The unprecedented Coronavirus (COVID-19) pandemic has brought the economic motors of the world to their knees. The Not-for-Profit sector is not immune and is in fact particularly, and if not harder, hit. NFPs and charities are scrambling just to survive and maintain virtual existence, let alone worry about governance issues like annual general meeting requirements and whether it is legal to hold meetings by phone or videoconference.
Much needed relief has come to Ontario Not-for-Profit corporations from the provincial government:
- The AGM of a Not-for-Profit corporation may be held by telephone or electronic means; and
- The time requirement to hold the AGM has been extended.
The Ontario government enacted REGULATION 107/20 made under the EMERGENCY MANAGEMENT AND CIVIL PROTECTION ACT. The regulation was published on e-Laws on March 31, 2020.
Previously, the board of directors of an organization had to review whether an organization’s by-laws, letters patent or supplementary letters patent prevented a meeting of members to be held by telephone or electronic means such as video conference.
Many organizations were concerned about the impact of the COVID-19 pandemic and wanted to see if their by-laws allowed for the terms of the current board of directors to be extended for another year. Many organizations could not do this if they adhered to their by-laws and governing documents.
The key governance features of the regulation in effect for all Ontario NFPs are that:
- Despite any provision to the contrary in their governing documents, a meeting of members or of directors of the organization can be held by telephone or electronic means such as video conference.
- The normal rules for holding an AGM are: a) If a corporation is recently incorporated, it must hold its AGM no later than 18 months after its incorporation date, and b) After that initial annual meeting, subsequent AGMs must be held not more than 15 months after the last AGM.
- The regulation provides two possible dates to hold this year’s AGM:
- If the AGM should normally take place within the period of the declared emergency, the AGM shall be held no later than the 90th day after the day the emergency is terminated by the government of Ontario. So, if the state of emergency is lifted September 30, 2020, the latest date an organization’s AGM could be held would be December 29, 2020.
- If the AGM should normally take place within the 30-day period that begins on the day after the day the emergency is terminated, the AGM shall be held no later than the 120th day after the day the emergency is terminated.
This regulation is a life saver for many NFPs in Ontario because the current board of directors can effectively remain in place to govern and manage the affairs of the organization until the next AGM, to be held after the COVID-19 pandemic emergency officially ends.
For Federal Not-for-Profits, we will be watching closely to see if the Canada Not-for-Profit Corporations Act will be similarly amended. My colleague, Tanya Kuzman, sets out a Step by Step “How To” guide regarding Virtual AGMs for Federal NFPs: Step by Step: How to know if your Federal Not-for-Profit or Charity can hold a Virtual Annual General Meeting during the COVID-19 Pandemic.
For the full text of the Ontario Regulation 107/20 made March 30, 2020: https://www.ontario.ca/laws/regulation/r20107.
This article is intended to provide an overview of the emergency relief regulation enacted by the Province of Ontario to assist Ontario not-for-profit corporations in connection with convening an AGM during or after the COVID-19 pandemic. With the unprecedented degree of uncertainty and fluidity associated with COVID-19, it is important that Ontario corporations continue to monitor any further notices or changes which may be released by the Ontario Office of the Public Guardian and Trustee, Service Ontario or the Province of Ontario. We further recommend, due to the unique nature of every corporation, that legal counsel be consulted to find an approach that works best for your organization.
At Mills & Mills LLP, our lawyers regularly help clients with a wide range of legal matters including business law, family law, real estate law, estate law, employment law, health law, and tax law. For over 130 years, we have earned a reputation amongst our peers and clients for quality of service and breadth of knowledge. Contact us online or at (416) 863-0125.