Am I right to think this Board governance change is not a good idea?

March 8, 2016 11:35 AM

Our community health centre is one of many in our province in Canada. A lobby group exists that represents all of the member health centres in the province. Recently, their Board passed a motion to allow the Board to make changes to their by-laws, such that these changes would take place effective immediately. A subsequent vote by the members would still be needed to ratify the change. It seems that there is a small window where bad things could happen ...

....(i.e. between Board's immediate implementation and the subsequent vote). The Board could change the by-laws to affect how Members vote etc. Am I right to be leery of this governance change?

There are rumblings from other Members about this, but I am not a governance expert and just wondering if these concerns are justified.

posted by storybored to Law & Government (4 answers total)

Does the change explicitly state that, if not ratified, the by-law changes and all effects thereof are retroactively un-applied? For example, if the Board decides that they can fire someone who they previously couldn't, fire that person, and then the Members vote against that change, is the person considered never to have been fired?

If it doesn't contain such language, then yeah, that's a bad policy that's ripe for abuse.
posted by Etrigan at 11:58 AM on March 8, 2016 [2 favorites]

Best answer: I am not familiar with non-profit boards, but the situation you describe -- board can make changes, which go into effect, subject to ratification -- is the default configuration for corporate boards in Canada. It is codified in the Canadian Business Corporations Act, and while it can be changed by the articles of a particular corporation, it is bog-standard operating procedure.

The voting powers of members, on the other hand, are in the articles, not the by-laws. Changing the by-laws might allow you to change things like notice periods, where votes happen, etc, but the core voting power can't be changed by the board.

The relevant provisions of the Not-for-profit Corporations Act appear to be similar.
posted by jacquilynne at 12:48 PM on March 8, 2016

Response by poster: Thank you jacquilynne and scrittore! That clarifies the risk with respect to the bigger picture. Much obliged.
posted by storybored at 5:11 PM on March 8, 2016

You might be interested in BoardSource, which provides training and best practices for nonprofit boards.
posted by postel's law at 6:50 PM on March 8, 2016