AGM Notices and Voting Procedures - Conference #4

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1 As the subject matter of this conference is complex, this lengthier paper covers two consecutive conference sessions. We will cover only the Notices of Meeting portion in the first conference (pages 1 to 3 + Appendix A), leaving Voting for the second conference (pages 4 to 7 + Appendix B + Appendix C). They are being dealt with in the same paper because several of the document distribution processes are closely related. The Canada Not-for-profit Corporations Act specifies that two by-laws are mandatory: one setting out the conditions of membership [s. 154]; the other setting out the notice requirements of meetings of members (Annual General Meeting (AGM) or a Special Meeting) [s. 162(1)]. This part of this paper will deal only with the latter. There are several detailed provisions in the Act and in the Regulations requiring precise compliance. While this is primarily an information piece, there are two options to consider: the first deals with record dates; the second deals with whether the proposed process for distributing the Notice of Meeting (and later, proxy forms) is appropriate. AGM Notice of Meeting: Currently: Our by-laws [By-laws and ] state: An Annual General Meeting shall be held at least once in every calendar year and not later than fifteen (15) months after the holding of the preceding Annual General Meeting The National Secretary shall notify all Divisions of the date and location of the next Annual General Meeting by the 1st day of December prior to the date of the meeting The National Secretary shall provide the Divisions with a list of Resolutions to be presented at an Annual General Meeting in writing by April 1 st of each year. The Canada Not-for-profit Corporations Act has detailed requirements for annual meetings: Section 160 deals with the mandatory requirement to call an annual meeting: 160. (1) The directors of a corporation shall call an annual meeting of members (a) not later than the prescribed period 1 [18 months] after the corporation comes into existence; and (b) subsequently, not later than the prescribed period [15 months] after holding the preceding annual meeting but no later than the prescribed period [6 months] after the end of the corporation s preceding financial year. (2) On application of the corporation, the Director [Corporations Canada official] may authorize the corporation, on any terms that the Director thinks fit, to extend the time for calling an annual meeting if the Director reasonably believes that members will not be prejudiced. (3) The directors of a corporation may at any time call a special meeting of members. 1 Wherever the Act says prescribed period, that time period is set out in the Regulations. To simplify the reading of these provisions, I will insert [in brackets] each relevant time period as prescribed in the Regulations. 1 P a g e

2 Section 161 deals with an optional requirement to fix a record date prior to the meeting for purposes of the entitlement to receive the Notice of Meeting, and to the entitlement to vote at that meeting, and says: 161. (1) The directors may fix, as a record date for any of the following purposes, a date that is within the period that is prescribed in relation to that purpose, namely, record dates for (a) determining members entitled to receive notice of a meeting of members [within 21 to 60 days]; (b) determining members entitled to vote at a meeting of members [within 21 to 60 days]; (c) determining members entitled to participate in a liquidation distribution [60 days]; or (d) determining members for any other purpose [60 days]. (2) If no record date is fixed by the directors, (a) the record date for the determination of members entitled to receive notice of a meeting of members is (i) at the close of business on the day immediately preceding the day on which the notice is given, or (ii) if no notice is given, the day on which the meeting is held; (b) the record date for the determination of members entitled to vote at a meeting of members is (i) if a record date has been fixed under paragraph (1)(a), the day that is the prescribed period [10 days] after that date, and (ii) otherwise, the date that is the record date under paragraph (a); and Section 162 deals with the mandatory requirement to have by-laws dealing with giving members notice of meetings, and says: 162. (1) The corporation shall give members entitled to vote at a meeting of members notice of the time and place of the meeting in accordance with the bylaws and the regulations. The provisions of the by-laws respecting the giving of notice shall comply with any prescribed requirements. Regulations dealing with Notice of Meeting of Members: The prescribed requirements are found in the Regulation 63. They are exacting and require precise compliance. The details will be paraphrased here (the full text is quoted in Appendix A) to better understand why we have proposed the by-laws that we have. The by-laws must set out the manner in which notice can be given to members entitled to vote and can include any of the following options: a) notice is sent by mail, courier or personal delivery, between 21 and 60 days before the meeting; b) notice is communicated by telephone or other electronic communication means, between 21 and 35 days before the meeting; c) notice is communicated via a publication: o at least once a week for three weeks prior to the meeting if using a newspaper; or 2 P a g e

3 o between 21 and 60 days if using a publication of the corporation that is distributed to members; or d) notice is affixed to a notice board not less than 30 days before the meeting. We believe we can dispense with alternatives (c) and (d) as being either not possible or not practical: we have no notice board location frequented by members; and due to the wide geographic dispersion of the membership, publication 3 consecutive weeks in newspapers is not practical; and we have no distributed Association publication. The proposed by-laws for AGMs, and for delivery of Notice of Meeting by electronic means (i.e., ) or by mail, and are contained in By-laws Part X. 1, 3 and 4: 1. An Annual General Meeting shall be held at least once in every calendar year and not later than 6 months after the close of the Association s fiscal year, and not later than fifteen (15) months after the holding of the preceding Annual General Meeting, at such time and place as designated by the Board. 3. Notice of the time and place of a meeting of members shall be given to each member entitled to vote at the meeting by the following means: 3.1. by mail, courier or personal delivery to each member entitled to vote at the meeting, during a period of 21 to 60 days before the day on which the meeting is to be held; or 3.2. by telephonic, electronic or other communication facility to each member entitled to vote at the meeting, during a period of 21 to 35 days before the day on which the meeting is to be held. 4. Unless another period is fixed by the directors, the directors shall fix 60 days prior to the date of the Annual General Meeting as a record date for all purposes. The 1 st series of options to consider are: i) should the directors fix a record date? ii) if so, is 60 days a reasonable number of days prior to the AGM for: a. the entitlement to receive Notice of Meeting?, and/or b. the entitlement to vote at the AGM? In practical terms, and this detail will be set out in the Operations Manual, the National Secretary will know months in advance of the AGM when and where the AGM will be held. Divisions will be notified, but this early notification will not constitute the official Notice of Meeting. The Secretary will, after the record date, issue the official Notice of Meeting to Divisions within the prescribed time. (The official Notice must include certain attachments; e.g., list of director s nominations, the text of any resolutions, etc. detail to be dealt with in Conference #6.) Once the official Notice is issued, Divisions will be required to follow their usual course of distributing notices to their members, either by , or by postal mail. The National Secretary must exercise due diligence in monitoring the distribution process, as the responsibility to give Notice of Meetings is with the corporation: Divisions are merely agents for the Board (corporation) for purposes of distribution P a g e

4 The 2 nd option to consider therefore, is whether the proposed method of distributing the Notice of Meeting as described above, is appropriate, or should distribution be done entirely by the National Office? Voting: The voting procedure detail is onerous and will require patience to read through. Also, there are three additional options available for consideration: whether to allow for absentee voting; if so, what form of absentee voting; and whether voting should primarily be by simple majority, or by two-thirds majority. Current: our by-laws dealing with voting at to inclusive, say: A voting member of the Association is entitled to one (1) vote on any issue Voting at any meeting shall be by majority vote of the voting members in attendance except as provided elsewhere in these By-Laws A two-thirds (2/3) majority vote at a General Meeting of the Association is required to: (a) Approve a change to the Letters Patent, the Supplementary Letters Patent, and/or the General By-Laws of the Association. (b) Dissolve or reinstate a Division Divisions shall be represented by a Voting Delegate at the Annual General Meeting of the Association. By-law states voting shall be by members in attendance, but allows for members not in attendance (absentee voting) to be represented by a Voting Delegate. In practice, the Division delegate is the Division President, or alternate, attending the AGM. By a consultation process within the Division prior to the AGM, a majority position is expressed on any voting issue. The delegate (by proxy) delivers the majority position at the AGM by delivering all votes from the Division (except those individuals attending the AGM personally who vote their conscience) in accordance with the majority position. Minority positions are not otherwise reflected in the final vote count. The Canada Not-for-profit Corporations Act and the Regulations have detailed and specific requirements respecting voting at meetings of members. In order to make this paper readable, these provisions will be quoted sparingly in the body of this text, but for ease of reference, all relevant provisions not quoted are reproduced in Appendix B. The Act, at s. 165(1) and (3), and 171(1) and (2) state: 165. (1) Subject to section 171 and the by-laws, voting at a meeting of members shall be by show of hands, except if a ballot is demanded by a member entitled to vote at the meeting.... (3) Despite subsection (1), unless the by-laws otherwise provide, any vote referred to in that subsection may be held, in accordance with the regulations, if any, entirely by means of a telephonic, an electronic or other communication facility, if the corporation makes available such a communication facility. 4 P a g e

5 171. (1) The by-laws of a corporation may provide for any prescribed methods of voting by members not in attendance at a meeting of members. If the by-laws so provide, they shall set out procedures for collecting, counting and reporting the results of any vote. (2) On application of the corporation, the Director may authorize the corporation, on any terms that the Director thinks fit, to permit members to vote by any method if the Director reasonably believes that the members and the corporation will not be prejudiced. In section 165(1), voting by show of hands implies voting by only those present at the meeting. This is the default position of the Act, and can be varied in the by-laws. Section 171(1) invites a corporation to provide methods for voting by members not in attendance (absentee voting), but also says such methods must be prescribed ; i.e., prescribed in the Regulations (as shown in Appendix B). The relevant Regulation is 74, and is very detailed and precise, describing not only the various types of absentee voting, but also, if proxy voting is provided for, even what the proxy form must look like. The proposed by-laws dealing with voting are contained in Part X.10 to 14 inclusive: 10. Any voting Member may be represented by proxy at a General Meeting of the Association by another Member 2 provided such proxy shall be in writing on the form provided, or a facsimile thereof. Members eligible to vote shall be provided with a proxy form between 21 and 35 days before the General Meeting. 11. A proxy must be signed by the voting Member and shall be valid only for the meeting for which it was given, or for any adjournment thereof. 12. Every proxyholder shall provide the Secretary with a list of the names of proxies held, in alphabetical order, no fewer than 10 days before the General Meeting takes place. 13. Voting at any meeting shall be by ordinary resolution except as provided elsewhere in the Act A voting Member of the Association at any meeting of the Association is entitled to one (1) vote on any issue, except the chair of the meeting, by whatever name, who shall not cast a vote except in case of a tie, and who may then cast the deciding vote. The 3 rd option to consider is whether the Association should provide for absentee voting at all. If only those in attendance can vote, this would mean that on behalf of all the Association membership, the 250 to 350 members who usually attend AGMs would determine what resolutions are passed and what directors are elected. 2 Please note that while by-law X.10 says that any voting Member may be represented by proxy by another Member, Regulation 74(2) says members may vote by appointing in writing a proxyholder, and one or more alternate proxyholders, who are not required to be members. As the Regulations have greater authority than the Association s by-laws, a non-member proxyholder can insist of being able to attend an AGM to represent any voting Member(s). In such case, the proxyholder can vote the proxy votes held, but cannot personally vote. 3 For information purposes only, a list of matters required by the Act to be voted by ordinary resolution or by special resolution is contained in Appendix C. 5 P a g e

6 The 4 th option to consider is, if absentee voting is to be authorized, what form of absentee voting is preferred: by proxy, by mailed in ballot, or voting by telephonic or other electronic means. The proposed by-laws support absentee voting by proxy. As above, when looking at Regulation 74, three possible methods of voting are included: i) by proxy; ii) by mailed in ballot; and iii) voting by telephonic or other electronic means. Each of the options has specific requirements to meet. Mailed in ballot and electronic voting requires votes to be gathered in such a way as to enable verification of voting eligibility, and enabling the tallying of votes in such a manner as to prevent the Association from knowing how each member voted; i.e., blind voting. There are some very practical difficulties with both of the latter options, including: cost (mailed-in and electronic voting will have to be delivered and/or monitored by an independent 3 rd party); and the ability to cast and tally votes in the event of amended resolutions or of nominations for directors made from the floor when the proxy contains no discretionary voting. For these reasons, a by-law for proxy voting is proposed. But very detailed and precise requirements for proxy voting are prescribed in Reg. 74(2). Under the new Act, every member entitled to vote, but not intending to be present at the meeting, may identify a proxyholder who will vote in accordance with the member's written directions. A proxyholder will not be permitted to re-assign a proxy. A standardized proxy form provided by the Association, or a proxy form of the member's own design conforming generally to the prescribed requirements, will be used to provide the written direction. The member may indicate precise choices to be voted, or may give the proxyholder discretion on any or all votes to be cast. The member must sign the proxy, and it must be verified by scrutinizers before votes are cast. A proxyholder may carry numerous proxies with different vote choices, and must vote accordingly and not en bloc. If a member otherwise entitled to vote at the meeting is neither present in person nor by proxy, they have no vote to cast. It is expected that standardized proxy forms will be distributed to members on behalf of the National Secretary by Divisions in the same manner and at the same time as the Notice of Meeting. Divisions will likely develop their own mechanisms to deliver and collect proxy forms and present them for verification at the meeting of members. Voting may be by show of hands (or showing of printed cards with the number of Yea and Nay depicted, or by secret ballot if demanded by a member. It was originally anticipated that the required processes for delivering and collecting proxy forms, and for counting and reporting votes, will be detailed in the Operations Manual. However, on further reflection in light of ss. 171(1) which requires the detail to be in the by-laws, the placement of this detail will have to be reconsidered. Therefore, additional proposed by-laws to meet the requirements of ss. 171(1) are: 12.1 Every proxyholder shall bring all original proxy forms to the AGM, and AGM host scrutineers shall validate each proxy form during registration, as determined during the preceding 10 days. 6 P a g e

7 12.2 Scrutineers shall issue each proxyholder with hand-held signs showing the number of votes to be cast in favour of, or not in favour of each resolution; or in favour of a nominated candidate for director Voting shall be by show of hands and/or by show of pre-numbered handheld signs for each resolution to be voted and for each director to be elected. The 5 th and final option for consideration deals with by-law X.13, which again says: voting at any meeting shall be by ordinary resolution except as provided in the Act. The members may choose to pass all resolutions not required to be passed by ordinary resolution, to be passed by way of special resolution. Thus, by-law X.13 can be reworded to say: voting at any meeting shall be by special resolution except as provided in the Act. Currently, by-law says, voting at any meeting shall be by majority vote. 7 P a g e

8 Regulation 63 AGM Notices and Voting Procedures - Conference #4 APPENDIX A 63. (1) For the purpose of subsection 162(1) of the Act, one or more of the following manners is a prescribed manner of giving notice: (a) by mail, courier or personal delivery to each member entitled to vote at the meeting, during a period of 21 to 60 days before the day on which the meeting is to be held; (b) by telephonic, electronic or other communication facility to each member entitled to vote at the meeting, during a period of 21 to 35 days before the day on which the meeting is to be held; (c) by affixing the notice, no later than 30 days before the day on which the meeting is to be held, to a notice board on which information respecting the corporation s activities is regularly posted and that is located in a place frequented by members; and (d) in the case of a corporation that has more than 250 members, by publication (i) at least once in each of the three 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 of the corporation reside as shown by their addresses in the register of members, or (ii) at least once in a publication of the corporation that is sent to all its members, during a period of 21 to 60 days before the day on which the meeting is to be held. (2) For the purpose of subsection 162(1) of the Act, if the by-laws provide for an electronic means of giving notice, the by-laws shall also set out one or more of the methods set out in paragraphs (1)(a), (c) or (d) as a non-electronic alternative manner of doing so to be used if a member requests that the notice be given by non-electronic means and, despite subsection 162(2) of the Act, if no alternative manner is set out in the by-laws, the corporation shall only send a copy of the notice to members that request a copy. 8 P a g e

9 Regulation 74 AGM Notices and Voting Procedures - Conference #4 Appendix B 74. (1) For the purpose of subsection 171(1) of the Act, the prescribed methods of voting are (a) voting by proxy in accordance with subsection (2); (b) voting by mailed-in ballot if the corporation has a system that (i) enables the votes to be gathered in a manner that permits their subsequent verification, and (ii) permits the tallied votes to be presented to the corporation without it being possible for the corporation to identify how each member voted; and (c) voting by means of a telephonic, electronic or other communication facility that (i) enables the votes to be gathered in a manner that permits their subsequent verification, and (ii) permits the tallied votes to be presented to the corporation without it being possible for the corporation to identify how each member voted. (2) Members not in attendance at a meeting of members may vote by appointing in writing a proxyholder, and one or more alternate proxyholders, who are not required to be members, to attend and act at the meeting in the manner and to the extent authorized by the proxy and with the authority conferred by it subject to the following requirements: (a) a proxy is valid only at the meeting in respect of which it is given or at a continuation of that meeting after an adjournment; (b) a member may revoke a proxy by depositing an instrument or act in writing executed or, in Quebec, signed by the member or by their agent or mandatary (i) at the registered office of the corporation no later than the last business day preceding the day of the meeting, or the day of the continuation of that meeting after an adjournment of that meeting, at which the proxy is to be used, or (ii) with the chairperson of the meeting on the day of the meeting or the day of the continuation of that meeting after an adjournment of that meeting; (c) a proxyholder or an alternate proxyholder has the same rights as the member by whom they were appointed, including the right to speak at a meeting of members in respect of any matter, to vote by way of ballot at the meeting, to demand a ballot at the meeting and, except where a proxyholder or an alternate proxyholder has conflicting instructions from more than one member, to vote at the meeting by way of a show of hands; (d) if a form of proxy is created by a person other than the member, the form of proxy shall (i) indicate, in bold-face type, (A) the meeting at which it is to be used, (B) that the member may appoint a proxyholder, other than a person designated in the form of proxy, to attend and act on their behalf at the meeting, and 9 P a g e

10 (C) instructions on the manner in which the member may appoint the proxyholder, (ii) contain a designated blank space for the date of the signature, (iii) provide a means for the member to designate some other person as proxyholder, if the form of proxy designates a person as proxyholder, (iv) provide a means for the member to specify that the membership registered in their name is to be voted for or against each matter, or group of related matters, identified in the notice of meeting, other than the appointment of a public accountant and the election of directors, (v) provide a means for the member to specify that the membership registered in their name is to be voted or withheld from voting in respect of the appointment of a public accountant or the election of directors, and (vi) state that the membership represented by the proxy is to be voted or withheld from voting, in accordance with the instructions of the member, on any ballot that may be called for and that, if the member specifies a choice under subparagraph (iv) or (v) with respect to any matter to be acted on, the membership is to be voted accordingly; (e) a form of proxy may include a statement that, when the proxy is signed, the member confers authority with respect to matters for which a choice is not provided in accordance with subparagraph (d)(iv) only if the form of proxy states, in bold-face type, how the proxyholder is to vote the membership in respect of each matter or group of related matters; (f) if a form of proxy is sent in electronic form, the requirements that certain information be set out in bold-face type are satisfied if the information in question is set out in some other manner so as to draw the addressee s attention to the information; and (g) a form of proxy that, if signed, has the effect of conferring a discretionary authority in respect of amendments to matters identified in the notice of meeting or other matters that may properly come before the meeting shall contain a specific statement to that effect. 10 P a g e

11 APPENDIX C Matters that must be voted by ordinary resolution (majority): ss. 130(1) removal of directors; ss. 181(1) to appoint a public accountant; ss. 181(4) to set the remuneration of a public accountant; and ss.188(2) to require an audit engagement for designated corporations Matters that must be voted by special resolution (two-thirds majority): Generally, voting by special resolution is needed to make, amend or repeal by-law provisions dealing with: conditions of membership; notice of meetings to members; transferability of membership; and absentee voting. Additionally, voting by special resolution is needed for the following specific provisions: 189(2)(b) to require a review engagement for a soliciting corporation with gross revenues less than $250,000; 197(1) to make any amendment to the Articles or the by-laws to: (a) change the corporation s name; (b) to change the province of the registered office; (c) add, remove, or change any restriction on the corporation s activities; (d) create a new class or group of members; (e) change a condition required for being a member; (f) change the designation of any class or group of members or add, change or remove any rights or conditions of any such class or group; (g) divide any class or group of members into two or more classes or groups and fix the rights and conditions of each class or group; (h) add, change or remove a provision respecting the transfer of membership; (i) increase or decrease the number of or the minimum or maximum number of directors fixed by the articles; (j) change the statement of purpose for the corporation; (k) change the statement concerning the distribution of property on (l) liquidation; change the manner of giving notice to members entitled to vote at a meeting of members; (m) change the method of absentee voting; (n) add, change or remove any other provision that is permitted to be set out in the Articles. 197(2) to revoke any amendment listed in 197(1) before it is acted upon; 212(2) authorize directors to apply for articles of continuance; 220(2) authorize the dissolution of a corporation with no property; 220(3) authorize the dissolution of a corporation where property is disposed of; 221(3) authorize the liquidation or dissolution of a corporation on a member s resolution. 11 P a g e

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