Ne’er do well member? Lackluster director? Subject to an improper action by the societies registry? The new Society Act (BC) (the “New Act”) provides many avenues for dispute resolution, both for internal and external disputes.
Under the former Society Act (BC) (the “Old Act”), the court could set aside contracts where a director failed to disclose a conflict of interest, remedy problems in the society’s affairs, and provided a very limited oppression remedy when a society was wound-up. In the event of an unreasonable decision by the Registrar of Companies, an appeal lay to the BC Supreme Court. Under the new Society Act (BC) (the “New Act”), the court gains additional powers, while certain other remedies are clarified, and others are maintained.
The New Act implements:
- a wider, more available oppression remedy, allowing persons who have been unfairly treated to apply to the courts for relief;
- where a director or senior manager is discovered to have an undisclosed conflict of interest, a new court power to set aside or prohibit the entry into such contracts;
- the ability for a single member, or a person selected by the court, to bring a derivative action or defend an action on behalf of the society;
- explicit provisions allowing for the removal of directors by special resolution, as well as for discipline and expulsion of members by the membership by special resolution;
- the power for the court to prohibit a violation of the society’s purposes, bylaws, the Act, or the regulations, and to make other orders the court deems appropriate, on application by a member or director; and
- a court power to order records disclosed and correct errors in records.
The ability of the BC Supreme Court to hear an appeal from a decision of the Registrar of Companies is maintained as part of the general appeal in the Business Corporations Act (BC). It is no longer a separate process.
Other suggestions, such as the ability of a member of the public to seek a court remedy if a society was acting in a fraudulent or unlawful manner has not been implemented.
Certain other procedural points, such as the express statement in the Old Act that the Registrar need not hold a hearing before exercising a power under the Act, have been removed. Time will tell if this imposes a higher burden of consultation and procedural fairness on the registry, particularly in relation to societies with overlapping purposes and similar names.
Of course, the best method to avoid disputes in the courts is to ensure your bylaws include systems for transparency and accountability for directors, as well as clear policies and procedures for member discipline. Registers of members should also be kept up to date and dues collected regularly to avoid membership disputes.