Organizing members’ and directors’ meetings during normal times can be difficult for non-profit corporations, but the COVID-19 crisis has made the process even more challenging. Not-for-profit corporations typically conduct in-person meetings, which during the COVID-19 outbreak would contradict public health advice to practice physical distancing and self-isolation to prevent the spread of the virus.
If a not-for-profit corporation’s by-laws prohibit virtual meetings or the ability to participate virtually in meetings, it may now be stuck in the position of not being able to hold a valid meeting. Also, if a non-profit corporation is required to hold its annual general meeting during the pandemic, it may not have the capabilities to hold a virtual members’ meeting. Thankfully, the Ontario government passed an Emergency Order (Ontario Regulation 107/20 made under the Emergency Management and Civil Protection Act), retroactive to March 17, 2020, that addresses these issues for Ontario not-for-profit corporations. However, federal not-for-profit corporations have no similar solution.
Ontario Corporations Act
Prior to the pandemic, corporations incorporated under the Ontario Corporations Act (the “OCA”) were, unless its by-laws otherwise provided, able to hold a meeting of the members by telephonic or electronic means. Likewise, OCA corporations were, if its by-laws did not prohibit and if all the directors present at or participating in the meeting consented, able to hold a meeting of the directors by telephonic or electronic means.
The Emergency Order has temporarily suspended these sections of the OCA and replaced them with provisions that provide that “despite any provisions in the letters patent, supplementary letters patent or by-laws of a corporation that provides otherwise”, a meeting of the members or directors may be held by telephonic or electronic means.
Prior to the crisis, OCA corporations were required to hold an annual meeting of the members not later than 18 months after incorporation and not more than 15 months after its previous annual meeting and no later than 6 months after its preceding financial year end.
The Emergency Order has also extended the deadline of the aforementioned annual meetings until 120 days after the declared emergency is terminated, if the deadline for holding the meeting falls within 30 days after the termination date, and 90 days after the declared emergency is terminated, in all other cases.
These changes are only in effect during the temporary suspension period. Though it is unknown when the Ontario government will terminate the emergency. An OCA corporation should review its letters patent and by-laws to ensure that virtual meetings are not prohibited, to allow for virtual meetings to continue after the emergency is terminated.
Canada Not-for-profit Corporations Act
Corporations incorporated under the Canada Not-for-profit Corporations Act (the “CNCA”) are only able to hold members’ meetings entirely by means of a telephonic or electronic facility if the by-laws provide. Further, a member may only participate in a meeting by telephonic or electronic facility if the by-laws do not provide otherwise. Directors of CNCA corporations may participate in a meeting of directors by means of a telephonic or electronic facility if, subject to the by-laws, all directors consent.
A CNCA corporation should review its articles of incorporation and by-laws to determine if they specifically allow virtual members’ meetings and if they prohibit members from voting digitally. It should also take care in choosing the method of digital voting, as it must allow the corporation to gather votes in a way that allows the votes to be verified, tallied and presented while maintaining votes anonymous.
If the by-laws prohibit virtual members’ meetings or are silent with respect to them, an alternative is to hold a partially virtual meeting, whereby some participants attend in-person and others participate virtually. In the further alternative, the directors may amend the by-laws; however, it should be noted that such amendment would need to be confirmed by the members at the next members’ meeting.
CNCA corporations are required to hold an annual meeting of members within the same time frames as mentioned above for OCA corporations. If a corporation determines that it would be detrimental for it to call an annual meeting of members within the normal time-frame, it can apply at least 30 days before the day on which the notice of the time and place of a meeting is to be given to members, to the Director appointed under the CNCA to extend the deadline. The Director, on a case-by-case basis, will assess the reasons for the application and the potential prejudice to members.
I have been advised by Corporations Canada that they have received many such applications and are unable to provide decisions within the 30 days service standard. If a CNCA corporation intends to apply for this exemption, it should do so well in advance of its annual meeting deadline.