Revising the BC Society Act: Nonprofits speaking up
By Andy Levy-Ajzenkopf
March 8, 2010
For the first time since 1977, the BC government's Ministry of Finance is taking steps to update the BC Society Act.
As defined by the province, the Act is the statute that provides "rules for the registration and corporate governance of not-for-profit entities."
When the BC government announced last December it was setting forth on a review process for the Act, Finance Minister Colin Hansen said he welcomed "input from the more than 26,000 societies registered in BC. I encourage them and anyone else with interest in the legislation to take part. Their feedback will help determine what changes need to be made."
Since that time, a coalition of nonprofits and interested parties has emerged to take Hansen up on his invitation. But there is a time crunch on since the government has set an April 1 deadline to receive initial input and suggestions on how to modify, update, or revise the Act.
The government says it has identified "two fundamental structural issues" regarding the Society Act. "The first concerns the nature of the corporate model most appropriate for societies and whether a sophisticated business law framework should be adopted. The second concerns the extent to which the act should contain regulatory provisions or other rules that constrain the operation of societies." For a more detailed summary of what specific changes the province is pondering, its "stakeholders letter" is a must read.
With such a tight time frame to respond, many BC sector leaders have come together to present a unified voice to the province in the hope their fears and aspirations for a revised Society Act will be heard and taken into serious consideration.
Nonprofits banding together
One of the main voices for this group is Derek Gent, executive director of the Vancity Community Foundation.
Gent is behind an initiative to draft a "collaborative response" to the government in tandem with a spectrum of sector organizations such as the YWCA of Greater Vancouver, Coast Mental Health, PLEA Community Services, Vancouver Foundation, United Way of the lower Mainland, West Coast LEAF, First Call, Pivot Legal Society and "some umbrella groups" such as BC Non-profit Housing Society, Alliance for Arts & Culture, and Enterprising Non Profits.
For Gent and his colleagues, one of the main issues of concern is that the province might attempt to harmonize certain rules governing societies with those that pertain to corporations.
"A new Act could create additional challenges or undue restrictions on the important work of the sector, as we've seen implemented other jurisdictions like Ontario [in December 2009’s Bill 212 or Good Government Act], or with the proposed federal Canada Not-For-Profit Corporations Act. We want to clearly say that the [BC Society] Act should help build capacity and encourage innovation and effective service delivery rather than creating onerous regulatory requirements," Gent said.
"There are specific recommendations we have been talking about, including removal of the requirement for special resolutions on borrowing; increased scope for restorations and amalgamations, and provisions for non-voting members. The more general recommendations will likely include more flexibility on governance, provisions for member remedies, simpler and more streamlined processes with the registrar, education and sector support, and addressing the growing amount of earned revenue [from] social enterprise activity."
"We also want to reinforce that there is a whole level of oversight and regulation already imposed by the federal government for those organizations which are registered charities, and we would not want to see duplicated efforts at a provincial level." |
|
Gent stressed that while accountability is "absolutely important," his coalition’s position is that there is a danger that over-regulation could occur with a revised Act, as well as the possibility for imposition of "undue requirements for a sector that is already struggling to deliver on growing demands we face, and has a solid track record of self enforcement and effective operation. We also want to reinforce that there is a whole level of oversight and regulation already imposed by the federal government for those organizations which are registered charities, and we would not want to see duplicated efforts at a provincial level."
He also points out to readers that his organization is now supporting a blog called yourtake.ca where anyone can post and read comments about the review process. The site is hosted by United Community Services Cooperative (UCSCo-op). Though not a charity itself – co-ops fall under the Co-op Act – it has a vested interest in the BC Society Act since many of its members are nonprofits.
Of nonprofit and corporate acts
Tim Beachy, CEO of UCSCOOP, echoed Gent’s comments to CharityVillage last week, saying the biggest concern over the revision to the Act was about how much new regulation it might contain.
"In the years 2003 and 2004, there was an initiative by the province to reduce red tape. During that time they reduced regulations around the Society and Co-Op Acts. And the federal legislation that was introduced and passed, but not yet enacted, proposed a bunch more of what we think is very heavy regulation. The talk now about trying to harmonize some aspects of the BC Society Act with the Business Corporations Act, has raised the fear of over-regulation," he said.
Asked what specific overlap in regulations might occur between the two acts that would impact nonprofits in the province, Beachy said that while he couldn’t "speak to the Corporations Act in detail" the issues revolve around governance models, and rules related to what societies need do or don’t need to report to the registrar.
"There’s a very streamlined way to incorporate businesses in BC. You can go online and basically have a corporation established in an hour," Beachy said. "But a society takes weeks and there’s heavy regulation of the wording of the bylaws and constitution. And if a society goes dormant or needs to be re-established, that’s a very long a difficult process. Whereas, in the Corporations Act, you can go ahead and restore [an incorporated entity] in a few minutes." Beachy acknowledged that from different perspectives, some of these regulations from the Corporations Act might be beneficial to certain societies and not to others.
"Some of this harmonization with the BC Corporations Act would be helpful. But there’s a lack of knowledge about [it] and fears that because they tried to harmonize it in Ontario, it resulted in a lot of regulation," he said.
Ideally, Beachy said he’d like "some peculiar" ideas removed that have been suggested - mainly by the BC Law Institute’s (BCLI) comprehensive review of the Society Act in 2008 - including the notion that societies can have only one member and one director, similar to corporations.
"In my personal opinion, this seems to be out of bounds from what I would consider to be good society behaviour," he said, adding that another primary change he’d like to see to the Act involves its borrowing provisions for societies. "These are pretty restrictive. Directors have to call a general meeting to get borrowing powers and I think that’s overly onerous. This should be reduced backwards so that directors have access to more borrowing if they choose to have it."
The long arm of nonprofit law
As mentioned above, the BCLI’s two-year review and its ensuing draft of a new Act, in a form that was ready for enactment by the provincial legislature of the BC Society Act, is one of the major documents being looked at by the province in its formulations for revision of the Act.
[Note: The BCLI is an independent law reform agency and not a part of the provincial government, and it is not responsible for the ongoing Ministry of Finance consultation on reform of the BC Society Act. It regularly publishes reports making recommendations to the BC government with the aim of modernizing, simplifying, and clarifying the law.]
Kevin Zakreski, a staff lawyer with the institute and a primary contact on BCLI’s revision project for the Act, said that from a legal perspective the revision of the BC Society Act is crucial to reflect changes in the sector and laws since 1977.
"...it has created a strange situation in which societies in this province have to adhere to a number of onerous requirements that were originally created for business corporations, but that no longer even apply to those business corporations." |
|
"The BC Society Act is based in large measure on British Columbia's 1973 Company Act. When the Society Act was enacted in 1977, the responsible minister described it as a 'satellite' of the Company Act. In 2004, the Company Act was repealed and replaced by the new and modern Business Corporations Act. Conceptually, this development completely undercut the rationale for a lot of the provisions in the BC Society Act. As a result, it has created a strange situation in which societies in this province have to adhere to a number of onerous requirements that were originally created for business corporations, but that no longer even apply to those business corporations," Zakreski explains. He continues:
"The [nonprofit] sector in BC has undergone considerable change and development since 1977. The number of societies has grown dramatically - from about 8,500 in 1977 to over 26,000 today. Societies are involved in many more areas and are providing more services than in the 1970s. There is greater sensitivity to questions of corporate governance now. And, finally, since 1977 there have been great advances in electronic communication. None of these developments are reflected in the current BC Society Act."
Asked about whether he felt the revision of the BC Society Act could possibly help the multitude of nonprofits and their varying missions in any comprehensive way, Zakreski replied:
"Yes, it can. Harmonization with the Business Corporations Act - which is one of the models the ministry is considering - would bring greater certainty to day-to-day operational issues that affect every society, regardless of size. This approach could also go a long way toward resolving many of the practical issues created by the out-of-date BC Society Act. Finally, a new act could harness advances in electronic communication, making it easier for new groups to incorporate societies."
Time to make a nonprofit noise
Liked this article?
Check out the following links: |
|
|
|
As stated, time is running out for BC nonprofits and those involved in the sector to make themselves heard, at least in this first phase of government consultations.
Jamie Edwardson, a spokesperson for the ministry, said that there was no timetable set for what happens after the April 1 written submission deadline. He called this first phase a "temperature check" on the mood and thoughts of the sector about the proposed revision. He also noted that there would "likely be more consultations" afterwards, but that no public hearings were currently scheduled. He would not comment on when the minister might respond or issue a statement about this initial phase.
If you are interested in signing Your Take's collaborative submission, please click here. For those interested in submitting their comments directly to the government, the province has provided the following contact information:
By email: fcsp@gov.bc.ca
...or by snail mail to:
Financial and Corporate Sector Policy Branch
Ministry of Finance
PO Box 9418 Stn Prov Govt
Victoria BC V8W 9V1
Andy Levy-Ajzenkopf is president of WordLaunch professional writing services in Toronto. He can be reached at andy@wordlaunch.com.
Next week: The Charitable Registration Decision Tree Project
Click here to learn more about
upcoming cover stories.
