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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.

1. Members' Remote Participation in Meetings

In the former case (member participation through a communication facility), there is a physical meeting at a location and some members may be in attendance in person at that location. However, one or more (possibly hundreds) may instead participate in the meeting by communications hook-up. The member has a choice between attending the physical location and participating remotely. A person participating remotely in the meeting is deemed to be present at the meeting.

Members have the statutory right to participate in a meeting by a communications facility unless the corporation opts-out of or restricts the member's right to participate remotely, either generally or in specific circumstances. However, even if there is no opting-out, the corporation still decides, with respect to each meeting of members, whether to make such a communication facility available. If the communication facility is made available, it must permit all participants to communicate adequately with each other during the meeting. The communication facility could be by way of video-conference, Skype®, Webex® or other means. However, email exchanges would not meet the adequacy standard.

A corporation wanting to opt-out of or restrict the member's right to participate remotely must prohibit or restrict remote participation in the by-laws or, less commonly, the articles. If the by-laws contain rules opting out of or restricting remote participation or, conversely, lack appropriate restrictions, the board can amend or repeal any provisions it considers unsuitable with immediate effect. The members must, by ordinary resolution (requiring approval by a simple majority of the votes cast), confirm the amendment or repeal at the next meeting of members, failing which the amendment or repeal has no further effect after that meeting and may not be re-enacted by the board without member approval. If provided for in the articles, the provision can only be amended by special resolution of the members (requiring approval by at least two-thirds of the votes cast) and the filing of articles of amendment with Corporations Canada.

For example, by-laws should generally prohibit remote participation in the case of requisitioned meetings of members, in which the requisitionists call and conduct the meeting. The requisitionists would not have access to the corporation's communication facility and may not have financial resources to pay for a communication facility. Meetings conducted by requisitionists are uncommon but, where they are a possibility, the by-laws should prohibit remote participation by members at the meeting.

2. Virtual Meetings of Members

In a virtual meeting, the meeting is held entirely by a telephonic, electronic or other communication facility. Members cannot otherwise attend the meeting at any specific physical location. The chairperson could be conducting the meeting from his or her office, home, cottage or overseas location. The only option for members (and any directors participating at the meeting) is to participate by way of the corporation's chosen communication facility, which, again, could be by video-conference, Skype®, Webex® or other means.

Again, as in the case of remote participation by members at the meeting, the corporation's chosen communication facility for the virtual meeting must permit all participants to communicate adequately with each other during the meeting.

In contrast to remote participation by members, a corporation can only hold a virtual meeting of members if the by-laws (or less commonly, the articles) specifically provide for it. Stated otherwise, the default rule is that a corporation cannot have a virtual meeting in place of a physical meeting. If there is no provision for a virtual meeting in the by-laws, the board can add it with immediate effect and seek confirmation of the by-law amendment at the next meeting (or virtual meeting) of members.

3. Electronic Voting

Unless the by-laws or articles otherwise provide, any member (entitled to vote) participating at a meeting of members (whether a physical meeting with remote member participation or a virtual meeting) may vote by means of the telephonic, electronic or other communication facility that the corporation has made available for that purpose. The facility must:

● enable the vote to be gathered in a manner that permits its subsequent verification; and

● permit the tallied vote to be presented to the corporation without it being possible for the corporation to identify how the person voted.

The same standard applies where the vote is held entirely by means of a telephonic, electronic or other communication facility that the corporation has made available for that purpose. In effect, the voting must create the functional equivalent of a secret ballot. This rules out most simple conference calls as a compliant form of telephonic meeting. However, a conference call combined with electronic voting by computer may be compliant if the corporation does not directly gather the tallied votes. Rather, a third party contractor (including the corporation's public accountant or lawyer) could gather the tallied votes without identifying to the corporation how each member voted.

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