If you run, work at or belong to a nonprofit in the province of British Columbia, then you are likely intensely aware of the need to conform to the new regulations set out in the updated BC Societies Act.
For those unfamiliar, the Act is the statute that provides the legal framework for the formation and governance of societies in BC. Royal assent was given to upgrade the Act and bring it into a modern context in 2015. On November 28, 2016, the Act came into effect. Prior to that, it had not been substantially revised since 1977.
[You can read more about the genesis of the new revisions and the formative discussions around them in an earlier CharityVillage story here.]
As of November 27, 2017, nonprofits (societies) in the province are on a one-year deadline – societies are being asked to submit their transition forms by November 28, 2018 – to ensure their organizations transition into compliance with the new BC Societies Act. So what does this mean in practical terms?
Update. Upkeep. Upload.
The major issue with BC’s nearly 27,000 societies (read: nonprofits) is the need to update their constitutions, bylaws and sundry legal paperwork so that they are in good standing with the province’s societies registry – then, all these files must be uploaded digitally to the registry’s new system. While that sounds like a simple enough exercise, the ramifications of the procedure are immense.
Martha Rans, a nonprofit sector lawyer based in Vancouver, is the project lead of a website designed specifically to assist the BC sector with transitioning. It is an invaluable resource located at Lawfornonprofits.ca. The site is an initiative of the Pacific Legal Education and Outreach Society (PLEOS), of which Rans is the legal director.
One of the most useful aspects of the site is its user-friendly FAQ section, which serves as the baseline to understanding what a nonprofit society is facing with the requirements of transition in the Act. The answers to the FAQs are laid down in bullet form:
- Every society in BC will have two years [as of November 2016] to electronically file a transition application consisting of their constitution, bylaws, a statement of directors and their registered office, all as they existed before the new Act [came] into force.
- It is important that every Society ensure that the statement of directors and their registered office is up to date prior to transitioning.
- If a society’s information is incorrect at the time of transition, the society will be required to make a separate filing after their transition is complete.
- It is also important that all annual reports are up to date in the annual reporting filings. Any society whose annual reports are not up to date will not be able to transition.
- This transition application will require societies to make changes to their current constitution and bylaws, as well as re-file those documents in electronic format with the Corporate Registry.
The rest of the FAQ page can be found here, with more important information on what is necessary to complete the transition.
Transparency concerns
Dene Paquin, a manager at Enkel, a book-keeping and accounting firm that works with BC nonprofits, notes that his clients are noting a specific section of the Act that is drawing more focus – Section 36: “Reporting on remuneration of directors, employees and contractors.”
“From a financial reporting perspective, one of the key considerations appears to be Section 36,” Paquin says. “We believe that the upcoming transition is going to strengthen the focus on financial record keeping for British Columbian societies. Now that organizations will have the requirement to publicly disclose financial information upon request, there will be an increased focus on ensuring that information is accurate and appropriate.”
Additionally, he notes that his company’s clients seem to have a good grasp of the transition process and are working diligently with their legal councils and advisors to ensure they are compliant before the deadline.
“With the transition date rapidly approaching, we are starting to see an increase of dialogue in public sphere over the past months. As 2018 begins, we believe that many organizations are focusing their attention on researching the requirements needed in order to remain compliant under the new Act.”
Still, there is much concern that many more, resource-poor societies are going to have a harder time hitting the deadline.
Feels like the first time
While more than a year has now gone by since the 2016 enforcement of the new Act, according to Rans’ data, less than a third of all BC societies have completed their transitions. Though there are still 10 months to go before the deadline, for many smaller, less well-funded organizations, time is running out.
“As of November 27, 2017, out of the approximately 27,000 BC societies, only 6,543 have transitioned,” Rans told CharityVillage. “The issue is, for many societies, they have not looked at their constitutions and bylaws since they were incorporated. Of the 27,000 societies, maybe 5,000 are secure and funded organizations, robust enough to have really good governance practices, such as reviewing their bylaws on a regular basis. But a lot of groups may not even understand what their own bylaws mean.”
She adds that for many of these organizations, transitioning is “not just a question of uploading their revised or compliant bylaws and constitutions to meet the Act…they need to re-familiarize themselves with their own bylaws first.” This could require added legal help, since many organizations don’t have the resources to hire a lawyer to educate them about their own charters and constitutions so that they can begin actually complying with their own bylaws.
Moreover, Rans says that in her work she and her colleagues at PLEOS are discovering that many organizations are now finding mistakes made in the original drafts of their bylaws from years ago. “They are only now realizing that they can’t, for example, meet quorum for an annual meeting – which is an issue if you actually want to make changes to your bylaws in your annual meeting” to update them into compliance with the Act’s requirements, she adds. It’s a vicious, often frustrating.
To make matters more complicated, staff members at some of the societies are also finding out that changes they did make to their constitutions or bylaws years ago were never even filed with the BC registry. “So they’ve been functioning on the basis of their members’ agreement, but they are legally non-compliant” from the start, Rans says.
Amen…dment
But not all is lost. The BC Registry has thrown a life preserver out to the sector in the form of a “transition correction/amendment” form. Rans notes that many nonprofits consist of all-volunteer employees, who struggle to make their filings due to limited time and resources to commit to the detailed administration of their organizations. Mistakes are bound to be made in the transition process, and the registry won’t be able to catch the majority of these, since it is only gathering the files, not scrutinizing the validity of every bylaw and charter unique to thousands of charities.
“There’s no information office that is screening for these mistakes. It is [the societies themselves] who need to catch those errors in their own bylaws and constitutions.”
Rans says based on discussions she has had with the registry, she is confident that the province is not interested in “catching” groups who have made mistakes and de-certifying them. Rather, it is encouraging organizations that catch mistakes after they’ve transitioned, to self-correct, submit an amendment form, and the BC registry will be lenient. According to Rans, the province will give those organizations time to correct the errors and come into compliance, even after the November 28, deadline. But that shouldn’t serve as an excuse to delay the transition, Rans cautions. Down the road, if a society has forgotten about making the corrections, it could cause unwanted trouble or even decertification.
Still, for any BC societies/charities who worry they are not transitioning in the right way or need to update or clarify their organizations’ constitutions and bylaws, the Lawfornonprofits.ca website is an invaluable resource and portal for assistance and information.
Andy Levy-Ajzenkopf is a professional writer living in Toronto. He can be reached at aajzenkopf@yahoo.com.
Please note: While we ensure that all links and email addresses are accurate at their publishing date, the quick-changing nature of the web means that some links to other web sites and email addresses may no longer be accurate.
