DISPUTE RESOLUTION

Being a director or officer of a non-profit corporation — even a small one like Naturist Legacy Inc. — is no easy job. There's always a ton of things that need doing, and many of them need doing at very specific times. It's a lot to remember. This page offers a friendly reminder concerning one of those things.

Naturist Legacy's by-laws underwent a major revision in 2014. Added to these by‑laws was Section 22 - Dispute Resolution.

22.1 Disputes or controversies among members, directors, officers, committee members, or volunteers of the Corporation are as much as possible to be resolved according to mediation and/or arbitration according to this section.

22.2 In the event that a dispute or controversy among members, directors or officers of the Corporation arising out of or related to the Articles or this by-law, or out of any aspect of the operations of the Corporation is not resolved in private meetings between the parties, then without prejudice to or in any other way derogating from the rights of the members, directors or officers of the Corporation contained in the Articles, this by-law or the law, and as an alternative to the person instituting a law suit or legal action, the dispute or controversy will be settled by a process of dispute resolution . . .

The board of directors at the 2014 Annual General Meeting were Debbie Lyon (president), Mark Brown (treasurer), Rita Lavoie (secretary) and John Leduc (director). You have them to thank for this brilliant addition to the corporation's by-laws. Their efforts virtually guaranteed that Naturist Legacy Inc. and Naturist Legacy Park could never be sued by a member from that date forward.

Log in to Member Central (the members area of Naturist Legacy's website) to see the minutes of the corporation's Annual General Meetings, reports from the corporation's officers and committees, and annual financial statements. Learn from them if any board of directors has ever faced the threat of an internal lawsuit brought by a member, or if any board of directors has ever initiated formal dispute resolution per Section 22 of the by-laws to prevent such a lawsuit.

A DUTY TO COMPLY

Directors and officers have a duty to comply with their by-laws, their articles of incorporation, The Corporations Act and the Corporations Regulation.

Duty to comply
117(2) Every director and officer of a corporation shall comply with this Act and the regulations, the articles and by-laws, and any unanimous shareholder agreement.

No exculpation
117(3) Subject to subsection 140(5), no provision in a contract, the articles, the by-laws or a resolution relieves a director or officer from the duty to act in accordance with this Act or the regulations or relieves him from liability for a breach thereof.

Why is obedience to even the smallest detail in the by-laws so important?

In legal proceedings, adherence to good governance practice will not necessarily provide a complete defence. Where, however, a corporation or director can point to having followed an established practice in keeping with good governance, or to have chosen a course in an effort to achieve good governance, this often provides a highly persuasive argument in the corporation or director's favour.

Read this and more in the Primer for Directors of Not-for-Profit Corporations.

ADDITIONAL READING

Article: Dirty Little Secrets

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