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. These cards can be electronic. The Board can also set annual dues members must pay.
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 set out a procedure to discipline or terminate a member in certain situations. Any discipline or termination of a member must be done in good faith and in a fair and reasonable manner. A procedure is fair and reasonable if:
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 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, 2022 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. It can be signed electronically. 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. The Board can specify in the notice calling a meeting that proxies need to filed with the corporation up to 48 hours before a meeting (excluding Saturdays and holidays).
Members generally exercise their rights at meetings. Meeting can be held in-person and, unless the bylaws state otherwise, can also take place either electronically or by telephone. Unless the bylaws state otherwise, members can also participate in in-person meetings electronically or by phone if the corporation provides these ways to participate.
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.
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. When meetings are held electronically or by telephone members vote using these methods. 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 the time and place of a meeting of members must be sent to all members no more than 50 days before the meeting and no later than 15 days before the meeting. The notice can be posted online instead of sending it to each member as long as the members are informed that the notice has been posted and told how to access the notice. Members must be able to access the notice free-of-charge. Members can be notified electronically if they consent or the Articles allow this.
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. The Articles of a membership corporation can state that meetings will take place every second or third year in place of annual meetings.
Financial statements and the auditor's report must be available to the membership 21 days prior to the date of the meeting and are presented at the meeting. They can be posted online instead of sending them to each member as long as the members are informed that the records have been posted and told how to access them. Members must be able to access the records free-of-charge. Members can be notified electronically that the records are available if they consent or the Articles allow this. 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 yearly or no longer than 15 months after the last annual meeting, if there has been one.
The directors can also call a special meeting of the members at any time. If a corporation has 1000 or more members 5% of the voting members or 300 members (whichever is less) can require the directors to call a members' meeting. In this case the minimum number of members needed to require a meeting is 100. If the corporation has less than 1000 members 10% of the members can require a meeting to be called. 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.