Written Resolutions in Lieu of Meetings
By: Joel Secter

Federally incorporated non-share corporations can expect many changes when the new Canada Not-for-profit Corporations Act (the "CNCA") comes into force. For example, the directors and members of non-profits will be able to pass resolutions in lieu of holding meetings (if signed by all the directors or members entitled to vote on the resolution at the meeting). This practice has not been acceptable since the late 1990s when Corporations Canada determined that written resolutions in lieu of meetings are not permitted under the Canada Corporations Act (the "CCA"). Although there are inherent benefits to transacting business at meetings, the change will undoubtedly be welcome news to organizations for which the requirements to have the directors and members in the same place at one time is cumbersome.

Meetings have long been considered essential so that directors and members can exercise their respective control over the corporation and, as mentioned, under the CCA written resolutions in lieu of meetings are prohibited. Consequently, maintaining a non-share corporation has required organizations to deal with the requirements for giving notice of meetings as well as the need to get all the directors or members together at the same time in person or virtually. In addition, according to Policy Statement 13.1, non-profits are required to keep, among other things, minutes of all directors' and members' meetings in the custody of the secretary or another officer specially charged with that duty. (Adequate accounting records are to be kept at corporation's head office.)

In this way, the CCA differs from modern corporate statutes such as the Canada Business Corporations Act and the Ontario Business Corporations Act, which both allow directors and shareholders to pass written resolutions in lieu of meetings. When passed, these resolutions have the same effect as if they were adopted at a duly constituted meeting. The legislation governing share capital corporations, after which the CNCA is modeled, also allows directors and shareholders to sign in counterpart, meaning that not everyone is required to sign the same physical copy of a document.

While the directors and members of non-share corporations will finally be allowed to adopt resolutions in lieu of meetings under sections 127(5) and 166(1) of the CNCA respectively, not all business of the corporation will be allowed to be transacted by resolution. Directors will only be allowed to:

a)     make by-laws;
b)     adopt forms of debt obligation certificates and corporate records;
c)     authorize the issue of debt obligations;
d)     appoint officers;
e)     appoint a public accountant to hold office until the first annual meeting of members;
f)      issue memberships; and
g)     make banking arrangements

Members, on the other hand, are less restricted. With limited exception, a resolution in writing dealing with all matters required by the CNCA to be dealt with at a meeting of members satisfies all the requirements of the CNCA relating to meetings of members. These resolutions will be as valid as if they had been passed at a meeting of the members. Copies of every resolution signed by all the directors and all the members must be kept with the minutes of meetings of directors and members respectively.  

It is also important to note that certain resolutions, such as when the members of a soliciting corporation approve the annual financial statements by written resolution rather than at a meeting, will need to be sent to Corporations Canada without delay.

Allowing written resolutions in lieu of meetings will be most helpful to organizations for which attendance at meetings is an issue. Understandably, meetings are more difficult and costly to arrange and hold: they require notice to be given and having participants in the same place at the same time. This can be particularly onerous for larger organizations with larger boards or membership bases that are geographically spread out. Notwithstanding the obvious upside to this change in terms of organizational efficiency and potential cost savings, meetings are often preferable because they afford the opportunity for more fulsome discussion and deliberation on issues facing organizations.