Read the new Sport Law blog from Jason Robinson titled “Special Meetings – How it Works and Common Issues”
Over the past year, we have noticed an increase in the requests to assist with Special Meetings of Members.
This blog focuses on the process of calling a Special Meeting of Members and the common questions that we receive about these meetings, both from a procedural and legal perspective.
A Special Meeting of the Members
A ‘Special Meeting’ is a meeting of members that is not regularly scheduled and usually called by the Board of Directors, or the members meeting the minimum threshold required, for a particular purpose.
While the intent of an Annual Meeting is to conduct the formal business of an organization that it is legally bound to complete, such as the appointment of an auditor/accountant, presentation of annual financial statements, the election of directors as well as other formal business outlined within the governing documents (approval of minutes, reports, bylaw revisions, etc.); the purpose of a Special Meeting is to consider any specific business that is included within the call of the meeting. A Special Meeting may also be referred to as a ‘General Meeting’ or ‘Meeting of Members’.
Despite the different names associated with these, the sole key distinction between an Annual Meeting (or Semi-Annual Meeting) and a Special Meeting is that Special Meetings are not regularly scheduled.
Special Meetings can often be useful for considering and discussing matters that need to be addressed before the next Annual Meeting, with the most common example being the consideration of bylaw revisions. In some instances, Special Meetings are called to consider bylaw revisions (or other business) separately from the Annual Meeting so that they are prioritized over the regular business of the Annual Meeting and/or do not prolong the Annual Meeting. These considerations may also affect upcoming elections or changes to membership that will impact voting rights at the Annual Meeting.
Special Meetings are also used when a member, officer or director is to be potentially removed from the organization and in circumstances where a formal proposal to remove a member or an officer or director is made, membership approval is required for this removal. The bylaws typically set out the rights of the party facing removal. This often includes that they receive notice of the meeting and have the opportunity to both attend the meeting and be heard by the members.
A Special Meeting can be called at any time of the year, and as often as desired, although there are limitations contained in some statutes around calling meetings for the same purpose (some Acts restrict the calling of additional member meetings for the same business). For example, the Canada Not-for-profit Corporations Act (CNCA) states the following:
163(6)(e) – A corporation is not required to comply with subsections (2) (proposal set out in notice) and (3) (right to submit and discuss) if substantially the same proposal was submitted to members in a notice of a meeting of members held not more than the prescribed period before the receipt of the proposal and did not receive the prescribed minimum amount of support at the meeting;
and the CNCA Regulations state furthermore:
68 (2) – For the purpose of paragraph 163(6)(e) of the Act, the prescribed period is five years.
The proximity of a Special Meeting to an Annual Meeting is not a barrier to a Special Meeting being held, although depending on the nature of the business and the member notice that is required, proximity between these meetings can pose both practical and legal challenges. In some instances, business may be postponed from an Annual Meeting to a Special Meeting to be held at a later date.
Calling a Special Meeting
A Special Meeting can generally be called by the Board of Directors (which is straightforward as the board determines the business and calls the meeting) OR by a requisition of members that is properly submitted to the organization.
This leads to our first common question:
What is a requisition?
While a requisition is not explicitly defined in the governing legislation, it is defined in the Merriam-Webster Dictionary as “the act of formally requiring or calling upon someone to perform an action.” In the context of an incorporated sport organization in Canada, a requisition is a formal request that the directors call a Special Meeting of Members.
The CNCA outlines the following with respect to requisitions:
167 (1) – The members of a corporation who hold the prescribed percentage of votes that may be cast at a meeting of members sought to be held, or a lower percentage that is set out in the by-laws, may requisition the directors to call the meeting for the purposes stated in the requisition.
167 (2) – The requisition referred to in subsection (1), which may consist of several documents of similar form each signed by one or more members, shall state the business to be transacted at the meeting and shall be sent to each director and to the registered office of the corporation.
The applicable legislation for each of the provinces and territories has very similar language to the CNCA about the requisition for a Special Meeting of Members. What may be different however, in each Act, is the prescribed member threshold to call such a meeting. The CNCA (and several provinces/territories) requires a requisition to be signed by only five percent (5%) of the voting members, other provinces/territories set a higher threshold to requisition a Special Meeting. These include the:
Voting member thresholds are essential when considering a requisition, especially if they do not align with what is stated in your by-laws. Legislation often permits bylaws to set a lower threshold than the statutory threshold, but not a higher threshold.
Requisitions do not have to follow a specific form as long as it ‘form’ is in writing and meets the basic statutory requirements. The requisition should clearly indicate its purpose (“this is a formal requisition to call a meeting of the members in accordance with the Act and the organization’s governing documents”), the business to be transacted at the meeting (the specific motion(s)), and the individual signature of each voting member who is a participating party in the requisition.
Here are three critical points to consider when submitting (or reviewing) any requisition that is submitted:
We have found that requisition submissions are often less detailed than they should be, placing boards in a challenging position. In such instances, the organization can work with the requisitioners to revise their submission so that it maintains the integrity of their request but clarifies the requisition and informs the members further. Depending on the nature of the submission, the requisitioners may not be willing to accept this support.
It is important to note that even if a requisition may be less specific than desired (i.e. the motion is unclear), this does not invalidate the requisition.
However, the uncertainty caused by unclear motions can have a detrimental impact on an organization. It is beneficial for the requisitioners to accept support (internally or externally) in such instances – in our experience, a motion that is unclear or improperly stated is unlikely to succeed at a Special Meeting.
Can they do this?
Many organization leaders have never received a requisition before. When the requisition is unexpected, they may believe that the requisition is detrimental to the organization and struggle with determining the next steps in the process.
Any sport organization that is incorporated as a member-based organization is bound, under its relevant governing Act(s), to hold a Special Meeting whenever it is properly called and does not conflict with an organization’s governing documents or applicable legislation. As member-based organizations, the members have the right to call meetings and make decisions on just about any matter or issue that is within the scope of the organization.
As a result, in most instances, the answer to the question above is yes.
Can a requisition include more than one motion or item of business?
There is no limit to the business that is stated within a requisition. While Special Meetings are usually used for one specific purpose, it is permissible to include multiple motions, within the requisition. A requisition could include a motion to revise a financial policy as well as a motion to change membership fees. Sometimes the motions within a requisition may be related to one another, such as a motion to revise a financial policy – to permit an expenditure that was previously restricted – that is then followed by a motion to make a new purchase, which is subject to the first motion being adopted and the restriction removed. Or a motion to remove a director that is followed by a motion to determine when their replacement would be elected.
Any business that is not included within the call of the meeting is outside of the scope of notice and may not be discussed at the meeting. Members must receive proper notice to determine whether to attend a meeting as well as to consider the matters brought forward. This rule, however, does not preclude the consideration of subsidiary motions (such as relevant amendments) or other incidental motions that are directly related to the identified business or with the conduct of the meeting.
Can the Board of Directors add business to the calling of a Special Meeting of Members?
Generally, the board cannot alter the business (or motion) that is stated within a requisition, or add further business, as the member requisition does not belong to the board. The board’s role is to call the resulting meeting. As previously noted, the board can potentially collaborate with the requisitioners and, with permission of the requisitioners, work to revise the specific business that is to be stated within the call of the meeting.
If the board itself is calling the meeting for specific business that it wishes the members to consider, the board can potentially add more business as long as this is done with proper notice. Once the prescribed deadline for notice to the members has passed, the business at the meeting may not be altered.
Once the organization receives a valid requisition, what happens next?
Special Meetings are called either through the process set out in the bylaws or when authorized by the members themselves at a previous meeting. The bylaws commonly indicate when the meeting must be called once the requisition has been properly submitted (usually between 21 to 30 days). The meeting must be called by the board (or as otherwise authorized in the bylaws) before this deadline and then proper notice of the actual meeting with the meeting date must be given to the members.
The requirement to call a meeting is different than holding a meeting.
For example, if the bylaws indicate that a Special Meeting must be called within 21 days of the receipt of a requisition, and the bylaws further indicate that members require a minimum of 21 days’ notice for all member meetings, the Special Meeting could take place at least 42 days after the requisition is received. Importantly, the requirement to call a meeting within 21 days is not a requirement to host the meeting within 21 days – proper notice must still be given to the members.
If the Board of Directors dooes not call a Special Meeting within the prescribed period after receiving the requisition, any member who signed the requisition may call the meeting.
In the call of the meeting, the organization must include the date, time and location of the Special Meeting, the business of the meeting as stated in the requisition and any supporting documentation. It is common practice to include the requisition document itself as it is submitted.
A basic agenda for the Special Meeting is:
- Call to order
- Confirmation of quorum
- Business as specified in the requisition of Members
- Motion to revise the Finance Policy by striking Section 5 and substituting the proposed revisions as per the member requisition, effective immediately.
- Business as specified in the requisition of Members
The processes used to announce and manage the organization’s Annual Meeting should also be applied to the Special Meeting. This includes procedures for giving notice and communicating the meeting to members and for managing registration, voting, tracking of attendees, chairing the meeting, and any other applicable rules.
Minutes of the Special Meeting must be formally prepared (like any other member meeting) and are approved at the next regular member meeting (Annual Meeting), along with the minutes from the previous Annual Meeting.
The Special Meeting is conducted in the same manner as any other member meeting, but it is limited to the items described in the requisition and meeting notice.
The consideration of subsidiary motions (such as relevant amendments) or other incidental motions that are in direct connection with the business may be considered. However, it is important to recognize that any proposed amendments are limited to the scope of the notice.
As an example, if a motion has been requisitioned to revise a membership fee from $100 to $150, amendments to the number $150 could be considered so long as they are within the range of $101 to $149.
If the members want to continue a Special Meeting at a later date if, for example, the meeting has lasted for several hours and the members wish to adjourn, a motion to adjourn and to continue the meeting at a defined later date would generally be in order. However, the defined later time must be reasonable (i.e. less than three months) and must not prohibit the proper actioning of the requisition. In the example above regarding the membership fee, the Special Meeting could not be continued later if it overlapped with the start of the applicable membership year.
Lastly, as with any other member meeting, the organization is responsible to implement any resulting items from the motion(s) that are adopted at the Special Meeting. Examples include updating and posting revised bylaws or policies, adjusting facts or figures on the organization’s website, engaging a committee, or conducting the process to remove a director.
Who is allowed to attend a Special Meeting?
An organization’s bylaws should set out who is allowed to attend member meetings. This does not change for a Special Meeting. If the bylaws are silent on who can attend, the default position is members in good standing only may attend, with the defined membership clauses in the bylaws determining who is a member in good standing.
Often non-member guests are invited to attend Special Meetings, commonly as non-speaking (unless presenting) and non-voting observers of the meeting. Examples include a national or provincial/territorial affiliate, a funding partner, or volunteers who are not members. Such invitations are discretionary. Sometimes the business of a Special Meeting is sensitive in nature and the typical guests are not invited to these meetings.
The organization’s directors and officers, its appointed auditor/public accountant, and any member-appointed proxies (if proxies are permitted) are legally entitled to attend member meetings. Any board-appointed scrutineer(s), parliamentarian, or security personnel (if required) are also permitted to attend. Members also can permit non-members to attend the meeting via a vote (as prescribed in bylaws or by majority vote if silent).
What is the vote requirement at a Special Meeting to adopt a motion/resolution?
The vote requirement at a Special Meeting is the same as at any other member meeting and depends on the nature of the motion or resolution itself. Most motions require a majority vote to adopt, but some motions (i.e. bylaw revisions) may have a higher vote threshold. These requirements are set out in the applicable legislation or the organization’s governing documents.
Simply because the meeting itself is called a Special Meeting or there is Special Business to consider at the meeting, this does not mean that all motions within that meeting require a Special Resolution (a 2/3 or 3/4 vote depending on the applicable Act) to adopt. The vote requirement for business at a Special Meeting is the same as it would be at an Annual Meeting.
Navigating your Special Meetings
Special Meetings can present challenges pertaining to requisitions, calling of the meeting, attendance, voting, and the business to be considered, among others. As the Special Meeting requires the same levels of preparation and diligence (if not more) of an Annual Meeting, it is critical to ensure that your organization is following its prescribed rules, its governing Act, and its identified parliamentary authority. Sport Law has two Certified Parliamentarians, Jason Robinson and Kathy Hare, who can support you in managing your meetings effectively and ensuring that you comply with the relevant meeting procedures. Our legal team is also here to support sport organizations who need assistance in determining the legal implications of business that is introduced via a Special Meeting.
Reach out to firstname.lastname@example.org if you have any questions or need support with your member meetings. We are here to help!