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Unanimous Member Agreements and their Uses

The Canada Not-for-profit Corporations Act permits the members of non-soliciting corporations to enter into a unanimous member agreement ("UMA"). If the corporation has only one member, it may sign a unanimous member declaration ("UMD") that is deemed to be a UMA. As the name makes clear, all members of the corporation (including non-voting members) must be parties to the UMA. A UMA is an otherwise lawful written agreement that restricts the powers of the directors to manage, or supervise the management of, the activities and affairs of the non-soliciting corporation.

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.

No Free Ride for Non-Contributing Members

In D.S. Park Waldheim Inc. v. Nagy (decided 2008), Deputy Justice Freeman of the Ontario Superior Court of Justice held that minority members of a non-profit housing association were liable to contribute to the cost of subdividing the land so that members would be able to register the title of their lands.

Ontario Court Upholds Closed Membership Structure as Corporate Best Practice

In Ottawa Humane Society v. Ontario Society for the Prevention of Cruelty to Animals (decided September 2017), Justice Beaudoin of the Ontario Superior Court of Justice upheld the conversion of an prominent Ontario charitable corporation into a closed membership corporation, in which the directors were the only voting members. The court found that the adoption of a closed membership was a corporate best practice and fell within the proper exercise of the board's business judgment.

Freedom of Association for Members of a Voluntary Association

In Conacher v. Rosedale Golf Assn. (decided 2002), Justice Chapnik of the Ontario Superior Court of Justice held that the members of a corporation without share capital (a golf club) had no standing to sue the club over its refusal to admit their son as a member. Their claim was found to have no basis in law and was held to be frivolous and vexatious.

Life Memberships: A Qualification

In Whittall v. Vancouver Lawn Tennis & Badminton Club (decided in 2005), the British Columbia Court of Appeal reconciled the apparent inconsistency between a life membership and the ability of the voting members of the corporation to unilaterally vary the conditions of membership. In effect, the status of a life member is subject to the right of the members of the corporation to vary membership classes or groups - including requiring members who were formerly exempt from paying dues to start paying annual dues.

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