Can my nonprofit organization hold its AGM virtually?
“I am a Director of a nonprofit and our AGM is coming up soon. I heard that because of the COVID-19 situation, some larger Canadian corporations and banks have had to apply to court to allow them to hold their annual general meetings “virtually” and not in person. How do I know if my organization can hold a virtual meeting?”
First off, you should know that in response to the COVID-19 crisis, the Government of Alberta has suspended the deadlines for nonprofits governed by Alberta law to hold their annual general meetings. These groups will not be dissolved due to failing to file annual returns on time at Alberta corporate registry. Furthermore, until this Government of Alberta order lapses at some time when the crisis is over, nonprofits can hold their meetings through remote means such as videoconference, teleconference or other means despite any provision in their articles, bylaws , rules or memorandum.
However, many organizations are taking this time of “working virtually” to consider if they might hold their AGM by virtual means even after the government order lapses.
In our modern technological age, you would think the answer to this question would be common sense. But the answer doesn’t come from common sense, it comes from the law.
Most nonprofit organizations are corporations, just like most businesses. The answer as to whether a virtual meeting can be held depends on a review of many things, from what is permitted under the legislation that the organization was incorporated under to what is stated in the bylaws of the organization and what the organization has properly authorized as a process.
Let us look at one piece of legislation many Alberta nonprofits are incorporated under: the Societies Act. One of the reasons why the Government of Alberta may have made the temproary order is because the Act is silent on the subject of virtual or electronic meetings. All it dictates is that: “A society shall hold an annual general meeting in Alberta.” This, in its interpretation, begs the question of what is a “meeting” in a virtual world?
As they taught us in law school: “sometimes you have to rely on the common law, not on common sense.” The “common sense” definition of meeting is “a planned occasion when people come together to discuss something.” On the other hand, the legal definition of meeting is “a gathering of people to discuss or act on matters in which they have a common interest.” This clearly means a connection with each other for a purpose. How can a nonprofit organization provide that connection for a valid annual general meeting?
If that isn’t enough of a headache, the rules are different in each jurisdiction (e.g. in each province in Canada). So just because an organization like yours located in Ontario can hold a virtual meeting for its AGM, does not mean that your organization located in Alberta can! An organization incorporated in Alberta is governed by the laws of Alberta.
The organization has to “take control” of the definition of what a meeting is for their organization. In other words, Alberta nonprofit organizations have to define for themselves what it means to hold a meeting and the processes and policies that relate to it. This must be done in the organization's bylaws.
As noted, many Alberta organizations are incorporated under the Societies Act. However, some Alberta nonprofits are incorporated under the Canada Not-for-profit Corporations Act and then register in Alberta to carry out their activities. The rules are more certain as this modern statute addresses the issue "virtual" head on.
The Canada Not-for-profit Corporations Act allows an organization incorporated under it to hold a meeting entirely by electronic means if the bylaws so state and it can occur virtually as long as all participants can communicate adequately with each other. Electronic participation at meetings (such as voting) is permitted under the Act by default unless the bylaws have a provision to prohibit or restrict electronic methods.
A common bylaw provision from some Canada Not-for-profit Corporations that has been adapted for use in an Alberta organization’s bylaws for members meetings is:
If the Organization chooses to make available a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during a meeting of members, any person entitled to attend such meeting may participate in the meeting by means of such telephonic, electronic or other communication facility in the manner provided by the policies and procedures of the Organization. A person participating in a meeting by such means is deemed to be present at the meeting. Notwithstanding any other provision of this by-law, any person participating in a meeting of members pursuant to this section who is entitled to vote at that meeting may vote, in accordance with the policies and procedures of the Organization, by means of any telephonic, electronic or other communication facility that the organization has made available for that purpose.
We could also look to the rules for our businesses in the province for some guidance on what might be acceptable in Alberta. In the Alberta statute that most businesses are governed by, the Business Corporations Act, a meeting can be held by electronic means, telephone or other communication facilities that permit all persons participating in the meeting to hear or otherwise communicate with each other if the bylaws so provide, or if all those who could attend the meeting consent.
What should an organization do? Here are some tips to help your organization prepare to join the electronic world in any event, despite the current situation.
1. Know the legislation your organization is incorporated under and if it is an Alberta nonprofit organization like the Societies Act or Part 9 of the Companies Act assume there is no process provided for in the legislation for a virtual AGM.
2. Review your bylaws. Do they give the organization the power to hold a virtual AGM in Alberta? If not consider amending them to include a robust virtual meetings clause.
3. Create and approve policies and procedures for these meetings that can keep up with our rapidly changing technology.
4. Communicate these changes to those who will be affected and obtain the required approvals.
5. Test the technology!
It’s never too late to amend your bylaws. Indeed, in the absence of legislative reform in the area of nonprofit regulation in our province that is all an organization can do. Not all organizations need an actual in person meeting to amend their bylaws. Most organizations can accomplish this in other ways, such as by unanimous resolution in writing. Check your bylaws for the actual amendment requirement for the bylaws.
So, in summary, the answer to your question needs further investigation of what applies to your specific organization. If it’s not clear or there is no time to make amendments to your governance documents, and the Goverment order lapses, the courts may be a last resort for you too.
If you want to have some fun with this try testing your knowledge with an IntegralOrg Kahoot:
Government of Alberta: Ministerial Order No. SA:009/2020
Government of Alberta: Annual returns for corporations, cooperatives, and organizations: COVID-19 Response