November 28, 2018 was the deadline for transitions under the new British Columbia Societies Act, which came into force in November 2016. The new Act substantially updates and improves the governance framework for non-profit organizations in BC, and all BC societies must take steps to comply with the new Act. As of yesterday, every society in BC should now have completed the transition process to comply with the new Societies Act.
You’re not alone. As of today, 74.4% of the 27,000 societies in BC have transitioned. There may be serious consequences for those societies that have not transitioned, including eventually leading to a society being struck/dissolved and ceasing to exist.
The immediate consequences as of today are that all societies that have not transitioned will be identified as being “not in good standing.” Eventually, the Registry will strike and dissolve these societies, but there is no time frame established for when the dissolution would begin.
We expect that dissolution notices will be issued similar to where there is a failure to file annual reports.
Your society will still be able to file Annual Reports and Notices to Change Directors. However, the status of being a society “not in good standing” may have an effect on some other financial and leasing arrangements of the society:
- It could mean you are breaching your funding contract requirements and potentially interrupt and risk government and other forms of funding.
- It could breach borrowing covenants under mortgages and other documents.
- It may breach lease and other occupancy agreement covenants.
- You will be unable to change name, purposes and bylaws or to wind up or amalgamate until transitioned.
In order to transition with new bylaws, Board and Membership approval are required (which requires necessary meeting notice). Alternatively, the simplest way to transition immediately is to complete a Simple Transition. This does not require Member approval, and only requires some minor restructuring for the Constitution and Bylaws. It can be completed online through the BC Registry.
Once the Simple Transition is complete, the society will have transitioned, but it will not yet be compliant with the new Act. The new Act has both traps and opportunities that cannot be addressed without updating the bylaws.
After the Simple Transition is complete, it will be important to update the bylaws to fully comply with the requirements of the new Act. Additionally, this is an opportune moment to revise the society constitution and membership structure.
Along with the deadline to transition, yesterday marks the day that several sections of the new Act officially kick in:
- Unaffiliated Board Members: The society must ensure that a majority of its directors are not employed by or under contract with the society (s. 41).
- Director/Senior Manager Qualifications: The society must ensure that all of its directors and senior managers meet the required qualifications laid out in section 44 and 61(3).
- Consent to act as a Director: The society must ensure that all directors (other than those elected or appointed at a meeting they attend) have provided written consent (s. 42(4)).
You can find the text of the above-mentioned sections in the Societies Act here.
Start today! Give us a call. We are experienced and well versed in the requirements of the new Societies Act and would be happy to work with you on your transition. It may be too late to meet the Societies Act transition deadline, but we can help get you back on track.