- within Compliance topic(s)
- with Senior Company Executives, HR and Inhouse Counsel
- in North America
- with readers working within the Healthcare industries
In recent years, it has become increasingly more common for charities and not-for-profits to hold their board and member meetings by electronic means, such as online, by telephone, or as a combination of in-person and electronic means ("virtual meetings").
Although undeniably more convenient, charities and not-for-profits that are corporations which opt to host their meetings virtually are faced with some novel corporate governance issues. One such issue is how votes can be collected from participants of virtual meetings, particularly in situations where anonymous voting is desired or required by the statute.
In this article, we will summarize the statutory requirements for virtual meetings and voting under both the Canada Not-for-profit Corporations Act1("CNCA") and the Not-for-Profit Corporations Act, 20102 ("ONCA") and then explore the practical implications of hosting virtual meetings.
Statutory requirements for hosting virtual meetings and collection of votes from participants
The statutory requirements for hosting virtual meetings and voting at virtual meetings are similar under both the CNCA and the ONCA, but not identical.
Under the CNCA the minimum requirements for voting during virtual meetings are:
- Subject to the corporation's by-laws, a corporation can host its board and members meetings virtually – although both types of meetings have different requirements – and all participants can communicate adequately with each other during the meeting3.
- Subject to the corporation's by-laws and if the corporation is not collecting votes by telephonic, electronic or other communication facility (electronic voting), the default method of collecting votes during a members meeting will be by a show of hands by members entitled to vote, unless a member demands that the votes be collected by ballot4.
- A corporation also can collect votes at members' meetings by means of a telephonic, an electronic or other communication facility, provided the votes can be verified and tallied votes are presented to the corporation without it being possible for the corporation to identify how each member or group of members voted 5.
While under the ONCA the minimum requirements for voting during virtual meetings are:
- A corporation can host its meetings in-person, online, by telephone, or by any combination of in-person attendance and one or more virtual means, provided the participants are able to communicate, with statutory requirements for board meetings that include simultaneous and instantaneous communication at said meetings6. Although this requirement is of practical benefit for all the corporation's meetings.
- Subject to the by-laws, the default method of collecting votes will be by a show of hands unless an attendee entitled to vote at the meeting (e.g., a director or member) demanded a ballot7.
- A corporation also can collect votes at board and members' meetings by telephonic or electronic means8.
Practical implications
Although virtual meetings and voting are permitted under the CNCA and ONCA the statutory requirements are not determinative as to whether a charity or not-for-profit which is also a non-share capital corporation can host virtual meetings which permits voting virtually. Instead, the relevant provisions of either the ONCA or CNCA must be considered with the entity's articles and by-laws to determine if they can host virtual meetings and collect votes virtually.
It is also important to note that both statutes require that all communication between participants at meetings happen in "real time." This applies to both conducting the meeting and collecting votes from participants. This means that meetings cannot be held via e-mail (i.e., e-mailing board members meeting materials is not considered to be a virtual meeting), because e-mail is not considered to be a "real time" or "instantaneous" communication. Moreover, participants of the meeting cannot cast their vote by e-mail.
There are several software products on the market that are designed collect votes during virtual meetings which allow entities to comply with their governing statute—either the CNCA or ONCA. If an entity wants to use such software it is tasked with ensuring compliance with its statutory obligations, as well as its articles and by-laws.
Footnotes
1. Canada Not-for-profit Corporations Act, SC 2009, c 23.
2. Not-for-Profit Corporations Act, 2010, SO 2010, c 15.
3. CNCA, s.136(7), s159(4) and (5).
4. CNCA, s 165(1).
5. CNCA, s 165(3); Canada Not-for-profit Corporations Regulations, SOR/2011-223, s 71(2).
6. ONCA, s. 34(6)
7.ONCA, s 58(1).
8. ONCA, s. 32(5) and s. 67(1)
Read the original article on GowlingWLG.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
