The Canada Not-for-profit Corporations Act provides for default rules if your corporation’s by-laws are silent. You have the option of overriding many of these rules by setting out your own rules in the by-laws or, if you so choose, in the articles. In some cases, the Model By-laws provide alternate rules to the default ones.
1. Financial Matters
Provision | Default Rules | By-laws Providing Alternate Rules |
Borrowing powers | Directors can borrow and grant security without authorization of members. | Can restrict borrowing powers. |
Providing annual financial statements to members | Annual financial statements must be sent to members 21-60 days before the annual meeting. | Can send notice to members that financial statements are available at the registered office. See Model By-laws (section 1.07). |
2. Membership
Provision | Default Rules | By-laws Providing Alternate Rules |
Transferability of membershipFootnote 1 | Membership can only be transferred back to the not-for-profit corporation. | Can specify different rules for transferability. |
Place of meeting of members | The meeting of members is to be held at a place in Canada that the directors determine or a place outside Canada if all the members entitled to vote at the meeting agree. | Can provide otherwise. |
Members calling a meeting | Members who hold 5% of the votes can request a meeting of members. | Can set a percentage lower than 5% but not higher. |
Electronic participation at meetings | Participation by electronic means is permitted. | Electronic participation can be prohibited or restricted. |
Meeting held entirely by electronic means | Not permitted. | Can be permitted as long as all participants can communicate adequately with each other. |
Quorum for meetings | A quorum is a majority of members, and if a quorum is present at the opening of a meeting, business may proceed even if a quorum is not present throughout the meeting. | By-laws with a different quorum must set it out as a fixed number of members; a percentage of members; or a number or percentage of members that is determinable by a formula. Can provide that an opening quorum at a meeting is not sufficient where there is a loss of quorum later in the meeting. See Model By-laws (section 4.03). |
Manner of voting by members | Voting is by show of hands or by electronic participation. A member entitled to vote at the meeting can demand a ballot. | Can specify manner of voting. See Model By-laws (section 4.04). |
Absentee voting by membersFootnote 1 | Not permitted except for electronic participation. | Can specify that absentee voting will be allowed by proxy, mailed-in ballot, or telephonic, electronic or other communication facility. Must also set out procedures for collecting, counting and reporting the results of any vote. See Model By-laws (section 2.03) |
Rights on termination of membership | Rights of a member cease to exist on termination of membership. | Can provide otherwise. See Model By-laws (section 3.02). |
3. Directors
Provision | Default rules | By-laws Providing Alternate Rules |
Remuneration of directors | Directors can fix the reasonable remuneration of directors, officers and employees. | Can provide otherwise. |
Place of meeting of directors | Directors may meet at any place. | Can provide otherwise. |
Appointment of directors | No appointments allowed. | Cannot be overridden by the by-laws. The articles may permit the directors to appoint up to one-third of directors until the next annual meeting of members. |
Quorum of directors | A majority of the number of directors or minimum number of directors required by the articles constitutes a quorum. | Can provide otherwise. |
Appointment of officers | Directors designate the offices, appoint officers and specify their duties. | Can provide otherwise. See Model By-laws (section 7). |
By-lawsFootnote 2 | Directors make, amend or repeal by-laws, except those requiring two- thirds vote of members. The by-law, amendment or repeal is effective until the next meeting of members when members confirm, amend or reject it. | Can provide otherwise. |
4. Other
Electronic documents | Electronic documents are permitted. | Can provide otherwise. |