The Societies Amendment Act, 2021: It’s time to update your operating system
From time to time, my phone reminds me that it’s time to update its operating system. As I learned the hard way, ignoring these updates can only cause headaches later on.
Phones with older operating systems don’t just lack the latest features; they are also increasingly burdened with old bugs and software glitches. In my case, after pressing “Remind me later” too many times, my phone just became unusable!
The articles of association of a company are the operating system of the company. And with the passage of Companies Amendment Act 2021 (the “Amendment Act”), it may be time for many companies in British Columbia to update their operating systems.
The Amending Act received Royal Assent on October 28, 2021 and introduced a number of far-reaching changes to the Companies Act [SBC 2015] Chapter 18 (The “Companies Act”).
Like any good software update, the changes clarify and clean up rules, fix loopholes and address public concerns since the Companies Act was first enacted in 2016.
Some of these amendments came into force on October 28, 2021, while several others will come into force at a later date to be announced by regulation.
There are lots of updates. For the purposes of this article, the most substantial changes that may be of interest to companies are summarized below. Note: All points mentioned below refer to current or new provisions of company law.
Amendments effective October 28, 2021
The following amendments to the Companies Act came into force on the date of Royal Assent (October 28, 2021):
- Minutes general meetings (s. 20(1)(i)) – Companies are required to keep only the minutes of “general meetings”. The previous wording required corporations to keep records of the minutes of “every meeting of members,” which presumably included all gatherings of members.
- Limits on the use of copies of registers (art. 25(7), 27.1) – Under the current rules, a member who has inspected the register of directors or the register of members of a company is required to use the information obtained during the inspection only for certain limited purposes directly related to the company. The amending law clarifies that these same limitations apply to any information a member has obtained from a copy of a company’s register of directors or register of members (and not just information that a member obtained from an inspection of these records).
- Directors and capacity (art. 44) – The amending law sets the qualification rules for directors by specifying that a finding of incapacity by a court does not prevent a person from exercising or renewing his or her duties as a director of a company, provided that a court has subsequently determined that the individual is capable.
- Disclosure of conflicts of interest (ss. 56(1), 62(1)) – In a reasonable clarification of the rules on conflicts of interest, directors and executives are only required to disclose a conflict of which they are aware or reasonably should have been aware. Please note, however, that directors continue to be required by common law to make reasonable inquiries to determine whether a conflict may exist.
- Word limits for requisitions (s. 75(3)(c)) – The word limit for describing any business to be discussed at a requisitioned meeting is increased from 200 words to 500 words.
- No proxy voting at general meetings (Art. 85(1)) – The Amendment Act clarifies and confirms that members cannot vote by proxy at general meetings, unless a company’s articles of association provide otherwise.
- Transition of pre-existing companies (Art. 240(1)) – For BC corporations that have not yet transitioned under the Societies Act, the Amendment Act extends the deadline to file a transition application from November 28, 2018 to November 28, 2022.
Amendments not yet in force
The following amendments to the Companies Act have been approved, but will come into force at a later date to be determined by regulation:
- Mandate of directors (s. 11(1)) – Unless the articles of association provide otherwise, any director without a mandate ceases to exercise his mandate at the end of the first annual general meeting after having become a director.
- Information about directors and members (paragraphs 20(1)(e) and (h)) – Director records should provide information on when a director begins and ceases to be a director. In an effort to protect and limit the types of member information that may be collected, the Amendment Act clarifies that member records may only contain name, contact details and class of membership (if applicable) of each member and no other information. . In light of this change, corporations should review their director and member records and add or remove any information to comply with these changes.
- Notice for documents available for pickup (art. 29) – If a company’s bylaws provide that a file may be sent by making the file available for pickup, the company must notify the intended recipient.
- Disclosure of employee compensation (s. 36(1)(b)) – Companies will have to disclose the compensation of any employee or contractor that exceeds the prescribed amount (currently $75,000). This amendment applies to financial statements prepared for annual general meetings held one year after the entry into force of this requirement. Currently, companies are only required to disclose compensation for the ten highest paid employees and contractors that exceeds the prescribed amount.
- Errors in the declaration of the directors and the registered office (art. 51 and new 51.1) – Companies must file a corrective notice with the Registrar if they notice an error in their declaration of administration and registered office. Additionally, in a new process introduced by the Amendment Act, anyone claiming not to be a director can also apply to the Registrar to remove their name from a statement of directors and registered office.
- Directors’ meetings (s. 54) – The directors may pass a directors’ resolution without a meeting if a copy of the resolution is sent to all the directors and if all the directors (or a lesser number, if the articles of association so provide) consent to the resolution in writing or otherwise. other manner provided for in the articles of association. Under the current rules, it is not necessary to send a copy of the resolution to all directors. Directors will not be able to vote by proxy at directors’ meetings.
- Persons in conflict remaining at meetings (art. 56 and 62) – Disputing directors and senior officers may remain in a meeting for information purposes so long as a director, or more directors if required by the articles of association, requests the continuance of the person in conflict.
- Member Threshold for Email Notifications (s. 77) – Companies with at least 101 members (and not a minimum of 501 members, as is the current threshold) will be able to call the members to a general meeting by sending an email to the members and publishing the notice in a newspaper or a website, if their statutes allow it. The email should only be sent to each member for which the company has an email address in the member register.
- Content of the notice of general meeting (art. 78) – Notices of general meetings must be given in writing and contain the date and time and, where applicable, the place of the meeting and the text of any special resolution to be submitted to the meeting.
- Proposals by deputies (art. 81) – The amending law specifies that, for a member proposal to be valid, (i) the proposal must contain the names and be signed by at least the number of voting members who meet the proposal threshold for the society; (ii) the proposal must include any special resolutions to be considered; and (iii) the proposal (and any statements in support of the proposal) cannot exceed 500 words in total. In addition, one of the voting members who submitted the proposal must be personally present at the annual general meeting where the proposal is made; however, the company need not consider a proposal if it relates to substantially the same matter that was considered at a recent general meeting.
- archive keeper (news. 122.1) – In a new requirement, any corporation seeking to voluntarily dissolve will be required to appoint an “Archivist” by ordinary resolution of its members. The person in charge of the records shall keep and maintain the records of the company for a period of three years after the date of dissolution of the company and provide access to the records for inspection and copying during this period.
- Societies financed by their members and donations on death (art. 190) – Member-funded corporations may receive a testamentary disposition from a current or former voting member, director, officer, employee or relative of such persons, in certain circumstances, without lose or compromise their status as a member-funded society. society.
While these latest changes are not yet in effect, any prudent company thinking about updating its articles of association should consider all of the changes in the amending law, not just those that came into effect on October 28.