205 The ABCs of Amending Corporate Bylaws
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1 205 The ABCs of Amending Corporate Bylaws CONFERENCE 2012 Why are your by-laws important? By-laws set out how an organization will be governed, including: - Who can be involved in decision-making process - Qualifications and powers of the organization s directors - Closely held vs. democratic decision-making 205 ABC s of Amending Corporate By-laws 1 1
2 Procedures to amend by-laws Corporations Act Amendments must be passed by a resolution of the board of directors Amendments must be confirmed by ordinary resolution of members If by-law deals with disposition of property on dissolution or borrowing by the corporation, amendment must be confirmed by special resolution 205 ABC s of Amending Corporate By-laws 2 Procedures to Amend By-laws Not-for-Profit Corporations Act Amendments must be passed by a resolution of the board of directors Amendments must be confirmed by ordinary resolution of members Disposition of property on dissolution for PBCs and borrowing by the corporation are dealt with under the legislation 205 ABC s of Amending Corporate By-laws 3 2
3 Procedures to Amend By-laws Not-for-Profit Corporations Act (cont d) Special resolution of members required when amendments relate to transfer of membership, and absentee voting of members Member proposals 205 ABC s of Amending Corporate By-laws 4 Transitioning i to the New Act Key considerations for your By-laws 205 ABC s of Amending Corporate By-laws 5 3
4 Transitioning to the New Act Who are your members? Member rights under the new Act Classes of membership Corporations as members Requirements in operating agreement 205 ABC s of Amending Corporate By-laws 6 Transitioning to the New Act Member rights: Member proposals Derivative actions Dissent rights (does not apply to PBCs) Corporation should consider these rights when assessing how to structure membership. 205 ABC s of Amending Corporate By-laws 7 4
5 Transitioning to the New Act Member discipline and termination Legislation requires procedural fairness By-laws must set out process for informing member of termination/discipline and provide member with a right to respond 205 ABC s of Amending Corporate By-laws 8 Transitioning to the New Act Classes of membership Different classes of membership must now be set out in the articles of the corporation At least one class must have the right to vote at members meetings Harder to change classes and rights attached to each class 205 ABC s of Amending Corporate By-laws 9 5
6 Transitioning to the New Act Provisions re members meetings and voting: Quorum Proxies Mail/electronic voting Electronic meetings of members 205 ABC s of Amending Corporate By-laws 10 Transitioning to the New Act Impact of the PBC designation on by-laws: Only 1/3 of directors can be employees of the corporation or an affiliate Do not need to address distribution of property on dissolution Impact of Housing Services Act Officers of the Corporation 205 ABC s of Amending Corporate By-laws 11 6
7 Tips for Amending your By-laws 205 ABC s of Amending Corporate By-laws 12 Tips for Amending By-laws Tip #1 View each amendment in the context of the entire by-law and make sure provisions are not ambiguous. 205 ABC s of Amending Corporate By-laws 13 7
8 Tips for Amending By-laws Tip #2 Even if members and directors are the same individuals, they have different rights depending on the hat they wear. Distinguish between members and directors in your by-law. 205 ABC s of Amending Corporate By-laws 14 Tips for Amending By-laws Tip #3 Pass a new amending by-law to amend parts of an existing by-law. 205 ABC s of Amending Corporate By-laws 15 8
9 Tips for Amending By-laws Tip #4 Keep a certified copy of all by-laws and by-law amendments in your minute book (corporate seal is not required unless your by-laws state otherwise). 205 ABC s of Amending Corporate By-laws 16 Tips for Amending By-laws Tip #5 Unless amendment deals with a fundamental change, once passed by the board of directors, the amendment is immediately effective until the next members meeting, where it must be confirmed by ordinary resolution of members. 205 ABC s of Amending Corporate By-laws 17 9
10 Tips for Amending By-laws Tip #6 Number your by-laws and consolidate amendments from time to time. 205 ABC s of Amending Corporate By-laws 18 Case Study in Amending By-laws 205 ABC s of Amending Corporate By-laws 19 10
11 Case Study ABC NON-PROFIT HOUSING INC By-law No. 1 Organizational By-law Section 4.2 Qualifications of Directors: Every director shall be a member of the Corporation, and any director who is not a member of the corporation at the time of election shall become a member of the Corporation within 10 days of being elected. The corporation has decided that, pursuant to the new Act, it no longer wants to require directors to be members of the corporation. How should it amend its by-law? 205 ABC s of Amending Corporate By-laws 20 Case Study STEP 1: Consider what parts of by-law are impacted by change: Section 2.1 Membership: Membership in the corporation is restricted to those individuals who are elected to the Board of Directors, and terminates automatically once the individual is no longer a director of the Corporation. Section 3.3 Quorum: Five members present in person or by proxy shall constitute quorum for a meeting of members. 205 ABC s of Amending Corporate By-laws 21 11
12 Case Study STEP 1: Consider what parts of by-law are impacted by change (cont d): If directors are no longer members, who are the members? Are there even five members to make up quorum? If membership will no longer terminate automatically, what else should be included in the by-law? 205 ABC s of Amending Corporate By-laws 22 Case Study STEP 2: Draft the By-law amending the existing By-law: By-law No. 2 Amendments to Organizational By-law Being a By-law to amend By-law No. 1, Organizational By-law Be it enacted as a By-law of the Corporation that: 1.Section 2.01 of By-law No. 1 be repealed and replaced with: Membership: Membership in the corporation is restricted to those individuals admitted as members from time to time by resolution of the board of directors. 205 ABC s of Amending Corporate By-laws 23 12
13 Case Study 2. That the following provision be added to By-law No. 1: Section 2.09 Terminating Membership: Membership in the corporation may be terminated by resolution of the Board of Directors. A member shall be given 15 days written notice of the termination and reasons for termination. A member may provide a response to the notice of termination in writing for the Board s consideration, at least 5 days before the termination ti becomes effective. 205 ABC s of Amending Corporate By-laws 24 Case Study 3. Section 3.3 of By-law No. 1 be repealed and replaced with: Quorum: 50% of members present in person or by proxy shall constitute quorum for a meeting of members 4. Section 4.2 of By-law No. 1 be repealed. 205 ABC s of Amending Corporate By-laws 25 13
14 Case Study STEP 3: The directors of the Corporation need to pass a resolution approving the By-law amending the existing by-law. 205 ABC s of Amending Corporate By-laws 26 Case Study STEP 4: At the next meeting of the members, members need to confirm the By-law amending the existing by-law by ordinary resolution. 205 ABC s of Amending Corporate By-laws 27 14
15 Case Study STEP 5: A certified copy of the by-law amendment should be placed in the corporation s minute book. A certified copy means that at the end of the by-law the following is included: CERTIFIED to be a true copy of By-law No. approved by the directors on, 20 and confirmed by the members on, 20. Signed by the Corporate Secretary or designate 205 ABC s of Amending Corporate By-laws 28 Summary of Steps STEP 1: Consider what parts of by-law are impacted by change STEP 2: Draft the By-law amending the existing By-law STEP 3: The directors of the Corporation need to pass a resolution approving the By-law amending the existing by-law STEP 4: At the next meeting of the members, members need to confirm the By-law amending the existing by-law by ordinary resolution STEP 5: A certified copy of the by-law amendment should be placed in the corporations minute book 205 ABC s of Amending Corporate By-laws 29 15
16 Questions 205 ABC s of Amending Corporate By-laws 30 16
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