On January 26, 2015, the British Columbia Ministry of Finance held a roundtable discussion with stakeholders on the Ministry’s proposal for a new Societies Act. At the roundtable, the Minister of Finance, Michael de Jong, expressed his hope to introduce the draft legislation for the new Societies Act during the spring session of the British Columbia Legislature.
The roundtable is the latest step in the Ministry’s efforts to reform the existing Society Act, which has not seen substantial changes since its introduction in 1977. The legislation provides rules for the incorporation and governance of approximately 27,000 societies in B.C.
From the Society Act to the Proposed Societies Act
The Ministry’s review of the existing Society Act began in 2009 and culminated in the release of a “Societies Act White Paper” in August of 2014. The White Paper presents detailed draft legislation, policy recommendations and notes, and invited feedback from all stakeholders.
The purposes of the proposed Societies Act include:
- modernizing corporate governance rules;
- providing a “user-friendly” legal framework;
- creating greater flexibility;
- improving accountability and public transparency; and
- filling gaps and clarifying provisions in the current legislation.
The British Columbia Business Corporations Act provided the model for many of the proposed changes.
During the consultation period, which ended on October 15, 2014, the Ministry received substantive feedback from more than 200 stakeholders. In addition, more than 7,000 submissions were directed at the proposed new right for the general public to complain in court about societies’ activities that are detrimental to the public interest.
Roundtable on the Proposed Societies Act
The roundtable gave representatives of various stakeholders an opportunity to express their views directly to Minister de Jong. The discussions focused on the following reform proposals:
- the “complaints by the public” remedy (see White Paper, s. 99). If adopted, this new and unique remedy would give members of the general public the right to seek a court remedy if a society is conducting its activities or internal affairs to the detriment of the public interest;
- the adoption of the derivative action and oppression remedy similar to those existing for business corporations (see White Paper, s. 98). These new remedies would allow members and other interested persons to apply to court if they think they are oppressed or have been treated unfairly by a society, its directors or its members;
- the appropriate threshold for a new right of members to submit proposals for the next annual general meeting of a society (see White Paper, s. 78). The White Paper proposes a threshold of 5% of voting members for this right to “set the agenda”;
- the abolition of unalterable provisions in the constitution of societies (see White Paper, s. 16(5)). Such provisions, which are currently protected from any changes, could then be changed by a 2/3 majority vote of voting members;
- the stricter conflict of interest and accountability provisions (see White Paper, s. 56). Currently, directors must disclose direct or indirect interests in proposed contracts or transactions of a society. The new provisions, if adopted, would require directors to disclose direct or indirect material interests in all contracts and any matter that could affect the directors’ ability to act in the best interests of the society; and
- setting a minimum age requirement of directors of 18 years of age (see White Paper, s. 43(a)). Currently, there are no age restrictions in the Society Act.
If the bill for a new Societies Act is introduced in the Legislative Assembly over the coming months, the new legislation could receive royal assent as early as the end of the spring session in May 2015. However, the new legislation will likely not come into force until the implementing regulations are finalized. The current draft of the proposed Societies Act also contemplates a two-year transition period to give existing societies time to adopt required changes to their constitutions and bylaws.
Special thanks to articling student Anna Chen for her assistance in drafting this bulletin.