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Virtual Meetings, Governance Considerations with COVID19 - For NFPs

Virtual meetings with COVID19 distancing, and other governance considerations for NFPs

Executive teams and boards in the not-for-profit (NFP) sector are now feeling the full effects of COVID19 distancing directives. The inability for people to assemble together has created novel problems related to operations and governance for all NFPs. Many boards are calling emergency board meetings, contemplating the fate of upcoming Annual General Meetings (AGMs), and grappling with stakeholder and member engagement during such uncertain times. Because status quo is not possible – and may not be for some time - leadership teams must figure out how to advance their governance priorities within the confines of current public health directives and the rules set out in their governing legislation. Key considerations for organizations at this time include but are not limited to holding virtual meetings, providing notice, conducting board business, passing resolutions and amending bylaws where necessary.

Annual General Meetings: Canadian not-for-profit organizations are required by law to hold an AGM to do such things as elect directors, approve financial statements, and approve actions of directors for the preceding year. Most organizational bylaws also prescribe a timeframe and manner in which the organization’s AGM must be held.

With physical distancing in place, it will not be possible for members and board directors to assemble together as they normally would. Organizations must consider their options to remain compliant under their bylaws and governing legislation.

Holding a Virtual AGM. Where bylaws specifically allow virtual meetings, organizations can use digital technology for meetings so long as all participants have an opportunity to speak to each other and votes can be gathered in a way that allows them to be verified and tallied. Note: If the organization’s bylaws prohibit virtual meetings or are silent on holding them, the board of directors may change the bylaws. Typically, such bylaw changes are effective until ratified or rejected at the next membership meeting.

Delaying AGM. Federally incorporated NFPs can apply to Corporations Canada to delay the calling of their AGM when it would be detrimental to do so within the normal timeframe. Provincially incorporated NFPs should consult their governing legislation and contact their provincial corporate affairs department to determine if an application to delay is necessary or possible.

Notice: Notice provisions set out in organizational bylaws as well as governing legislation, such as the PEI Companies Act or the Canada Not-for-Profit Corporations Act, will apply to any virtual meeting being held. When providing notice of an upcoming meeting, organizations should clearly explain the importance of attendance at virtual meetings to encourage strong participation and ensure quorum is met.

Board Meetings: Most bylaws allow boards of directors to meet virtually or by telephone. If bylaws prohibit or are silent on virtual board meetings, the bylaws may be amended or the board may sign a written resolution approving virtual meetings. When meeting virtually, directors must have an opportunity to participate fully in all discussion. Meeting minutes should be recorded and distributed to board members as soon as possible following the board meeting for confirmation of the business that was transacted. Unless prohibited by the bylaws, approval of meeting minutes may be done electronically.

Voting: Organizational bylaws will typically set out voting requirements for board and member meetings. If the digital meeting platform being used does not allow for robust discussion, participant tracking, and verification of voting, then decisions made may not be valid.

Written Resolutions: Certain decisions made by the organization may be passed through a written resolution. Written resolutions can be proposed to all voters electronically for review and approval. Where permitted by the bylaws or governing legislation, written resolutions are binding and can be signed electronically and in counter-parts (i.e. separate signature pages).

Amending Bylaws: Bylaws can be amended through a resolution of the board of directors. Under most corporate legislation, amendments made by a board of directors will be effective immediately and remain in force until the amendment is either confirmed or rejected at the next meeting of the membership.

Other Key Considerations: Organizations may be subject to other rules and regulations set out in their governing legislation, trust agreements, third party contracts or other legal documents. Organizations should be sure to consult all corporate documents that affect their decision-making processes.

Executive teams and boards should take their time planning and executing virtual meetings to ensure all i’s are dotted and t’s crossed. These highly unusual circumstances should be considered just that, unusual, uncertain and unprecedented. Members, directors and stakeholders will likely understand that procedures need to be altered, but it is incumbent upon organizational leaders to ensure all member and stakeholder rights are respected and that information is conveyed in the clearest manner possible.

MRSB Consulting Support

MRSB is available to help you develop an action plan to work through these considerations and assist with implementation if required. We can work with your team to understand your AGM deadlines, clarify voting processes, review legislative and other governance requirements, prepare bylaw amendments, help you set up digital meeting platforms, and design compliant and effective processes for carrying on organizational business through physical distancing measures.

Additional Support Available

The newly announced COVID-19 Business Adaptation Advice Program provides a non-repayable contribution toward the cost for Prince Edward Island businesses, entrepreneurs, not-for-profit, and non-governmental organizations to hire a professional to provide advice and support to adapt to or recover from the impacts of COVID-19. You may be eligible for assistance to contribute up to 100 per cent of the cost (to a maximum of $2500) to engage a professional business consultant to provide advice and support. See details here.

Author: Maria Sanderson, JD, is a lawyer and governance consultant with MRSB Consulting Services in Charlottetown PEI. Maria works with leadership teams, including boards and management, of not-for-profit organizations to develop effective, compliant and responsible governance practices.

Contact Us: During this COVID19 crisis, our consulting team is committed to providing knowledgeable support to your team to navigate rocky and uncertain waters. Contact for an initial complementary discussion on ways we may be able to provide support to your organization. We are here to help.

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