Update to Cooperatives for holding AGMs: Please note that the Manitoba government has passed an order under The Emergency Measures Act which temporarily suspends a number of the provisions listed in my article below. I invite you to read the Order here. For any cooperative that was scheduled to hold an annual meeting on or after March 1, 2020, and before September 1, 2020, the rules have been suspended to permit the participation of members via electronic communication, provided the meeting is held by no later than September 30, 2020.
Cooperatives and COVID-19: Can a Co-op hold an AGM electronically?
All Cooperatives in Manitoba must hold an annual meeting of its members, in order to:
(a) appoint / elect directors whose term is set to expire;
(b) appoint auditors;
(c) review the annual report and financial statements;
(d) approve the financial statements; and
(e) any other special business that has been included in the notice of the meeting (such as proposed amendments to by-laws).
The first thing you need to do is check your articles and your by-laws, because The Cooperatives Act (the Act), for the most part, defers to what is stated in your articles or by-laws. The Regulations to the Act states that a meeting may be held electronically if the cooperative's by-laws authorize the meeting to be held in that manner, and set out adequate requirements for holding it that ensure each member can communicate with the other. The Board of Directors must pass a resolution determining how the meeting can be held.
That being said, the Act has some guidance, as follows:
1) Can members hold a meeting electronically?
Yes - if the by-laws permit it, members may participate or attend a meeting of members by means of a telephonic, electronic or other communication facility, provided every member can fully communicate with every other party in the meeting. This is critical, of course, because it is not sufficient to have members able to listen, but not able to communicate questions. Specifically, members must have a reasonable facsimile of the level of communication and participation in the proceedings that the member would have enjoyed had that member been present in person at the meeting. Information must be presented as simultaneously as possible to everyone participating in the meeting, and procedures (like voting) cannot be unduly delayed during the meeting.
2) How do members vote at a meeting held electronically?
Unfortunately, there's not a lot of guidance from the Act and regulations. The Act requires that members have the right to have their vote counted. How does that happen when it's electronic? There are a number of technology platforms available to assist with the lodging, tabulation and identification of votes, some free, some for a fee. The important thing to remember is that members continue to have the same voting rights (one member - one vote) and the board must ensure compliance with the by-laws of the cooperative.
3) When does a meeting have to be called?
- The directors must call an annual meeting of its members within 18 months after the cooperative comes into existence, and then every year within 15 months of the date of the last annual meeting (note that the Registrar's office is permitting a one-time extension to this timing this year, due to the pandemic).
- in order to determine who gets notice, the directors can fix a day prior to the meeting that permits the directors to identify all of the members as of that day, so long as it is no more than 50 days ahead of the date of the AGM
- notice must be given to all members of the date of the meeting and of any special business to be conducted at that meeting, and that notice must be circulated no more than 50 days in advance of the meeting date, and no less than 21 days in advance of the meeting date
4) Can we adjourn a meeting where notice has already been circulated?
Yes - in a couple of ways (subject to what might be set out in the Co-op's by-laws): the meeting can be adjourned for less than 30 days, in which event notice does not have to be sent out again in accordance with the rules set out in (3) above (notice of the adjournment may be communicated by a general announcement). If the meeting is to be adjourned for more than 30 days, notice must be sent out the same as in (3) above.
5) What do we do for older members who don't have access to technology?
It is currently not prohibited to have people gather, so long as it is fewer than 50 people and so long as a distance of 2 metres is respected. Depending on the number of members you have, then, you may hold a hybrid meeting, and identify that there will be a location where only those parties who do not have technical ability to join the meeting remotely will be invited, but that will be limited to an appropriate number of people. You may also want to consider having members complete a brief survey identifying if they have travelled within the last 14 days or have experienced any symptoms, and advise those that answer positively that they must not attend in person, and must find a means to attend electronically. Under these circumstances, it is recommended that the greatest amount of notice of the meeting be provided (50 days prior to the meeting) in order to accommodate as many of the Co-op's members as possible.
6) Other concerns
- Members may feel that transparency of the board or management is at risk, and that their annual opportunity to ask pointed questions of the board or management is being denied. It's important to let members know that they are being heard, and it is recommended that they be given a very clear method to have their questions posed. It may be worth considering whether a third party is hired to gather the questions, even in advance of the meeting, in order to collate them to permit management to address them in an orderly fashion.
- Refer to your by-laws to determine quorum. If your by-laws are silent on the point, note that the Act requires a quorum of 50% of the members
- If quorum is not achieved, those present (electronically) can adjourn the meeting, but no other business can be conducted
- Unless you have already amended your by-laws to deal with electronic voting, you are likely going to need to amend your by-laws. Amendments to the by-laws must be circulated in advance of the annual meeting, in compliance with the notice provisions (see (3) above)
- If you are a non-profit co-op, or otherwise receive funding from government sources, you should contact that government agency to find out if there will be any funding issues if you fail to hold your AGM within the time limits imposed.
- If your Coop has a lender, make sure to notify them if you are delaying the approval of financial statements that need to be supplied to your lender as part of your covenants.
- The provincial regulatory body, the Registrar of Cooperatives, has confirmed that it will work with Co-ops to address potential adjournments, but Co-ops must notify the Registrar of Cooperatives of any postponement or adjournment. Here is a link to their notice: Click here to read the guidance from the Registrar's office.
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.
