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April 2018 Archives

Directors' Terms of Office: Creative Variations

Under the Canada Not-for-profit Corporations Act (the "CNCA"), the default rule is that each director is elected at an annual meeting to a one-year term expiring at the close of business of the ensuing annual meeting. If no annual meeting is held or no replacement directors are elected at the annual meeting, the incumbent directors remain in office. But corporations and their members have considerable flexibility to craft other arrangements.

Class-Designated Director Structures: Pros and Cons

Under the Canada Not-for-profit Corporations Act (the "CNCA"), the default rule is that all voting members elect the entire board of directors at each annual meeting. Some organizations vary this default rule because it can result in a loss of board continuity if the entire, or substantially the entire, board is replaced at one annual meeting or because the default rule can expose the organization to a hostile take-over. The possibility of a hostile take-over is much greater in an organization in which there is a large membership body but a low membership turn-out at elections. In these conditions, there is widespread member apathy. Apathy creates an opportunity for a small group (measured as a proportion of the overall membership) to organize a coup - particularly if proxies can be used to obtain votes from members who are too indifferent to attend in person or who can be recruited by the dissident group to become members specifically to support the dissident slate of directors.

Checklist for By-Laws of a Federal NFP Corporation

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 (the "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. Typical areas covered by by-laws are set out below.

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