Not-for-Profit Corporations Act Presentation to Wheelchair - - PowerPoint PPT Presentation

Not-for-Profit Corporations Act

Presentation to Wheelchair Basketball Canada

December 2012

Sport Law & Strategy Group

Providing strategic insight to the Canadian

sport community through professional services in these areas: Legal Solutions Planning & Governance Strategic Communications

“The Perfect Storm” of 2011

 Canada Not-for-Profit Corporations Act – affects all NSOs and MSOs  Sport Canada’s Governance Principles - will affect future funding  Amendments to the Income Tax Act – affects all RCAAAs  Overall trends to improve Canadian sport governance

“Arguably, organization and system mismanagement costs us more medals and more lifelong participants [in sport] than the culprits we prefer to blame, such as limited facilities and funding, or insufficient school sport and activity programs”

Rationale for New Legislation

 Strengthen member rights  Increase accountability  Increase transparency  Improve efficiency  Embrace new technologies  Other provinces will follow (Ontario, B.C.)

Efficiency Features

 NFP Act contains mandatory rules, default rules and alternate rules  Bylaws can be slim as the rules are in the Act  Directors may change bylaws without approval

• f members, except for ‘fundamental’ changes

 Industry Canada will be a storehouse, not a clearing house, for bylaws  Changes to bylaws will take immediate effect

Possible Approaches

 Avoidance approach – do the minimum to

comply with the letter of the law

 Compliance approach – do more to comply

with both the letter and the spirit of the law

 Strategic approach – leverage opportunity to

review governance model and improve effectiveness … this opportunity will not present itself again in our lifetimes …

Impact #1 - Member Rights

 Members may pursue more ‘judicial’ remedies  Easier for members to ‘requisition’ a meeting  Members elect directors  Members may remove any, some or all directors by

• rdinary resolution

 Members without voting rights may vote on certain ‘fundamental changes’  In some instances, member classes may vote separately  Member proposals

Impact #2 - Board Structure

The Act requires that members will elect directors … therefore:

• ‘Ex-officio’ directors are prohibited
• Appointed directors are restricted

Therefore …. You need to

Simplify and streamline membership classes Move to an elected Board structure *

“Organizations may wish to collapse voting member classes into one category, and eliminate non-voting members”

• Carters Professional Corporation

Membership Models (51 NSOs – 2012)

 PTSOs vote  92%  Clubs vote  14%  Athlete reps vote  16%  Directors/Officers vote  37%  Where PTSOs have vote, 38% have equal vote, 62% have proportional vote  2 NSOs (Equine, Bobsleigh - Skeleton) have individuals vote

Board Composition (58 NSOs – 2011)

 Elected ‘Competency’ Board  53%  ‘Constituency’ Board  36%  Hybrid Board  10%  Board size 12 or less  57%  Board size 13 to 18  28%  Board size 19 or more  16%

What Other Sports Are Doing

 Creating simpler membership structures  Eliminating non-voting individual members, creating ‘registrants’ and ‘honorary officers’  Choosing smaller, policy-based boards  Creating ‘Provincial Councils’ with defined mandates  Rethinking committees – standing/operating  Embracing nomination systems to recruit skilled/competent directors

Challenges Emerging

Importance of the transition two-step! Timing of year end and annual meeting/ conference Meeting CRA’s new requirements of ‘exclusive purpose and function’ Maintaining jurisdiction

• ver individuals/athletes

Some Things to Watch For

 Maintaining an effective athlete voice  Failure to consult with stakeholders, or  Stakeholders not engaging in consultation efforts  Evolution to more modern and corporate structures may backfire!  High demand for HQPs

Not the best approach! Get started now!

Documents You Must File

 Articles of Incorporation must contain name, location, # of directors, statement of purpose, classes

• f members, restrictions on activities, distribution of

assets after dissolution  Bylaws must contain conditions of membership, method of giving notice for meetings  If an RCAAA, Canada Revenue Agency has to approve the Articles of Incorporation

Timing

Work backwards from October 2014 Member voting at AGMs, SAGMs, Special Meetings, telephone meetings? Communication with members, trust issues Two-step transition needed in most cases Make a plan - and make a back-up plan

For more information, visit:

http://www.sportlaw.ca/nfp-act/