By-laws, Policies & Governance

If you are taking a moment to read this thanks. Please keep reading because what you will find here is, I hope, a simple explanation to how by-laws and policies work together and are used to create a governance structure for a Not-for-profit organizations (NFPO) like STLHE. Often called dry-laws, there is no doubt that they can be boring. But, they are very important because they insure that everything about a NFPO works like a well-oiled machine. This is because members of an NFPO don’t make their by-laws up; there are set out by an Act of Parliament – Canada’s Not-for-profit Corporations Act.

Creating by-laws.
Everything that is required of a NFPO is included in the Act and the things it covers range from the inane to the obvious. Essentially everything that can happen, and how to deal with it, is covered by the Act. The Act is so comprehensive that a NFPO only needs two items in their by-laws: (1) a set conditions of membership and (2) the mechanism for notice of meetings to members who are entitled to vote to satisfy the registration requirements of a NFPO with Industry Canada. If there is nothing else, every default by-law included in the Act is applicable. In creating by-laws for an NFPO there is a balance between what needs to be repeated or modified from the Act and included in the corporation’s by-laws and creation of unique by-laws specific to how the NFPO functions. To assist, Industry Canada provides a sample set of by-laws and and expanded sets for special circumstances. It’s always better to use a clause that already exists among the common choices and the NFPO cuts and pastes as required. The by-laws don’t need to be bloated with every detail, and instead the more detailed information, which remains consistent to the act, is placed in policies along with the nitty-gritty of how things get done. The trick is to balance the by-law content with the most essential details but making everyone aware that the Act is the final set of rules for the NFPO. Any changes in the by-laws of a NFPO have to be submitted, along with a fee, to Industry Canada.

By-laws contain the items of governance; executive structure, Board structure, membership criteria and requirements, and committee structure are examples. How these items are implemented is usually found either in the policies of the NFPO or in some sort of operations and procedures manual. In the past, STLHE (referred to as the Corporation in the by-laws) used an operations manual. With the new by-laws the Society has shifted to individual policy statements that focus on particular aspects of how the STLHE governs itself. These new policies are a composite of policies and procedures that were contained in the old STLHE by-laws, other documents – including Board minutes, and the contents of the operations manual. By using policies the Society has considerably more flexibility in its governance by allowing for changes without complete revision and filing of new by-laws with Industry Canada. This increased flexibility does not diminish the role of the Society’s members and the accountability of the Board to its members. The members at the Annual General Meeting of the Society must approve changes in by-laws and policies; only by-law changes have to be submitted (along with a fee for filing) to Industry Canada. An example would be membership fees. Any changes to the fees stated in Policy 1 – Memberships and would require a special vote with a two-thirds majority at the Annual General Meeting of the Society. This change would have no effect on the by-laws concerning membership.

The Act also creates three main categories of individuals. The most fundamental is the member. Directors are elected by members and carry out the business of the NFPO on their behalf and the Board consists of all the Directors. Another even more elite group are the Officers: the President, Vice-president etc. The Officers have very specific jobs defined by the members and they are the front line for getting things done. In our NFPO the Executive Committee consists of the Officers and the chairs or EDC and the 3M Council and is empowered by the Board with all of its powers. Although Directors and Officers need not be members of the organization STLHE requires this of both. The Society also has a set of Standing Committees that have been charged with carrying certain aspects of the Society’s business and Chairs of Standing Committees are Directors on the Board. The term of office for Directors and Officers is four years and their election must occur at the Annual General Meeting of the Society.

So there you have it, and thanks for taking the time to read this.

Jon Houseman,
(July 22, 2014, updated January 6, 2016.)