Societies Act, Business Corporations Act and Cooperative Association Act to become more user-friendly.
The British Columbia Ministry of Finance is currently consulting with the public on proposed amendments to the British Columbia Societies Act, Business Corporations Act and Cooperative Association Act.
In force since November 28, 2016, the Societies Act governs over 27,000 societies in BC. The proposed amendments are aimed at perceived ambiguities, omissions and inconsistencies within the legislation and at streamlining certain corporate registry filings. Related changes concerning directors and shareholders/members are proposed for the Business Corporations Act and the Cooperative Association Act.
Stakeholders are invited to provide feedback on the proposed amendments: see the Letter from Deputy Minister of Finance (PDF). The submission deadline is August 23, 2019.
If you would like to comment on any of the proposed changes to the Societies Act, you can do so by contacting the ministry by email at Societies.Consultation@gov.bc.ca or send your comments by mail to:
Financial and Corporate Sector Policy Branch
Ministry of Finance
PO Box 9418 Stn Prov Govt
The Ministry proposes a total of 55 changes to BC's corporate legislation: 36 for the Societies Act, 13 for the Business Corporations Act and 6 for the Cooperative Association Act. The full list of proposed amendments and their rationales can be found in the Appendix to the Deputy Minister's letter or accessed on the government's "Societies Act Consultation 2019" webpage.
Here are a few highlights:
New Disclosure Requirements on Salaries
Notably, the amendments introduce new reporting requirements on the remuneration of employees and contractors of societies. Presently, societies are only required to disclose in their financial statements the ten most highly paid persons. The amendments, if implemented, would require societies to report the remuneration of all employees and contractors who received $75,000 or more in the financial year. This is intended to capture more accurate data on the overall remuneration paid by societies, especially those with a large number of employees.
Two amendments in regards to the qualifications of directors are proposed under all three corporate statutes. First, directors that were formerly found to be incapable of managing their own affairs, but are now capable, can requalify to be a director of the society. Second, individuals that are found incapable of managing their financial affairs under the Adult Guardianship Act will no longer be qualified to be directors.
Excuse for Unknown Conflicts of Interest
Directors and senior officers/managers of societies and companies would not be obliged to disclose a material interest in a contract or transaction if they reasonably had no knowledge of the transaction. Disclosure would be required as soon as they become aware of the conflict.
Due Diligence Defence for Senior Managers
If implemented, the amendments will provide senior managers of a society with the same due diligence defence that is available to directors, in recognition that senior managers have some of the same duties that directors have. This would limit the liability of senior managers in situations where they have taken reasonable steps to perform their duties. No such limitation is proposed for senior officers under the Business Corporations Act.
Registrar May Dissolve Society That Has Failed to Transition or Return a Record
Presently, approximately 5,000 societies still have not transitioned under the Societies Act. Societies that fail to file a transition application or to return a record that has been requested may be dissolved by the registrar. Under the Business Corporations Act the registrar has a similar ability in relation to companies. Any dissolved societies may, however, apply to the registrar to be restored.
Bequests No Longer a "Public Donation"
Bequests made by individuals that are affiliated with the society will no longer be considered part of the society's public donations. Societies may qualify as member-funded societies under the Societies Act if they do not receive more than the prescribed amount of government funding and "public donations." This change is being made as societies cannot control the value of bequests received. This would also allow affiliated individuals to continue to support a society after their death.
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.