The End Is Near: Transitioning Societies
As a reminder, there is just over one year left for societies (not-for-profit corporations) incorporated prior to November 28, 2016 to transition in accordance with the new Societies Act (the “Act”) – all societies have until November 28, 2018 to do so.
The transitioning process involves online filing of a transition application, including a constitution and consolidated bylaws that meet the new requirements of the Act. Societies will be unable to amend their bylaws until they transition, and the transition process will provide a great opportunity for pre-existing societies to consider updating their bylaws, to ensure current bylaws do not conflict with the new Act, and to take advantage of the new Act’s flexibility – for example, location of meetings, methods of providing notice, or membership structure.
On transition, societies also need to consider whether to designate as a “member-funded society”. A member-funded society is a society that is primarily funded by its own members to carry on activities for the benefit of its own members. There are certain benefits to becoming a member-funded society – for one, they are not subject to stringent accountability measures, there is no disclosure of a director’s remuneration, and the public does not have a right to access copies of financial statements. In addition, member-funded societies are allowed to distribute assets to their members if the society winds up.
There are certain requirements in order for a transitioning society to qualify as a member-funded society – for example, it will not qualify if it is a registered charity or if it receives public donations or government funding over a certain threshold. However, just because your society may qualify to be a member-funded society does not necessarily mean that it should become a member-funded society. Because member-funded societies are allowed to distribute their assets to their members on winding up, these types of societies might be disqualified from receiving certain benefits, such as certain types of government funding, down the road.
If you have any questions about the transitioning process, or are considering becoming a member-funded society, we would be happy to help and discuss your options with you.