The Canada Not-for-profit Corporations CNCA ("CNCA") entitles members of a corporation who hold at least 5% of the votes that may be cast at a meeting of members sought to be held (or such lower proportion as is set out in the by-laws or, less commonly, the articles) to requisition the meeting to be held. A requisition allows the threshold proportion of members to force the corporation to hold the meeting. It is an alternative to a member applying to for a court-ordered meeting of members. Indeed, members should always consider a member-requisitioned meeting before seeking a court-ordered meeting, as the courts strongly favour members exhausting their internal remedies before seeking judicial intervention in the affairs of the corporation.
Requisitioned Meetings of Members
Overview of Methods of Absentee Voting
Absentee voting refers to any permitted system whereby a member of a corporation can vote at a meeting of members, even though the member is not present in person at the meeting. Historically, voting by proxy was the only permitted form of absentee voting. However, as a result of advances in communications technology, modern corporate legislation has embraced new methods of absentee voting, while retaining older methods.
Electronic vs. Virtual Meetings of Members
The Canada Not-for-profit Corporations Act ("CNCA") makes an important distinction between:
(a) member participation at a meeting of members through telephonic, electronic or other communication facility; and
(b) virtual meetings - where the meeting of members is held entirely by means of a telephonic, electronic or other communication facility.
What follows explores the similarities and differences between these two ways of conducting a meeting of members.
Court-Ordered Meetings under the CNCA
The Canada Not-for-profit Corporations Act ("CNCA") permits any director or any member entitled to vote at a meeting of members (or the Director appointed under the CNCA) to apply to the court for an order that a meeting of members be called, held and conducted in such manner as the court directs.
Methods of Giving Notice to Members under the CNCA
A corporation must give notice of the time and place of a meeting of members to each of its members entitled to vote at the meeting. The regulations under the Canada Not-for-profit Corporations Act ("Act") prescribe certain permitted methods set out in the following table.
Disciplining and Expelling Members under the CNCA
Under the Canada Not-for-profit Corporations Act, the articles or by-laws of a not-for-profit ("NFP") corporation may provide that an organ of the corporation has the power to discipline a member or terminate a membership. Notably, this disciplinary provision is opt-in. The decision-making organ can consist of the directors, a committee of directors or a committee of members of the corporation. Presumably, all of the members or all of the voting members could also comprise a committee of members for this purpose.
Rules for Making, Amending or Repealing By-laws under the CNCA
By-laws set out the governance rules of a not-for-profit ("NFP") corporation. The by-laws of a corporation incorporated, continued or amalgamated under the Canada Not-for-profit Corporations Act may include any provision relating to the activities or affairs of the corporation or the rights and powers of the corporation, its members, directors and officers. The following blog post describes the rules for making, amending and repealing by-laws under the Act.
Member Proposals Under the CNCA
The Canada Not-for-profit Corporations Act entitles any member who has the right to vote at an annual meeting to submit a member proposal to the corporation, which proposal would be raised as special business at the meeting. The member is also entitled to discuss at the meeting any matter with respect to which the member would have been entitled to submit a proposal.
A corporation cannot contract out of this statutory right in favour of members.
The Perils of Inadequately Documented Affiliations
In Asian Outreach Canada v. Hutchinson (a 1999 decision), the Ontario Superior Court of Justice declined to issue interlocutory injunctions against the former and current affiliates of a foreign religious organization. The case demonstrates the perils of operating through affiliates unless the relationship is adequately documented.
Failure to Appoint an Auditor is not Oppression
In Dalpadado v. North Bend Land Society (released May 2018), the Supreme Court of British Columbia held that the failure of a non-profit corporation to have an annual audit, although not compliant with its legal obligations, was not in itself oppressive to its members.