In the business world it is common place for businesses to operate through multiple legal entities. Interestingly, the non-profit world has not embraced these strategies in the same way. We represent many established and growing non-profit and charitable organizations and many of them expand into new territories or cross national borders to scale their operations to meet demands. From time to time they will ask how best to structure their organizations to accommodate growth. The answer, like many, is never straight forward. One legal size rarely fits all organizations. Some lawyers or consultants decide upon on the ideal structure for any organization and then they impose that vision on every one of their clients. This mindset is unfortunately reinforced by model documents that on can find on-line or distributed by government bodies. Handle these with care.
On November 13, 2014, the Supreme Court of Canada released its decision in Bhasin v. Hrynew
2014 SCC 71, and clarified and settled “piecemeal, unsettled and unclear” principles in law.
When establishing a charitable or non-profit organization an important decision that needs to be made is whether the organization will be board driven or member driven. The not-for-profit corporation statutes in this part of the world are all being increasingly modeled on the premise that members will influence the management of the organization. Recent statutory reforms are designed to enhance membership rights and responsibilities in non-profit organization. But many organizations have no real active membership at all. In an organization that is board driven, there are typically no real members at all, or the members that do exist have very limited rights. Often these are referred to as self-perpetuating boards, where the members and the directors are one and same persons.
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