By Joel Secter
This article provides information on holding meetings of members under the Canada Not-for-profit Corporations Act (CNCA). It will be updated for Ontario no-share corporations once Ontario’s Not-for-profit Corporations Act, 2010 comes into force.
1. Calling Annual Meetings
Newly incorporated federal no-share corporations must hold their first annual meeting of members within eighteen (18) months of the date of incorporation. Thereafter, the directors must call an annual meeting of members once a year. The annual meeting must be held within fifteen (15) months of holding the preceding annual meeting and cannot be more than six (6) months after the end of the corporation’s preceding fiscal year end. The directors may also call a special meeting of members at any time provided that the requirements for giving notice are met. Remember, you are required to report any changes regarding directors within fifteen (15) days of the change.
2. Requisitioning a Meeting
Depending on what is provided in the corporation’s by-laws, members holding five (5) percent of the votes or lower may requisition the directors of a corporation to call a meeting of members. Subject to the CNCA, on receiving the requisition the directors must call a meeting to deal with the business stated in the requisition. If the directors do not call a meeting within twenty-one (21) days after receiving the requisition, any member who signed the requisition may call the meeting.
3. Place of Meetings
The default rule in the CNCA is that meetings of members must be held in Canada at the place provided in the by-laws or, in the absence of such a provision, at the place that the directors determine. A meeting of members may be held outside of Canada if the place is specified in the articles or if all the members entitled to vote at the meeting agree that the meeting is to be held at that place.
4. Well isn’t that special?
The business typically conducted at annual meetings of members includes
- reviewing the financial statements;
- reviewing the public accountant’s report;
- electing the directors; and
- appointing the public accountant.
Any other business, with the obvious exception of receiving reports from the directors, officers and committee chairs, is considered “special business”. Notice of a meeting of members at which special business is to be transacted must state
a) the nature of that business in sufficient detail to permit a member to form a reasoned judgment on the business; and
b) the text of any special resolution to be submitted to the meeting.
5. Notice of Meetings
According to the CNCA Regulations, there are four options for giving notice that may be included in a corporation’s by-laws:
- by mail, courier or personal delivery to each member and debt obligation holder entitled to vote at the meeting, no more than 60 days and no fewer than 21 days before the meeting date;
- by telephonic, electronic or other communications facility to each member and debt obligation holder entitled to vote at the meeting, no more than 35 days and no fewer than 21 days before the meeting date;
- by affixing the notice to a notice board where information respecting the corporation’s activities is regularly posted and that is located in a place frequented by the members no later than 30 days before the day on which the meeting is to be held; and
- if a corporation has more than 250 members, by publication:
- at least once in each of the 3 weeks immediately before the day on which the meeting is to be held in one or more newspapers circulated in the municipalities in which the majority of the members reside, or
- at least once in a publication of the corporation that is sent to all its members, no more than 60 days and no fewer than 21 days before the meeting date.
If the by-laws provide for an electronic means of giving notice, they must also provide for a non-electronic alternative means of giving notice.
Note that if the corporation is a soliciting corporation, notice of the annual meeting must include a copy of the annual financial statements unless the by-laws provide otherwise.
Finally, any person who is entitled to notice of a meeting of members may waive notice, and attendance of a person at a meeting is considered waiver of notice of the meeting, unless the person attends the meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
6. Quorum of Members
The default rule in the CNCA is that quorum is a majority of members entitled to vote at the meeting. However, by-laws can set out quorum as a fixed number of members or a percentage of members or a formula for determining a fixed number or a percentage of members. Unless the by-laws provide otherwise, if a quorum is present at the opening of a meeting of members, the members present may proceed with the business of the meeting even if a quorum is not present throughout the meeting.
7. Electronic Participation
The default rule in the CNCA is that any person entitled to attend a meeting of members may participate in the meeting by electronic means provided that all participants are able to communicate adequately with each other during the meeting. For the purpose of quorum, a person participating in a meeting electronically is deemed to be present at the meeting. Note that meetings of members may only be held entirely by electronic means if permitted by the by-laws of the corporation.
8. Resolution Passed
For corporations with only one class of members, each member is entitled to one vote.
Generally speaking, motions are carried by either ordinary or special resolution. According to the CNCA, “ordinary resolution” means a resolution passed by a majority of the votes cast and “special resolution” means a resolution passed by a majority of not less than two-thirds of the votes cast.
It is important to keep in mind that certain decisions, such as amendments to the articles and some by-law provisions, require a special resolution of the members to pass. In addition, if a corporation has more than one class of members, there may be times when the members of each class may be entitled to vote separately as a class even though the members of that class do not otherwise carry the right to vote.
Finally, by-laws can require that decisions by members be made by consensus; however, care should be taken in defining the meaning of consensus. In addition, unanimous resolutions are required in a few instances, such as when the members of a designated corporation resolve not to appoint a public accountant.
9. Ballots and Absentee Voting
While voting at a meeting of members is to be by show of hands, a member may demand a ballot either before or after any vote by a show of hands. The by-laws of a corporation may permit a number of methods of absentee voting, including voting by proxy, voting by mailed-in ballot, and voting by means of a telephonic, electronic or other communication facility. However, many rules apply to voting by proxy so care should be taken when appointing in writing a proxyholder.
10. Minutes of Meetings
The CNCA requires a corporation to prepare and maintain corporate records, including the minutes of meetings of members and any committee of members. In the event that all the members pass a written resolution in lieu of holding a meeting, the corporation must prepare and maintain a copy of the resolution of members or committee of members, as the case may be.
This list of things to know is not exhaustive so if you have further questions regarding meetings of members, we advise that you contact a lawyer.