202004.23

Several non-profit organizations are incorporated by letters patent under Part III of the Companies Act. While the entry into force of the Quebec Business Corporations Act in 2011 modernized the law applicable to companies, now corporations, non-profit organizations are still governed by the Companies Act, which has not been modernized, except to a minimal extent.

For example, it is permitted for a corporation to hold a meeting of shareholders in whole or in part by means of telecommunication, provided that the means allows all participants to communicate with each other immediately and provided that the by-laws of the corporation allow such a meeting.

On the other hand, until recently, a non-profit could not hold a general meeting of its members using telecommunications – they were required instead to hold such meetings in person. In these times of confinement, convening all the members of a non-profit for a general meeting is unthinkable. Furthermore, this may prove to be a problem with regard to the liability of directors who are obliged to convene and hold an annual general meeting during the current containment measures.

Fortunately, a recent amendment to the Companies Act, which occurred in November 2019, now allows non-profit organizations to hold a general meeting of their members by means of telecommunications. Before doing so, the board of directors must ensure that such a measure does not contravene the letters patent or the by-laws of the non-profit, otherwise an amendment to these documents may be necessary.

As mentioned above, it will be important to choose a means of telecommunication which allows the participants not only to communicate with each other in real time, but also a means which will make it possible to carry out a secret ballot and to preserve the confidentiality of the members in the event that it is requested.

In the event that it is not possible to hold a meeting by telecommunication means or in the event that it is not advisable to do so, the board of directors has the power, in certain circumstances, to cancel and postpone meetings of the members, including the annual general meeting. In such a case, a notice should then be sent to members to inform them. In addition, in the case of an annual general meeting, such a postponement will have consequences on various important subjects, in particular on the presentation of the financial statements, the election and the terms of office of the various members of the board of directors, as well as the appointment and mandate of the auditor.

Our team offers governance assistance services and can advise and support you in this process. We invite you to contact us in particular to convene and hold an annual general meeting of the members of your non-profit organization, in order to ensure that you are entitled to proceed by telecommunication or to postpone the holding of such a meeting while respecting the obligations incumbent on the board of directors.

An article by Lawyer Sébastian Proulx-Garcia

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