A. IS E-VOTING PERMITTED?

Although widespread commercial use of the Internet only dates from about the mid- 1990’s, it is difficult for many to imagine carrying on business today without the use of the Internet as well as the telephone. In this context, it is not surprising that many stakeholders in not-for-profit corporations assume that the law permits them to attend meetings electronically and vote electronically. In Canada, this assumption is not valid in many jurisdictions.

B. WHAT IS E-VOTING AND WHY BOTHER WITH IT?

E-voting means different things to different people: participating in a meeting and voting through telephonic or electronic means during the meeting; a vote taken by telephonic or electronic means after a meeting at which materials are circulated or discussed; or a vote held by telephonic or electronic means separate and apart from a meeting.

We are all likely to have encountered a situation where technology is used merely because it is available, even though it does not facilitate an activity. In some not-forprofit corporations however, where the objects of the corporation and criteria for membership result in a large, geographically dispersed or mobile membership, e-voting may permit stakeholders, for whom it would not otherwise be feasible, to exercise their vote. It may also ease the difficulty that some corporations experience in making quorum.

C. APPROACHES TO E-VOTING

Most statutes governing not-for-profit corporations contain the authority to make bylaws about specified matters. The provisions may be mandatory (“the board shall pass a bylaw regarding the following matters”) or permissive (“the board may pass bylaws regarding the following matters”). In some jurisdictions, corporations are permitted to establish means of voting under bylaws. Corporations may be able to permit e-voting under this authority, even where it is not expressly permitted by the legislation under which the corporation operates. The following are examples of different approaches to e-voting found in or suggested by the legislation governing not-for-profit corporations in Canada.

(a) Express Permission to Vote Electronically

There are statutes that expressly permit e-voting by directors or members unless the bylaws provide otherwise. Under these statutes, a decision has to be made to prohibit rather than to permit e-voting. The language differs slightly, but essentially these statutes permit voting “by telephone or other communications medium” under certain conditions, for example, if defined technological specifications are met or the consent of all of the participants is obtained.

(b) No Authority to Establish Means of Voting in Bylaws

Under some statutes, the bylaws are required or permitted to address voting rights and the use of proxies, but not the means of voting. Where the bylaw-making authority is mandatory rather than permissive, principles of statutory interpretation suggest that any matter that is not specifically listed in the bylaw-making provision is excluded by design and cannot be addressed in bylaws.

(c) Authority to Establish Means of Voting in Bylaws

The bylaw-making provisions in some statutes permit or require the making of bylaws establishing the procedure for doing business at meetings or “the procedure in all things at meetings …”. These provisions suggest that the bylaws could permit e-voting. However, where there is also a requirement for the bylaws to be consistent with the applicable law, it is possible that a court would find that there is no right to make bylaws permitting e-voting where other means of voting (by show of hands, for example) are referenced in the corporation’s governing statute. The same is true where the law permits meetings to be held by electronic means, but is silent on the issue of e-voting: it could be said that the inclusion of the right to hold meetings by electronic means indicates that the legislature turned its mind to and rejected permitting voting by electronic means.

In at least one jurisdiction, members vote by a show of hands “unless the bylaws provide otherwise” or a ballot is demanded.

D. STATUS OF E-VOTING IN NOTFOR- PROFIT CORPORATIONS

Corporations interested in permitting evoting should verify the requirements of the statue under which they are incorporated, be prepared to invest in new technology and to seek technical and legal advice, although corporations may find their counsel hesitant to recommend e-voting unless and until it is expressly permitted by law.

The Ontario and British Columbia governments have signalled that they plan to have new legislation applying to non-share capital corporations in the next few years. Bill C-62 (the Canada Not-for-Profit Corporations Act) received first reading in June 2008. New legislation may expressly address e-voting, although not necessarily all of the related issues that have been raised by not-for-profit corporations, such as whether e-voting may be offered to some, but not all directors or members on the basis of where they live in relation to the meeting place. In the meantime, some corporations will have to continue to decide whether to allow e-voting in the absence of any guarantee that it will be upheld by a court if challenged.