The New Societies Act is Now in Force
Bill-24, the Societies Act (the “New Act”), received Royal Assent on May 4, 2015 and comes into force today, November 28, 2016. Every society incorporated under the predecessor to the New Act (the Society Act, the “Old Act”) must transition under the New Act before November 28, 2018 (2 years from the coming into force of the New Act, the “Transition Deadline”). The New Act will apply to societies in British Columbia, whether they have transitioned or not, as of today. Below are some highlights of the changes to the Old Act and a few options on transitioning.
Highlights of Changes
The New Act has many benefits but also some drawbacks compared to the Old Act. One major change is the addition of a new type of society called a “member-funded” society. A society may now incorporate as a member-funded society, and a society incorporated under the Old Act may transition to being a member-funded society. Member funded societies have less onerous reporting requirements and oversight but aren’t allowed to receive public funding beyond a certain threshold. Many professional associations, sports clubs, and golf courses are well suited to becoming member-funded societies.
Important changes for non-member funded societies include:
- Director remuneration must be set by bylaw
- Additional financial reporting rules
- Access to financial records by the public
- Requirements to provide information on money paid to directors, contractors and employees
- Rules on investment and borrowing of funds
- Stricter rules concerning disbursing funds to non-members
- Stricter conflict disclosure rules for directors and senior managers
- Ability to have 16 and 17 year old members and directors
- New position with additional liabilities (“Senior Manager”)
- Lower default threshold for the passing of special resolutions (2/3)
Generally speaking, now that the New Act is in force, there are two options for societies to effect a transition. Societies must prepare their current constitution and bylaws in electronic format (Word format) and then apply for transition to the registry’s “Evergreen” electronic filing system. Most importantly, before transitioning, a society must move any unalterable provisions from the constitution to the bylaws (unalterable provisions are no longer allowed in the constitution, only the society’s name and purpose).
Societies may also decide to amend their bylaws at the time they transition (in order to remain current with the New Act). This transition is ultimately the same as the previous transition except that the society must hold a meeting to pass a special resolution approving the amendment of the bylaws upon transitioning. Note that a society cannot amend its bylaws or constitution prior to transitioning, but only at the time they transition or afterwards.
A society that does not amend its bylaws at transition does not need to hold a meeting or pass a resolution of any kind to make the changes required to the constitution (ie. removing unalterable provisions).
In any event, it is prudent and recommended to seek advice when deciding to transition and if transitioning to become a member-funded society or not, and whether to amend your bylaws at or after transitioning. Until a society has dealt with transitioning, it is very important after today that the board of directors carefully assess all decisions made prior to the society transitioning under the New Act because some actions, although provided for under the Old Act or the societies bylaws, may now be contrary to the law and may have serious unintended consequences.