Governance Review

1. Governance Review Canoe-Kayak Canada

2. Why a Governance Review? • New Non-profit Corporations Act • Increased demand for effective governance in NSOs • AGM characterized by duplicate approval • Cumbersome bylaws that lack of clarity • Incremental changes & unwritten rules • Questions about why things are the way they are • Questions from disciplines

3. Benefits of Governance Change • Compliance with new legislation • Enhanced accountability • Reduced duplication • Clarity of roles and authorities of board, Councils, committees and staff • Clear delineation of governance and management • Board appropriate level of oversight • Timely decision-making • Increased motivation of staff and volunteers = Improved organizational effectiveness that translates into performance ‘on the field of play’

4. Governance • From the Latin word, “gubernare” which means to steer not to row. • The purpose of governance is to steer (ensure that the organization arrives at the destination it should) usually on behalf of others, while avoiding hazards (behaviours and situations that could put organization off course).

5. Effective governance:the board’s job • The board must connect with and be accountable to those who give it the authority to govern. • The board must interpret the best interests of those on whose behalf it governs in order define what results the NSO should produce and how it should operate. • The board must ensure that what the NSO should be producing gets produced and that it operates how it should. Job #1: Job #2: Job #3:

6. In other words, a board’s job is: NOT – One step up management  BUT – One step down ownership 

7. Governing management NOT managing management • The board’s total authority is matched by its total accountability. • A board needs to delegate powerfully yet safely to those who carry out the work of the association, empowering them to the maximum extent that is consistent with maintaining the board’s accountability. • A board needs to set explicit expectations (criteria or limits) about how staff, Councils and committees do things.

8. Common pitfalls:Compromising governance effectiveness BOARD DISCIPLINE SETTING DIRECTION DELEGATION OF AUTHORITY MONITORING PROGRESS AND PROCESS

9. Common pitfalls:Delegation of authority • Lack of explicit expectations • Triangles • Leaky accountability • Abdication of authority to senior manager • Allow executive power to go unchecked

10. A further governance complication Families of Organizations

11. CKC:Federation or Holding Company? Holding company federation Families of boards • Each board in a family governs a separate corporation • Each board has a responsibility to exercise leadership on behalf of its “owners” • On whose behalf – does it exercise leadership – is crucial question

12. CKC:Federation or Holding Company? Federation Holding company One organization owns or “holds” 1+ other organizations The “parent” spawns subsidiaries to carry out functions best performed at arm’s length from the parent Subsidiaries are separate corporations but holding company is the unambiguous owner Owner has prerogative to direct the subsidiary board to act as though some other group were the owner (e.g., clubs/paddlers/etc.) Retain essential control over function yet at same time consign to separate organization Parent board delegates to subsidiary board Most reliable way to exercise ownership is through parent CEO who is held accountable by parent board for parent organization as well as performance of entire system CKC is “parent/owner” and SR, WW and Marathon are subsidiaries • Formed when 2+ organizations want to accomplish something beyond what any one can do alone & form another tier of organization • Members give up some part of resources/autonomy for common purpose • Organizations that “own” the federation are called members. • SR, WW and Marathon are “owner-members” of CKC • Members are both owners & customers • Board member represents all members not just member with which s/he is directly associated • Members-as-owners have right to determine what federation is for • ‘Ends’ are usually focused on what results are to be achieved for members and are “value-added” and distinct from its members

13. CKC Board of Directors • What are its unique authorities? • Fiduciary duty: • Accountability for all actions of all disciplines • Risk management through limitations • How does CKC Board govern without duplication in decision-making?

14. And to make things more interesting... New Canada Not-for-Profit Corporattions Act

15. Why a new Act? • Old Act had not been revised in close to 100 years • Promote accountability, transparency, efficiency, and sound governance by: • Providing clear set of procedural and other rules • Strengthen member rights • Streamline bylaw requirements • Simplify the paperwork • Allow new technologies

16. So what? We’re already incorporated • Act received Royal Assent on June 23, 2009 • The act became effective October 17, 2011 • The clock is now ticking.... • ~19,000 not-for-profit organizations, including NSOs, have 3 years to apply for continuance under the new Act • “That seems like lots of time.....”

17. What do we have to do? File Articles of Continuance that include • Corporation’s name • Province or Territory where registered office is located • Number of directors (minimum, maximum or fixed) • Statement of purpose • Restrictions on activities • Classes of members • Distribution of assets after dissolution • Any additional provisions wanted in articles File bylaws – new or substantially revised to comply with new Act

18. Do we need to change our bylaws? • Need to replace or substantially revise by-laws • Old Act had few rules, so lengthy bylaws were needed • New Act (rules) allows minimalist or comprehensive approach to bylaws • CNCA provides general framework and sets of rules • Mandatory rules – cannot be overridden by bylaws • Default rules – apply if bylaws are silent • Alternate rules – bylaws can include options

19. Mandatory Rules - Examples • Directors are elected by members • Directors can be removed by majority vote of members (or by class vote) • Must contain conditions for membership in corporation • Notice of meetings must comply with regulations • Sent by mail, courier or personal delivery • By telephone or other electronic means, providing member can opt for different means of notice • Affixed to a notice board • Communicated in newspaper or publication you distribute to members

20. Default Rules – apply automatically where bylaws are silent • Examples • Directors can borrow and grant security without members’ authorization • Participation in meetings by electronic means is permitted • Directors may meet anywhere/Members meet in Canada • Directors not required to be members • Directors can make, amend or repeal by-laws except those requiring a special resolution of members

21. Alternate Rules CNCA provides options for bylaws, including option to not include in bylaws • Examples • Consensus decision-making as means for board to make decisions as alternate to majority vote • Notice of financial statement available at registered office versus default rule which states statements must be mailed to members 21-60 days before AGM • Can specify absentee voting will be allowed by proxy, mailed in ballot, telephone/electronic means (not permitted unless in bylaws)

22. Where one alternate is that Bylaws do not need to address: • Corporate seal, • Execution of documents • Financial year end • Banking arrangements • Absentee voting • Membership dues • Discipline of members • Persons entitled to be at members’ meetings • Chair of members’ meetings • Term of office of directors • Regular meetings of board of directors • Committees of the board • Description of offices (officers’ & duties) • Vacancy in office • Notice of meeting of the board of directors • Invalidity of any provisions of by-law • Omissions and errors • Mediation and arbitration • Dispute resolution mechanism These items can be addressed in Governance Policy manual

23. What else is different? • Members’ Rights • All classes of members – even if they are non-voting – have the right to vote on “fundamental changes” • May pursue a wider range of judicial remedies • May remove directors by special resolution • May requisition members’ meeting with directors to pay reasonable expenses of requisitioned meeting • Directors delegation of authority • Industry Canada will be a storehouse, not a clearing house • Changes to bylaws will take immediate effect A corporation that wishes to maximize its future flexibility will best avoid creating more than one class of members”

24. Opportunities & Imperatives • Name • Purpose • Option to choose comprehensive or simple bylaws • Membership • Plain language • Increased flexibility in decision-making

25. Next steps Governance Review

26. ACTION: Establish a committee that has a mandate to produce: • Schedule for governance review that includes actions and time frame • Schedule for membership consultation about framework • New by-laws that meet the requirements of the new Canada Not-for-Profit Corporations Act • A governance/management structure that: • Ensures appropriate mechanisms of accountability for CKC and disciplines • Councils governance review: • Clarify decision-making authority of committees and staff • Clarifies authority of executive committee and councils • Clarifies role of executive functional positions • Optimizes volunteer and staff contribution, avoids unnecessary duplication • TIMEFRAME: up to 3 years