in BC will need to transition to meet the requirements of the new Act.
The new Societies Act has already received royal assent and will come into force sometime next year. Once the new Act comes into force, every existing society will have two years to submit a transition application to catch up under the new legislation. Two years might sound like a long time, but for societies that only meet at their AGMs once a year, that’s only two chances to pass a transition application.
There are many changes that will be brought in under the new Act; this article will attempt to gloss some of the major changes that will be introduced.
All societies will now file administrative changes electronically. Societies’ constitutions and bylaws will be available online. All societies will need to submit their transition applications electronically to come into compliance with the new Act.
Member Funded and Public Funded Societies
There will be two distinct categories of societies under the new Act: “member funded” and “publicly funded” societies. Member-funded societies are those societies that primarily receive funding from their members (by way of dues, for example) and offer services for those members. Many sports clubs are good examples of what could be considered member-funded societies. Publicly funded societies, on the other hand, tend to collect funds and distribute them for a public purpose. Charities and service organizations are examples of publicly funded societies.
There will be advantages to transitioning as a member funded society. In particular, member funded societies will have lower public disclosure requirements for their records and will only need one director. However, there will be limitations on how much public funding a member funded society can accept. ‘
To become a member funded society, you will need to submit in your transition application a statement that you wish to transition as such, and have that approved by your members. It is important to note that becoming a member funded society may limit your funding options and activities; if you are considering becoming a member funded society, seek legal advice.
Clarification of Accounting Rules
Bookkeepers and accountants for societies will be glad to know that the new Societies Act has clarified what records societies will need to keep. This will create clearer guidelines and hopefully streamline the tasks associated with bookkeeping.
It is important to note that there will be new rules around the disclosure of remuneration of employees, contractors, or paid directors of a society. A society will need to publicly disclose remuneration paid to its ten highest paid employees, contractors earning over a certain amount, and directors.
Publicly funded societies will have to make available to the public on request certain accounting records.
There are new rules being introduced on the qualification of directors. A person cannot qualify as a director if they have had a fraud conviction in the last 5 years or if they have any undischarged bankruptcies.
Under the new Act, “ex-officio” directors will specifically be allowed. Ex-officio directors are those who are directors not be election but because of a position they hold are have held. For example, many societies have a “past president” position on their board.
Directors will have to confirm their appointment in writing if they are not present at the meeting in which they are elected.
The new Act clarifies the fact that different classes of members can be created, both voting and non-voting. There can be more non-voting members than voting members.
Voting by proxy will be allowed if it is written into the bylaws.
Additionally, written consent resolutions will be able to be passed without holding physical general meetings.
Approval for special resolutions is currently set at 75% or more of votes cast. The new Act will change that to 66% unless your bylaws provide otherwise.
Many societies have “unalterable provisions” in their constitution. These will no longer be allowed. A constitution will contain the name and purposes of a society, and everything else will need to be part of the society’s bylaws. Previously unalterable provisions will need to be included in the society’s new bylaws and identified as “having previously been unalterable.” Societies, however, will be able to require a certain voting percentage to change specific provisions, up to unanimous consent.
When the original draft of the new Act was introduced, there was a public complaint oppression remedy that would allow any member of the public to apply to court to claim that a society had acted in an unfair or prejudicial matter towards them. That controversial section of the draft was removed, and now only a member of a society can apply to court claiming oppression.
To transition, all societies will need to submit a transition application. That may be as simple as adopting the standard bylaws provided with the new Act and altering your society’s constitution slightly. It may be more complex, as many societies are so far out of date that it will be a considerable amount of work to bring them up to speed. Ensure that you have a copy of your constitution and bylaws available for review. If not, you can request a copy from the registry.
Identify any issues that may come up for your society under the new Act. You may wish to retain the services of professionals, including a lawyer or a bookkeeper, in order to help bring you up to speed. You will need to consider whether you wish to transition as a member funded society. Ultimately, you will need to pass the transition application and file it with the registry.
Once the Act comes into force, you will not be able to make any changes to your society’s constitution and bylaws until you have transitioned. If you are planning some big changes in the near future, you may wish to wait to pass those until the new Act comes into force.
The new legislation is available at https://www.leg.bc.ca/40th4th/3rd_read/gov24-3.htm.