Changes re: members

Member classes or types

If you have more than one type of member, and the types have different conditions or rights, the ONCA treats them as member classes. Member classes have rights that are specific to each class.

Many nonprofits use membership for fundraising, inclusion, or affiliation. But they rarely think about what powers they want member classes to have. Many nonprofits have non-voting honorary or associate members. Often, partners, donors, clients, or the families of clients are called members. Does your nonprofit want these groups to have power over key decisions? Other nonprofits define voting powers through criteria that change with time or circumstance, for example, by the number of members or clients in a geographical region.

Previously, membership was described only in your bylaws. Bylaws could be easy to change, as long as a majority of your voting members agreed. Under the ONCA, the types of members you have and what power each class has to vote must be described in your articles. It’s difficult and expensive to change articles frequently. You must get approval from two-thirds of your members and pay to file the changes with Service Ontario. If you are a charity, you must also submit the changes to the Ontario Public Guardian and Trustee and to the federal Canada Revenue Agency and then wait to have the changes approved. Changing your articles could possibly put your charitable status at risk.

Under the ONCA, member classes have collective rights as a class to veto changes to that class. A nonprofit cannot change how members qualify for a class of membership (for example, the price they pay) or the voting power of a membership class unless that class of members agrees with the change. Each membership class, voting separately as a class, must also approve other fundamental changes to the nonprofit, like mergers or the sale of key assets.

The ONCA requires you to define the conditions for each member class in your bylaws. How does a member qualify for that class? Can a member withdraw or transfer to another class? If so, how? When does membership in a class end? Can a corporation or an organization be a member? If you don’t define conditions like this yourself, the conditions in the default bylaw or in the legislation will apply.

Clarify what classes of members you want to keep and what voting powers and conditions apply to each class. If you want to change your membership or voting structures, consider doing it now, before the ONCA takes effect.

Member rights (general)

Having engaged and active members can be good. But members have more power under the ONCA.  Under the ONCA, members have the right, for example, to put forward matters to be discussed at an annual members’ meeting, to nominate directors, and to call a special meeting. It takes fewer members under the ONCA to remove a director than under the former laws.

Any voting member can make a proposal that must then be circulated to members in advance and included in the notice of an annual members’ meeting, if the proposal meets the conditions set out in the ONCA.  The proposal can include nominations for directors, even if your nonprofit has a different nomination process.

It’s possible that a small minority of your members could inappropriately stack a meeting, plan a hostile takeover, or take your nonprofit in new directions.

If you do nothing, more power will be in your members’ hands. You may want to set some limits to members’ powers in your bylaws. For example, you can establish qualifications for becoming a member, set a higher quorum, limit the ability use a proxy, and set a record date to determine who can will have the ability to vote at a members’ meeting.  You could also set up a members’ code of conduct.

Review the rules your nonprofit has for members. You can’t change the mandatory provisions of the ONCA (for example, that members can put forward proposals), but you can set up processes in your bylaws that all members must follow – processes that are transparent and fair and that reflect the power you want members to have over your nonprofit’s affairs.

Member proposals

Voting members with voting rights have the right to put forward their ideas and to have the ideas discussed at annual member meetings, whether the directors and officers of the nonprofit agree with the ideas or not. Member proposals must meet certain conditions.

Under some conditions, a nonprofit does not need to accept member proposals, but in these cases they must still let the member know within 10 days of receiving the proposal that they intend to refuse the proposal and must give the member the reasons for the refusal.

Nonprofits must circulate information about a valid member proposal with the notice of the annual meeting to the members.

A member with voting rights is entitled to discuss at the annual meeting any matter that would have qualified as a proposal, even if the member did not submit a proposal in advance.

Executive directors and chairs of member meetings should be familiar with the conditions for member proposals and the obligations of nonprofits to consider them, as outlined in the ONCA [Section 56(1)].

 

Member rights to information

Under the ONCA, you must provide a free copy of your nonprofit’s articles and bylaws to any member who asks. Members are also entitled to view and purchase copies of financial statements and member lists, including member names and contact addresses.

The ONCA requires that a nonprofit keep a register (list) of its members and share the list with other members on request. The member must agree, by signing a formal “undertaking,” to use the information only for the purposes in the legislation. The purposes in the legislation include influencing voting of members, requisitioning a meeting of the members, and other matters relating to the affairs of the nonprofit. Members can’t use the information to promote their new business, for example. You should inform your members that, as part of becoming a member of your nonprofit, they are deemed to consent to the collection and use of their names and addresses in this way.

If members make proposals, as long as the proposals comply with the requirements in the ONCA, nonprofits have to include the proposal in the agenda of the next meeting and circulate the proposal to other members when they send notice of member meetings.

For more on reporting financial information to members, review the changes re: financial reviews and audits.

Consider practical ways to share information with members. Are your articles, bylaws, financial statements, and membership lists up to date and in a form you can easily share? Tell your members that their names and contact information might be shared with other members.

Reviewed: May 2015