New Societies Act (BC)

Transcription

1 PROFESSIONAL DEVELOPMENT PROGRAM New Societies Act (BC) COPYRIGHT CPABC All rights reserved. No part of this publication/course material may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means (photocopying, electronic, mechanical, recording or otherwise) without the prior written permission of the copyright holder and publisher. DISCLAIMER This course material deals with complex matters and may not apply to particular facts and circumstances. As well, the course material and references contained therein reflect laws and practices which are subject to change. For these reasons, the course material should not be relied upon as a substitute for specialized professional advice in connection with any particular matter. Although the course material has been carefully prepared, neither the Chartered Professional Accountants of British Columbia, the course author and/or firm, nor any persons involved in the preparation and/or instruction of the material accepts legal responsibility for its contents or for any consequence arising from its use. Fall Winter 2016

2 THE NEW B.C. SOCIETIES ACT CPABC - Professional Development Seminar Kate Bake-Paterson & Rebecca Hockin September 29, 2016 OVERVIEW Relevancy to Financial Advisors Background to the New Act Timing and Status of the New Act Formation and Governance Incorporation and Capacity Structure of Charter Documents Members Meetings and Resolutions 2 OVERVIEW, cont d Formation and Governance, cont d Directors Senior Managers Corporate Records Approval of Fundamental Changes Member-Funded Societies Society Finances Financial Reporting and Disclosure Transition 3 CPABC 1

3 RELEVANCY TO FINANCIAL ADVISORS Increasingly large number of societies with complex needs many with significant financial activity Understanding governance framework Classifying society as member-funded - or not Understanding financial reporting requirements and when they are applicable 4 BACKGROUND Over 27,000 societies in BC Diverse range of types of societies with different needs Act is first significant change to Society Act since 1977 Long time in coming - review process began 2006 Based largely upon White Paper released by Ministry of Finance in August 2014 White Paper contained annotated draft legislation and invited stakeholder feedback Over 7000 submissions made in response to the White Paper, of which at least 200 were substantive 5 TIMING AND STATUS Bill 24 introduced on March 25, 2015 and received Royal Assent on May 14, 2015 S.B.C. 2015, c. 18. Societies Regulations and Societies Transition Interim Regulation (latter recently replaced) Coming into force by regulation of the Lieutenant Governor in Council Effective date: November 28, 2016 Much of the Societies Act is applicable to societies as of the effective date, regardless of whether they have completed their transition 6 CPABC 2

4 INTRODUCTION TO THE NEW ACT Repeals and replaces B.C. Society Act Applies to societies incorporated in B.C. and NOT federal NFPs or those incorporated in other provinces (except re: extra provincial registration obligations) Continues tradition of a separate not-for-profit statute, drawing on both Society Act and BC Business Corporations Act Completely revises and updates existing Society Act framework provides for modern, flexible governance technology-friendly greater public accountability, including financial reporting creates classification scheme - member-funded societies 7 INTRODUCTION TO THE NEW ACT, cont d Much longer (142 sections 366 sections) Provisions addressing frequent operational matters contained in first 85 sections Default obligations with ability to opt out - to some extent - in the bylaws 8 Incorporation and Capacity Incorporation with one or more people No longer need 5 people to incorporate Electronic filing Capacity, rights, powers and privileges of an individual of full capacity No more ultra vires risk Prohibited from carrying out activities contrary to purposes but such activities are not void 9 CPABC 3

5 Structure of Charter Documents Still need constitution and bylaws Constitution may only include name and purposes (and statement regarding member-funded societies, if applicable) Other provisions currently in constitution must be shifted to bylaws No more unalterable constitution provisions Must be shifted to bylaws and identified as previously unalterable Alterable in accordance with the Societies Act i.e. designated pre-existing societies need consent from specified third parties such as BC Housing in order to amend previously unalterable provisions 10 Members Become a member in accordance with bylaws No minimum number of members required No more personal liability for directors if the number of members falls below 3 A minor can be a member unless bylaws provide otherwise Separate membership classes expressly permitted Bylaws must set out rights and obligations of each class Non-voting membership may exceed voting membership Bylaws can provide for member expulsion but Act entrenches right to procedural fairness 11 Members Resolutions Approval threshold for members special resolutions reduced from 75% to 2/3 of votes cast on a resolution Bylaws can provide for higher threshold for special resolutions in certain circumstances (but not to remove directors) Must identify specific fraction/percentage/number of votes OR formula for calculation OR unanimity Special Resolutions no longer need to be filed with BC Registrar of Companies Instead file forms specific to constitution and bylaw alterations 12 CPABC 4

6 Members Meetings AGMs still need to be held once a year and within 6 months of FYE No longer need to hold within 15 months of previous AGM Can obtain permission to hold by March 31 of following year AGMs can be held via written consent resolutions 14 day default for notice for general meetings; can be reduced to 7 days in bylaws, but not more than 60 days in advance Notice sent to every member (including non-voting) Electronic notice permitted unless precluded by bylaws and flexible notice provisions for societies with 250+ members if permitted in bylaws Text of special resolution must be included with notice of general meeting 13 Members Meetings, cont d Member electronic participation in meetings expressly permitted (but can be prohibited by bylaw) All participants must be able to communicate with each other and any votes must adequately disclose the intentions of the voters Members can requisition meeting - need 10% of voting members or lesser percentage permitted by bylaw Members can make proposals to be considered at meeting, with as little as 5% of voting members, but not if proposal was considered at a general meeting within past 2 years Bylaws may authorize electronic voting or indirect or delegate voting, If so, must set out rules respecting how that voting is to occur 14 Appointment and Removal of Directors Minimum of 3, one of whom must be BC resident (unless member-funded) Directors elected or appointed in accordance with bylaws Allows for appointment of directors by third parties (non-members) Act expressly allows appointment of ex officio directors Bylaws may provide that individual who holds a particular office or who has a specified attribute is, by virtue of holding that office or having that attribute, appointed as a director of the society Directors must consent to election/appointment (not mandatory until 2018) Directors may be removed in manner provided in bylaws But Members may still remove directors by special resolution - regardless of bylaws 15 CPABC 5

7 Directors Qualifications Statutory qualifications, similar to BCBCA Not mandatory until 2018 Cannot be: found incapable by court undischarged bankrupt convicted of certain criminal offence within 5 years and not pardoned Minimum age requirement of 18 years, although Bylaws may permit 16 or 17 year old directors majority of Board must still be 18+ years (not required until 2018) Additional qualifications can be imposed by Bylaw 16 Directors Qualifications, cont d A director who is not, or who ceases to be, qualified under either Act or the bylaws must promptly resign Offence under Act if fail to resign when not qualified under statutory requirements fine of up to $ Conflict of Interest Majority of Directors must not receive/be entitled to receive remuneration from society under contracts of employment or contracts for services other than remuneration for being a director not applicable until 2018 and not at all to member-funded societies Conflict of interest provisions similar to BCBCA directors with direct or indirect material interest in a contract/transaction with society or matter for consideration by board must fully disclose conflict abstain from voting and not influence vote leave meeting during discussion unless requested otherwise; leave meeting during vote 18 CPABC 6

8 Directors Liability Director is liable if consent to resolution authorizing distribution of property contrary to Act or bylaws But not liable and deemed to have complied with duties if relied, reasonably and in good faith on: financial statements represented to the director to fairly reflect the financial position of the society by a director or senior manager responsible for the preparation of the financial statements, or in a written report of society s auditor; written reports of professionals whose profession lends credibility to statement made by that person statements of fact by other directors/senior managers other record or information providing reasonable grounds for actions 19 Directors Liability, cont d In addition, court has discretion to excuse director liability if appropriate and if director, despite being liable, acted honestly, reasonably and ought to fairly be excused Court approval of indemnification no longer required 20 Senior Managers Act does not refer to officers but to senior managers Unique term, created by legislation A senior manager: Is appointed by directors To exercise directors authority to manage activities or internal affairs of society (or principal unit of society) Doesn t capture employees hired by ED/CEO/management Could be employee or volunteer, etc. ED, CEO, CFO, COO? 21 CPABC 7

9 Senior Managers, cont d Subject to same/similar director: statutory qualification requirements (not mandatory until 2018); offence to act when not qualified fiduciary duties conflict of interest requirements Benefits from same/similar director: indemnification rights (an eligible party ) ability to seek relief from liability from courts Consider overlap with employment terms appointment doesn t in and of itself create employment obligations 22 Corporate Records to be Maintained Act provides clarification about records that must be kept by societies (similar to BCBCA) In addition to charter documents and minutes of meetings, includes: financial statements and auditors reports, if any adequate accounting records for each financial year, including record of each transaction materially affecting financial position of society Not required to keep a record if it is no longer relevant to the activities or internal affairs of the society, and 10 years have passed since the record was created/altered Exercise caution in discarding records! 23 LOCATION OF CORPORATE RECORDS Electronic filings and storage permitted Necessary precautions must be taken If not electronic, records to be kept at registered office But directors may approve resolution to keep records/specified records elsewhere Notice of the same must be kept at registered office Resolution no longer needs to be filed with Registrar 24 CPABC 8

10 Access to Corporate Records Directors have access to all listed corporate records Default rule: Members have access to all listed corporate records But access to the following documents can be limited in Bylaws: minutes of each meeting of directors, including (i) list of all directors at meeting, and (ii) text of each resolution passed at the meeting; copy of each consent resolution of directors and copy of each consent to that resolution; adequate accounting records for each of society's financial years, including record of each transaction materially affecting the financial position of the society 25 Access to Corporate Records, cont d Directors can also - by Directors Resolution - restrict access to Register of Members if disclosure might be harmful But members can override with written application for access provided they comply with restrictions on use, i.e. to requisition meeting, submit proposal or influence voting of members Public access to corporate records if - and to extent - permitted by bylaws 26 Court Remedies Oppression remedy - members have right to complain about oppressive or unfairly prejudicial treatment Apply to court to correct or reconstruct erroneous or missing corporate records Derivative actions can be brought by member or director or other person whom court considers to be appropriate person to prosecute or defend a legal proceeding in relation to society Compliance/restraining orders can be sought by member or director or other person whom court considers to be appropriate person 27 CPABC 9

11 Fundamental Changes Modernized amalgamation provisions, clarify creation of new amalgamated entity, separate from amalgamating entities Cannot amalgamate with an entity outside of BC Special resolution required for disposal of undertaking, similarly to BCBCA Can continue into BC but not out of BC Restorations will be permitted without court order -- if application made within 10 years of dissolution Clarification of requirements for extra-provincial registration and when societies deemed to carry on activities in BC obligation to register not mandatory until MEMBER-FUNDED SOCIETIES Act creates new classification scheme: member-funded societies (i.e. sports and professional organizations) vs. nonmember funded societies (i.e. charities) Member-funded societies are subjected to less public accountability/transparency provisions: Need only have 1 director (otherwise need 3) Majority of directors can be employed by or under contract with society No public access to financial statements No restrictions on distribution of assets on wind-up (i.e. can go to members) No required disclosure of director and employee remuneration Can convert to company 29 MEMBER-FUNDED SOCIETIES, CONT D To be eligible, society must not fall within category of society that is prohibited from being a member-funded society : A society CANNOT be member-funded if: exceeds funding threshold a registered charity or other qualified donee under the Income Tax Act a designated recipient under Provincial Sales Tax Act a student society under University Act or College and Institute Act a hospital society under Hospital Act or designated as such receives or has received funding from the British Columbia Housing Management Commission; is or has been a service provider under Community Living Authority Act; or an authority under the Independent School Act and received under that Act a grant for the previous school year 30 CPABC 10

12 MEMBER-FUNDED SOCIETIES - IMPLICATIONS CONT D Funding-based eligibility test - consider impact of fluctuations? BC Gaming: member funded societies are not eligible for community gaming grants But may apply for gaming event licences Will only be issued if funds raised will be used to provide direct community benefit or given to a third party whose services provide direct community benefit within BC 31 MEMBER-FUNDED SOCIETIES - FUNDING THRESHOLD To be member-funded, society must receive funds primarily from internal sources Legislative test: Society must not have received: during the two financial years immediately preceding the relevant time public donations and government funding having a total value that is in excess of the greater of $20,000 and 10% of society s gross income for that period 32 MEMBER-FUNDED SOCIETIES, cont d government funding" means funding by way of a grant, a loan without interest or with interest substantially below the market rate or similar funding, provided by (a) the government of Canada, British Columbia or another province of Canada, (b) a municipality in British Columbia or in another province of Canada, (c) the governing body of a first nation in Canada, including the governing body of a band as defined in section 2 (1) of the Indian Act (Canada), (d) an organization that is owned or controlled by, or is an agent of, any of the governments or bodies referred to in paragraphs (a) to (c), or (e) a government, body or other organization that is included in this definition by regulation, but does not include funding excluded from this definition by regulation; 33 CPABC 11

13 MEMBER-FUNDED SOCIETIES, cont d "public donations" means donations (defined to include bequests and gifts) made to a society other than donations made by: (a) a voting member, director, senior manager or employee of the society, (b) the spouse of a person referred to in paragraph (a), or (c) a relative of a person referred to in paragraph (a) or (b), but does not include donations excluded from this definition by regulation Donations identified in paras. (a), (b) and (c) are not included in the calculation of whether a society is member-funded. There is no limit to the value of donations that may be made by these individuals Donations from non-voting members are included in calculation of public donations 34 MEMBER-FUNDED SOCIETIES - ELIGIBILITY ASSESSMENT First, consider if society is automatically precluded from being member-funded society, i.e. qualified donee Second, consider society s sources of funding if at time of incorporation, consider anticipated sources if after incorporation, consider funding in previous two financial years and extent to which is typical Does society receive government funding? consider government grants vs. payment for services rendered Does society receive donations? consider if received from public vs. internal sources if internal, consider if any from non-voting members 35 MEMBER-FUNDED SOCIETIES - ELIGIBILITY ASSESSMENT, CONT D Consider donations vs. membership fees Other sources of income? Third, consider total amount of government funding and public donations in relevant period Fourth, consider if such total amount is in excess of $20,000 if not, society is eligible to be member-funded society Fifth, if such total amount is in excess of $20,000, consider society s gross income in relevant 2 year period and calculate 10% thereof is total amount is less than this percentage, society is eligible to be member-funded society if total amount is more than this percentage, society is not eligible 36 CPABC 12

14 MEMBER-FUNDED SOCIETIES - EXAMPLE #1 ABC Society is funded almost entirely by donations from its members and their family members Public donations received in the previous 2 financial years total less than $5,000 ABC Society is not a registered charity but has charitable purposes A director of ABC Society mentions in passing that, as part of their activities, they provide residential services to seniors 37 MEMBER-FUNDED SOCIETIES - EXAMPLE #1 - COMMENTS Any applicable prohibition? Do they receive any funding from BC Housing? If so, not eligible per Regulations Sources of funding? any other government funding received in previous two years? Amounts of funding? assuming no government funding, amounts seem acceptable because under $20,000 consider if amount of public donations typical for financial period? Does assessment change if funding was previously received from BC Housing but not in previous 2 financial years Regulations prohibit societies that receive or have received loans or grants of money from BC Housing 38 MEMBER-FUNDED SOCIETIES - EXAMPLE #2 XYZ Society received $20,000 in government loans and $11,000 in public donations in the 2 previous years. Its gross income for that period was $250, CPABC 13

15 MEMBER-FUNDED SOCIETIES - EXAMPLE #2 - COMMENTS Applicable prohibitions? confirm not included on prohibited list Consider relevant time period. Are calculations made on basis of financial years? Consider sources of funding? are government loans interest free or with reduced interest? if yes, funding is included in calculation Consider amounts of funding? $31,000 in government funding and public donations: over $20,000 threshold and in excess of 10% of gross income ($25,000) How does assessment change if government loan was at market rate? only $11,000 in public donations, so under $20,000 threshold 40 MEMBER-FUNDED SOCIETIES - EXAMPLE #3 123 Society received no government funding and $15,000 in public donations in the relevant financial period. Its gross income for that period was $50, MEMBER-FUNDED SOCIETIES - EXAMPLE #3 - COMMENTS Applicable prohibitions? confirm not included on prohibited list Consider sources of funding? are donations truly public Consider amounts of funding? public donations ($15,000) in excess of 10% of gross income BUT not in excess of $20,000 threshold How does assessment change if $5,000 in donations received from non-voting members included in calculation of public donations but must be greater than $20,000 to trigger prohibition 42 CPABC 14

16 MEMBER-FUNDED SOCIETIES, cont d Eligible societies must add prescribed member-funded society statement to constitution This society is a member-funded society. It is funded primarily by its members to carry on activities for the benefit of its members. On its liquidation or dissolution, this society may distribute its money and other property to its members. This can be done on incorporation or transition if approved by special resolution After incorporation/transition, society must get court order permitting constitution amendment to become member-funded Societies must amend constitution to remove statement if cease to be member-funded 43 MEMBER-FUNDED SOCIETIES - What Does this Mean for You? Societies will look to financial advisors for assistance in determining if they are eligible as member-funded societies Understand significance of classification and who is eligible Work with societies (and their legal advisors) to confirm financial eligibility, i.e. identify at outset if society wishes to seek MFS status tracking origin of revenue (public donations vs. donations by members) 44 SOCIETY FINANCES - Distribution Societies must not distribute money or other property other than as follows for full and valuable consideration; in furtherance of the purposes of the society; to a qualified recipient; or for a distribution required or authorized by this Act, Regulations or otherwise required by law 45 CPABC 15

17 SOCIETY FINANCES - Remuneration and Reimbursement of Directors Director remuneration (for acting in capacity as director) prohibited unless permitted under bylaws Does not preclude payment to directors for services rendered in another capacity Not applicable until 2018 Director may be reimbursed for reasonable expenses necessarily incurred in performing his or her duties as a director Bylaws may restrict reimbursement by imposing conditions on reimbursement; limiting amount of reimbursement payable; prohibiting reimbursement Regulations may provide further restrictions; none yet 46 SOCIETY FINANCES - Borrowing Directors authorized to borrow funds No members resolution required under Act for borrowing, issuing security/debentures But bylaws may restrict society's ability to borrow money or to issue bonds, debentures, notes or other evidences of debt obligations 47 SOCIETY FINANCES- Investment of Society Funds Invest funds only in accordance with bylaws or in investment which prudent investor might invest unless prohibited by bylaw 48 CPABC 16

18 FINANCIAL REPORTING & DISCLOSURE - Reporting Societies Concept of reporting societies eliminated existing classification which requires additional financial reporting requirements Current reporting societies must include prescribed Reporting Society Provisions in bylaws upon transition after Act takes effect and prior to transition, these societies are deemed to have such provisions in bylaws May only remove Reporting Society Provisions by special resolution following transition First check to ensure no third-party restrictions, i.e. funder requirements? 49 FINANCIAL REPORTING & DISCLOSURE - Audit Audited financial statements not required under the Act Societies able to determine what level of financial review is appropriate, if any Exception? Society s bylaws may provide otherwise Exception? Regulations can provide for class of societies requiring audit (none yet) Exception? Current reporting societies must have an auditor for so long as reporting society provisions apply 50 FINANCIAL REPORTING & DISCLOSURE - Auditor s Report If appointed, auditor must prepare report on financial statements in which auditor states opinion as to whether statements: fairly reflect, in all material respects, for the period under review, the financial position of the society and the results of its operations; were prepared in accordance with generally accepted accounting principles; and in the case of financial statements other than the first financial statements, were prepared on a basis consistent with the basis on which the financial statements that related to the preceding period were prepared If an opinion is subject to qualification, the auditor must state, in the report, the reasons for the qualification 51 CPABC 17

19 FINANCIAL REPORTING & DISCLOSURE - Auditor Appointment First auditor, if any, appointed by directors or by ordinary resolution to hold office until close of next AGM Subsequent auditors appointed at AGM by ordinary resolution to hold office until close of next AGM Incumbent auditor continues if appointment is required by law and no successor is appointed Directors can fill mid-term vacancy created by resignation, death or otherwise (except removal) Court may appoint auditor, if one is required and has not yet been appointed, and may set remuneration 52 FINANCIAL REPORTING & DISCLOSURE - Auditor Qualifications Person only qualified to act as auditor if: member of (or is a partnership whose partners are members of): a provincial or territorial Institute/Ordre of Chartered Accountants within Canada or the Certified General Accountants Association of British Columbia; OR certified by Auditor Certification Board (under BC Business Corporations Act) Upon ceasing to be qualified, auditor must promptly become qualified or resign 53 FINANCIAL REPORTING & DISCLOSURE - Auditor Independence Must be independent from society Independence is question of fact but auditor is not independent if: director or senior manager of society or subsidiary employee of society or subsidiary partner, employer, employee, or immediate family member of director/senior manager/employee of society or subsidiary a creditor (or partner/member of immediate family is creditor), whether directly or indirectly trustee of estate of society under Bankruptcy and Insolvency Act (or partner/employer/employee/immediate family member of trustee) member of society and have power to elect (directly or indirectly) majority of directors (note: membership otherwise irrelevant to determination of independence) Upon ceasing to be independent, auditor must eliminate circumstances resulting in lack of independence or resign 54 CPABC 18

20 FINANCIAL REPORTING & DISCLOSURE - Auditor Removal Auditor may be removed by ordinary resolution (and new auditor appointed to fill resulting vacancy) Prior to removal, society must give auditor notice of meeting at which proposed removal will occur and a copy of relevant materials Auditor may make written representations respecting proposed removal 55 FINANCIAL REPORTING & DISCLOSURE - Auditor Rights of Access Auditor must make examinations that, in auditor s opinion, are necessary to prepare auditor report Members/directors/senior managers/employees/agents of society or subsidiary must (to extent reasonably able to do so) provide auditor with all information and explanations that the auditor considers necessary for purpose of examination or report allow access to all records of society and subsidiary, if any, that auditor requires and provide copies as requested by auditor Must provide additional information coming to light after AGM that could reasonably have been determined before the meeting and, if known, would have required material adjustment to financial statements 56 FINANCIAL REPORTING & DISCLOSURE - Auditors at the AGM Auditor is entitled to notice of and may attend general meetings of members Auditor may be heard on any part of business of meeting dealing with financial statements or other matters with respect to which auditor has duty or function Member may, by 7 days written notice, require auditor to attend general meeting at which financial statements are considered or auditor is to be appointed/removed If present at meeting, auditor must answer questions concerning financial statements, auditor s report, if any, and any other matter with respect to which auditor has duty or function 57 CPABC 19

21 FINANCIAL REPORTING & DISCLOSURE - Financial Statements Directors must present financial statements and auditor s report, if applicable, to members at each AGM Must cover period: beginning immediately after end of preceding financial year or, if society has not completed financial year, on date of incorporation Note: if, when Act comes into force, society has not completed first financial year, statements are to be prepared in relation to period beginning on date society was incorporated under former Act ending not more than 6 months before date of AGM Note: if AGM not held within 6 months of FYE, society should also be presenting stub financials for additional period Financial statements to be prepared in accordance with Regulations 58 FINANCIAL REPORTING & DISCLOSURE - Financial Statements, cont d Society must not issue, publish or distribute financial statements unless: approved by directors and signed by one or more directors to confirm approval was obtained; and have attached to them the auditors report, if any, on those statements Is offence under Act to do otherwise Society must not issue, publish or distribute financial statements that purport to be audited unless they have been audited and an auditor s report prepared 59 FINANCIAL REPORTING & DISCLOSURE - Amendment of Financial Statements After AGM, if director/senior manager/auditor becomes aware of facts: that could reasonably have been determined before AGM; and that, if known before AGM, would have required material adjustment to financial statements, they must communicate same to auditor (or auditor must communicate same to each director), and directors must promptly amend financial statements and send amended financial statements to auditor If amended financial statements are sent to the auditor, the auditor must amend auditor's report on the financial statements and the directors must send amended report to members with accompanying explanation 60 CPABC 20

22 FINANCIAL REPORTING & DISCLOSURE - Access to Financial Statements Unless member-funded society, potentially broad access to financial statements Person may request copy of financial statements required under Act to be presented at AGM. Society must provide requested copy Offence under Act to refuse access without reasonable excuse Note: members and directors entitled to copies regardless 61 FINANCIAL REPORTING & DISCLOSURE - Reporting on Financial Assistance Include note about financial assistance provided in past year Must set out nature and amount of financial assistance but need not identify recipient by name Not required if financial assistance is given in the ordinary course of the society's activities in furtherance of society s purposes Financial Assistance means financial assistance by means of loan, guarantee, indemnity, provision of security or other transactions included by Regulation 62 FINANCIAL REPORTING & DISCLOSURE - Reporting on Director Remuneration Financial statements must include a note in respect of remuneration paid to directors: either for being a director or for acting in another capacity, position or title of each such director (need not identify by name) amount of remuneration paid description of the capacity in which each such director acted, as applicable Member-funded societies do not need to include such information 63 CPABC 21

23 FINANCIAL REPORTING & DISCLOSURE - Reporting on Employee Remuneration Financial statements must include note identifying remuneration paid by society to employees and persons under a contract for services with society, whose remuneration was at least $75,000 for applicable year If more than 10 such persons, only 10 most highly remunerated persons must be disclosed Either: identify by position or title (but need not identify by name) and, as applicable, the nature of the contractual services provided, and the remuneration paid to each; or the total number of those persons and the total amount of remuneration paid during the applicable period Member-funded societies need not include information 64 TRANSITION Must actively transition within 2 years of Act coming into effect Note: much of the Act will be applicable even if society has not yet transitioned Current by-laws are of no effect if contrary to Act Impact of certain provisions delayed for 2 years Can approve transition documents before Act comes into effect 65 TRANSITION APPLICATION Must file transition application: Constitution: Name and purpose only By-laws: Consolidated pre-transition bylaws Unalterable + other provisions from constitution Reporting society provisions Any changes approved by special resolution Notice of directors and registered address 66 CPABC 22

24 APPROVAL OF TRANSITION If make bare minimum structural - but not substantive - changes, a members resolution not required But is unlikely that bylaws will otherwise be compliant Adoption of new bylaws is recommended Members special resolution required for all substantive bylaw amendments and if seeking member-funded status Bare transition does not violate contractual obligation not to alter charter documents 67 THANK YOU! QUESTIONS? Kate Bake-Paterson: kate.bakepaterson@dlapiper.com Rebecca Hockin: rebecca.hockin@dlapiper.com CPABC 23