In my experience, organizations (usually small but sometimes large as well) generally ignore their bylaws or otherwise harbor delusions about what is actually written there. This is particularly true regarding the definition of membership. For example, membership generally requires an application and admission as such by the directors, but I have seen circumstances where the board considered anyone who regularly attended weekly church services a member of the church; where anyone who made a donation to a charity was considered a member; or even that anyone who attended an Annual General Meeting was a member - just to be able to hold the necessary votes.
Anglican Church bylaws trumped current practice
A recent Court of Appeal Ontario decision dealing with the Anglican Church of Canada underlines the importance of abiding by the bylaws of the organization. Some congregations of the Anglican Church have split off in opposition to certain theological changes which took place within the Anglican Communion. In several circumstances this split has resulted in disputes over property. The recent decision (Delicata v. Incorporated Synod of the Diocese of Huron) was ostensibly a case about the property in dispute, but it turned on the definition of “parish.”
In coming to its decision, the Court of Appeal looked to specific documents within the canons (i.e. the bylaws) of the Anglican Church. This approach, rather than relying on the historical or even practical situation by which the organization may have operated is in line with other decisions of the courts where non-share capital Corporations are involved. In the result, the court decided that a parish or congregation is not a fluid understanding of the people who may form a congregation at a specific time; rather it refers to a specific entity within the Anglican Church.
Gulf between bylaws, current practice triggered dissolution
In another case, Warriors of the Cross Asian Church v. Masih, a dispute arose as to who were the members of the congregation. One group consisted of regularly attending worshippers at this particular church and another group were the original founders of the church. Historically, the only people admitted as members were the original founders of the church (it would seem that the lack of additional members was due to a lack of good governance). Rather than hand control of the church to the legal members who had no involvement with the church over the last fifteen years, or to a group of regular attendees who did not have legal control over the Corporation, the Court ordered the corporation dissolved.
Brush up on bylaws before AGM
Taken together there is a distinct line of thinking regarding the technical requirements of a corporation's governing documents. Corporations cannot afford to ignore their bylaws in any respect. In both of the above cases the courts simply read the organizing documents and applied them. Corporations who avoid these documents are risking an unhappy result should the corporation's members become involved in a dispute. It would be wise for charities and not-for profits to review their bylaws prior to each Annual General Meeting, at the very least, to understand what is written there. Only by following the bylaws can members ensure the affairs of the Corporation can be conducted in a legal manner.
Adam Aptowitzer of Drache Aptowitzer LLP is a charity law lawyer with a national practice based in Ottawa. He has been published in Canadian Taxpayer, Canadian Fundraising & Philanthropy and the Not-for-Profit News. He has also published a widely distributed study on the regulation of Canadian charities with the C.D. Howe Institute.
As a speaker, he has addressed many professional associations and Canadian charities. He has also given expert advice on Parliament Hill. Adam is an executive member of the Canadian Bar Association’s Charity and Not-for-Profit Law section.
For speaking engagements and consultations, contact him at 613-237-3300 or visit http://www.drache.ca.