All non-profits, whether charitable or membership corporations, must have members. Members play a number of important roles in non-profits, including electing the Board of Directors.
When a non-profit is incorporated directors must be named. These directors form the first board of directors and one of their duties is to determine how people can become members of the corporation. The board may, for example, set a fee for membership and decide to issue membership cards to those who have purchased a membership.
The board admits people as members of the corporation but the articles or bylaws may require that new members be confirmed at a meeting of the members. Corporations must keep track of who is a member and contact information for each member so notices can be sent out as required.
A membership can end in different ways. Memberships cannot be transferred to another person unless the articles or bylaws allow this. A member can choose to resign at any time. Memberships can also expire and need to be renewed after a certain period of time. The articles or the bylaws may also set out a procedure to expel a member in certain situations. In these situations members are entitled to a fair hearing before their membership is revoked
One of the most important roles of the members of a corporation is to elect the board of directors. However, the work of the members is not complete once they have elected a board to run the corporation.
Members have certain rights including the right to...
Generally members are not responsibility for any liability, act or default of the corporation.
There may be different classes of members in a non-profit corporation. These classes have different rights and privileges only if the articles or bylaws of the corporation stipulate the differences.
Some members' rights can be changed by the articles or the bylaws. For example, each member has the right to one vote at member meetings, unless the articles state otherwise. The rights given in The Non-profit Corporations Act, 1995 apply where no changes have been made through the articles or bylaws. Some rights, however, cannot be changed. For example, the right of access to the corporation's records cannot be taken away. The Act states which rights can be altered by the articles of the corporation, which can be altered by the bylaws, and which rights cannot be altered.
A proxy is a written document signed by the member giving another person the right to attend the meeting and vote on behalf of the member. The articles need to state that vote by proxy is allowed. The person appointed as a proxy must also be a member unless the articles state otherwise.
A proxy is only valid for one meeting and a new one is needed to appoint someone as a proxy at a subsequent meeting. A proxy can be revoked by a written document signed by the member and given to the chair at the meeting or left at the registered office no later than the day before the meeting.
Members generally exercise their rights at meetings. Members can reach an agreement without holding a meeting. The agreement must be in writing and signed by all the members entitled to vote on the issue. An agreement without a meeting cannot be used when the issue is the resignation of a director or an auditor. It can also not be used when the issue is a director’s or auditor’s opposition to a proposed action. The articles or bylaws can also allow members to vote by mail.
Generally, a majority of voting members must be present or represented by proxy in order to transact the business of the corporation. The minimum number of members required is called a quorum. A corporation can change this requirement through its bylaws. A bylaw can state that a certain number of members less than the majority constitute a quorum.
Voting is usually by show of hands. The bylaws can require a different method for voting. Any member can require the vote on any issue to be held by secret ballot before or after there has been a vote by show of hands.
If the majority of the members vote in favour of a resolution it is passed unless a special resolution is needed. In this case at least 2/3 of the members must be in favour for the resolution to pass. Special resolutions are required, for example, to amend the articles.
Notice of a meeting of members must be sent to all members. If there are 250 members or less it must be sent by mail. If there are more than 250 members notice can be given in a publication of the corporation sent to all members not more than 50 days before the meeting and no later than 15 days before the meeting. For corporations with more than 250 members notice can also be provided by publishing the meeting for three consecutive weeks in the newspaper for the municipality where most members live.
Members can waive the notice requirements and if they attend the meeting they are considered to have waived notice unless they attend just to object to the meeting being held.
The directors must call an annual meeting of the members. The first annual meeting must be held no later than 18 months after the corporation is created. After that, unless the articles provide otherwise, annual membership meetings must be held within 15 months of the last annual meeting. However, membership corporations may choose to hold meetings every second or third year in place of an annual meeting.
The annual meeting is usually held about three months after the fiscal year-end of the non-profit corporation. The annual meeting must be held no later than 4 months after the fiscal year-end. Financial statements and the auditor's report must be sent to the membership 15 days prior to the date of the meeting and are presented at the meeting. If a corporation’s articles provide that an annual meeting is not required the financial statements and auditor’s report must still be sent to the members.
Membership corporations can publish the information instead of sending it to each member. Charitable corporations must publish the information and send it to the members. If the articles allow, a corporation can publish that the information is available at their registered office instead of publishing the information itself.
The directors can also call a special meeting of the members at any time. If at least 5% of the voting members agree they can require the directors to call a members' meeting. Directors must call a meeting within 21 days of receiving this request. Members' meetings require at least 15 days’ notice. The notice must explain the purpose of the special meeting.