Rationale for, and summary of new by-laws (2016)

Rationale

One of the main reasons for updating our by-laws in 2014 was to meet the requirements of the Canada Not-for-profit Corporations Act that had become law a few years earlier and required continuance by the end of 2014. In preparing the by-laws for compliance Robert, Denise and I also revised the by-laws of the Society by removing redundancies and operational details to be included in Policies. These by-laws were approved by the members at the 2015 Annual General Meeting of the Society in Vancouver.

When our documents for compliance in 2014 were not accepted by Industry Canada the Board authorized retaining legal assistance to sort out the Society’s compliance with the new Act. Gowling WLG was engaged to review our 2015 by-laws and complete compliance requirements of the Society. A search of our corporate history revealed that since its initial incorporation in 2008 the Society had failed to submit most compliance documents and we were facing possible dissolution by the end of this year. Subject to submitting revised by-laws, those proposed here, a Certificate of Compliance was issued to the Society by Industry Canada on May 12, 2016.

Our 2015 by-laws were created using a cut-and-paste approach and the by-laws builder provided by Industry Canada. Gowling’s review of the by-laws indicated that while we had some aspects of our operation properly described ( i.e. Affiliated groups, and Two classes of members.) there were others that were missing or not consistent with the Act (i.e. Election of Officers and a renewable term for a Director). We adopted Gowling’s boiler-plate by-laws for Not-for-profits and then customized them to meet the unique requirements of the Society as described in the 2015 by-laws and developing Policies. This document represents the results of this collaborative process coordinated by myself between the Board and our legal advisors. In the following sections I’ll highlight the unique aspects of the Society within the by-laws and some of the challenges the new Act created and how we worked around them.

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Jon G. Houseman
STLHE Secretary

Article 1: Definitions and interpretation

The biggest change in a definition doesn’t appear here, but on the cover page of the by-laws: We are no longer referred to as a Corporation but a Society. Article 1 defines short terms for reference throughout the body of the by-laws. Unique to the Society are its Affiliated Groups and its Institutional Members. Our use of polices isn’t unique, but it is recognised here. 1.2(a)iii clarifies the meaning of person to include not just individuals and is important in consideration of Institutional members.

Article 2: Business of the Society

This article is essentially boiler-plate with two exceptions. The first, 2.5 Execution of Documents, is the requirement of two directors or officers to sign contracts etc. who these officers are is defined in policies.

The second is 2.6 Operating Policies that describe the operations of the Society. Any changes in by-laws must be filed with Industry Canada and require approval of all members at an Annual General Meeting. Placing operational matters in policies simplifies any changes the Society wished to make to its operations. Policies are a tool of the Board and are created by the Board. Some policies have an effect on members, especially items included in 12.2 Amendments Requiring Special Resolution where 2/3 of members are required to make changes. Such changes in policies would be approved by the Board subject to approval by the membership at an Annual General Meeting (i.e. membership dues).

Article 3: Board of Directors

To understand the unique nature of the governance structure of the Society it helps to understand what the “usual” Board of Directors consists of. A corporation would define a range for the number of Directors that sit on the Board, in our 2015 by-laws between 5 and 20 (3.2 Size of the Board), and the number of Directors that normally are on the Board, we identify 13. When there are vacancies on the Board they are filled at an Annual General Meeting. So, for example there might be 5 vacancies and 10 expressions of Interest and the members would choose five from the list of 10 and that would be the new Board. Only the members can elect a Director. In this “usual example” Directors are not voted in for the tasks they will be doing – that is decided amongst the directors after the Annual General Meeting.

Our Board is “unusual” in that we elect Directors with tasks already assigned. In essence all of our Directors have tasks assigned to them: Directors who are Chairs of the Standing Committees, Directors who are representing Constituencies, and Directors who are Officers – we have no directors-at-large on the STLHE Board. This complicates the balloting process, a problem that is not insurmountable and dealt with by the Nominations Committee. A further “unusual” situation with our Board is that the Constituencies have a representative, usually the Chair, on the Board (Board 6.2 (a) Constituencies) – this is in conflict with the Act that requires all members elect the Directors. I’ll discuss this when we take a look at Article 6 – Affiliated Groups.

3.3 Term of Directors is new. Our old bylaws elected a Director to a four year term. In discussions that the Board had, there was some concern that this term was too long and many Board members were resigning before the end of four years. The Board changed this to a two year term that could be renewed once. This is not possible under the Act because the members must renew a director, in effect re-elect them. There can be no automatic extensions of a term for a director. A compromise between four years and a untenable two year renewable term was a three year term for Directors. This is described in the bylaws as “up to three years” because there are Directors that will have different length terms. This accommodates the President-elect who is a Director with only a one year term and terms of the Constituency chairs that are often less than three years. It also allows the Board to change the length of a term without changing by-laws. If the Board decided that all terms should be two years they can do that. If there is a candidate for a Director’s position that requests a term less than three years this can also be accommodated. These different lengths of term become part of the Policies but respect the by-laws definition of up to three years.

Article 4: Meeting of Directors

All of this is boiler-plate with one change from our previous by-laws.

4.6 Votes to Govern has changed. In our old by-laws the Chair of the Board could not move or second motions, or vote unless to break a tie. On the advice of the lawyers and after discussion by the Board we changed this to allow the Chair to vote, make, and second motions. The old model gave inordinate power to the Chair to move a matter of business forward in the case of a tie vote and in this model if a tie vote does occur the motion is defeated.

Article 5: Committees

New Article typically found in all by-laws of Not-for-profits. This is all boiler-plate. It is under this section that in our Operating Policies we create the Executive Committee, Nominations Committee, and Standing Committees.

Article 6: Affiliated groups

This article is unique to STLHE and recognizes our two special groups that are defined in the Operating Policies of the Society: Constituencies and Special Interest Groups. Article 6 is based on our 2015 by-laws but is kept more generic by not naming either the current Constituencies or Special Interest Groups. This allows the Board to approve new Affiliated Groups without writing new by-laws and such changes are included in the Policies. The most important difference* between the Affiliated Group is 6.2(a) Constituencies are entitled to nominate one (1) Director for election to the Board.

Here is where we run into the conflict with the Act that I mentioned previously. The conflict is a subset of Society members in a constituency is electing a Director to the Board that should be elected by all members. The work around is that members ratify the constituency representative at the AGM – essentially voting with the result of acclaiming them as members of the Board.

*It should be noted that the Board is currently discussing what the differences are between a Constituency and a Special Interest Group – the only differences in the 2012 and 2015 by-laws being direct Board representation for Constituencies and Board representation through the Partnerships Chair for the Special Interest Groups.

Article 7: Officers

This article caused a number of problems and to understand them we need to revisit the hypothetical board of 13 members with no assigned tasks that we mentioned earlier (Article 3- Board of Directors). In this case the Directors would elect from amongst themselves an Officer, the Chairperson, of the Board (also called President) and this is the minimum number of Officers required under the Act. Amongst the Directors might be someone qualified as Secretary and the Board would elect them as an officer in that position. If no one had the skills required for a Treasurer they may go to an outside firm to manage their finances and name a person from that firm as an officer. In all cases, the “usual” is to have the Board elect the Officers and the Officers provide service to the Board and not directly to the membership. That is clearly not how STLHE, and many Not-for-profits, operate. So again a work around is required.

Our 2015 by-laws required that Officers be members of the Society and all Directors by definition must be members of the Society – the solution is to link Director and Officer together (7.1 Appointment). So for example, we would, under these new by-laws, have a Director and Treasurer – not a Treasurer; or have a Director and President – Not a President. Because they are Directors they must, to the greatest extent possible, be elected by the Membership. This “greatest extent” language allows the Board, under exceptional circumstances, to appoint an officer – an example, a Canada Revenue Agency audit for fraud may require the Board to make its own auditor, agent or attorney (7.7 Agents and Attorneys) an officer during the investigation. Sounds extreme but if the duties of an officer are required and there is no Director/member to do them there has to be a way to move forward.

The link between Director and Officer is further reinforced with identical descriptions of the term of up to three years and in 7.8(c) where a person elected as a Director and Officer cannot resign or be removed from being an officer and retain their membership on the Board as a Director.

7.3 President-Elect was also problematic under the Act. In our old by-laws the President-Elect automatically became President after a one year term. The Act doesn’t permit an automatic appointment of a person to a different officer position without an election. In the strict sense of the Act, the officer is elected by the Board but in our use of ‘Director and President’ he or she is elected by the membership. The language here is a work around and by accepting this by-law the members allow the Board to make this change. The language also allows for the rare exception that might arise when, after a year, the Board may not want the President-Elect to become President. The Board noted that there is potential redundancy here between 7.8(a)iv and chose to retain this redundancy.

Article 8: Public Accountant

New Article typically found in all by-laws of Not-for-profits. This is all boiler-plate.

Article 9: Protection of Directors, Officers and Others

New Article typically found in all by-laws of Not-for-profits. This is all boiler-plate.

Article 10: Membership

For the most part this article is boiler-plate except for our two classes of members: Individual and Institutional. Classes of members changed in the new Act and we were on the right path in our 2015 by-laws to limit ourselves to only two distinguished from each other by only individual members having voting rights at meetings of members. By doing this we can divide our members into different categories or types and asses different membership fees for these categories in Policies. Individual members all have the same rights and privileges and the membership fee is discounted by the circumstance of the member: student, retired, life-time etc. The same is possible for the dues of an Institutional Member who have rights and privileges, dues set by the nature of their institution, but no vote. These rights, privileges and dues are set in the Policies. Care has to be taken in the policies to be sure that changes in policy related to items in 12.2 Amendments Requiring a Special Resolution are approved by the membership by a 2/3 majority at the Annual General Meeting of the Society – in particular, but not exclusive to: 12.2(d) create a new class or group of members, 12.2(e) change a condition required for being a member, 12.2(f) change the designation of any class or group of Members or add, change or remove any rights and conditions of any such class or group.

Article 11: Meeting of Members

This is boiler-plate and reflects the content of the 2015 by-laws.

Article 12: Amendment of By-law

This is also boiler-plate and reflects our 2015 by-laws. The new Canada Not-for-profit Corporation Act included a new “Special resolution” and 12.2 Amendments Requiring a Special Resolution details when a special resolution, requiring a 2/3 majority of the votes, is required. These have been included in the proposed by-laws.

Article 13: Dispute Resolution

Existed in old by-laws and is all boiler-plate as written here.

Article 14: Miscellaneous

New but is boiler plate incorporating some elements of our 2015 by-laws. In 14.1 Method of Giving Notice the “last recorded address as recorded on the books of the Society” is the member’s database in the Wild Apricot system. Through the email blasts members are reminded to update their profiles to insure the currency of the membership database and that they receive adequate notice of Society Business.