What to Include in the Bylaws of a Canadian Non-profit
Nonprofit bylaws serve as the internal rulebook that governs how your organization operates on a day-to-day basis. While your articles of incorporation establish your nonprofit’s legal existence and core purpose, your bylaws provide the detailed procedures for running board meetings, electing directors, managing finances, and making organizational decisions. Every incorporated nonprofit in Canada is legally required to have bylaws, whether you’re operating under federal legislation like the Canada Not-for-Profit Corporations Act (NFP Act) or provincial laws such as Ontario’s Not-for-Profit Corporations Act (ONCA).
The difference between federal and provincial bylaws matters significantly. Federal nonprofits must comply with the NFP Act’s requirements, while provincial organizations follow their respective provincial statutes. These laws set out mandatory provisions that must appear in your bylaws, such as how directors are elected, how meetings are called, and how amendments are made. Understanding which legislation applies to your organization is the first step in creating compliant bylaws.
Many nonprofits make the critical mistake of copying bylaws from other organizations or downloading generic templates from the internet without considering whether these documents match their structure and needs. This approach creates confusion, governance conflicts, and potential legal problems down the road. Bylaws borrowed from American nonprofits are particularly problematic, as U.S. charity law differs substantially from Canadian requirements. The better practice is working with an experienced charity and nonprofit lawyer who can start with a compliant template and customize it to fit your organization’s unique circumstances.
Nonprofit bylaws are the governance roadmap for the organization’s officers and directors. Many nonprofits look to the bylaws of other nonprofit organizations or samples gleaned from the internet with no regard to whether the bylaws match the structure and style of their organization. This approach leads to confusion and board conflict.
The better practice is to work with a knowledgeable charity and nonprofit lawyer, starting with a compliant template, and tailoring it to the needs of your organization.
Essential Elements of Canadian Nonprofit Bylaws
Nonprofit bylaws should include, at a minimum, the following essential elements:
1. Governance Structure and Membership Model
The governance structure determines who controls your nonprofit and how power is distributed within the organization. This fundamental decision shapes everything else in your bylaws. The board must decide whether to create a member-driven nonprofit or a board-driven organization, and whether to allow life memberships.
In a member-driven model, members have voting rights and can elect directors, approve major decisions, and potentially remove board members. This structure works well for organizations that want community input and democratic governance, such as community centers, sports associations, or professional networks. In contrast, a board-driven nonprofit has no voting members, and the board is self-perpetuating, meaning existing directors appoint new directors. This model suits organizations where specialized expertise is needed or where the founding vision needs protection.
Life memberships create additional complexity because they cannot be easily terminated or modified. If someone holds a life membership, they typically retain voting rights for their entire lifetime unless the bylaws specify otherwise. This decision determines control for the life of the nonprofit, so it should be made carefully with legal guidance. Many organizations regret granting life memberships years later when they want to change governance structures.
2. Director Terms and Board Composition
Your bylaws must specify how long directors serve and how terms are structured. The two main approaches are staggered terms and successive terms, each with distinct advantages. Staggered terms divide directors into groups whose terms expire at different times. For example, a nine-member board might have three directors elected each year for three-year terms. This provides board stability and institutional memory since experienced directors always remain on the board.
Successive terms mean all directors’ terms end simultaneously, typically at the annual general meeting. While this approach allows for complete board renewal if needed, it risks losing organizational knowledge if multiple experienced directors leave at once. Most lawyers recommend staggered terms for stability.
Your bylaws should also address the minimum and maximum number of directors, qualifications for serving, residency requirements (particularly important for federal nonprofits under the NFP Act), and whether directors can serve consecutive terms. Some organizations limit directors to two or three consecutive terms to ensure fresh perspectives, while others allow unlimited re-election to retain experienced leaders.
3. Officer Roles and Responsibilities
Officers are the individuals who hold specific leadership positions such as president, vice-president, secretary, and treasurer. Your bylaws must clarify whether officers are elected by the membership, appointed by the board, or elected by directors from among themselves. Each approach affects accountability and governance dynamics.
The bylaws should define each officer’s duties clearly. The president typically chairs board meetings and represents the organization publicly. The secretary maintains corporate records, takes meeting minutes, and ensures proper notice is given for meetings. The treasurer oversees financial records, provides financial reports, and ensures proper bookkeeping. Many organizations add vice-presidents or other specialized roles depending on their needs.
Officer terms should be specified, including whether they align with director terms or operate independently. The bylaws must also explain how officers are removed from their positions, either through resignation, termination by the board, or loss of director status. Clear removal procedures prevent governance paralysis when officer changes become necessary.
4. Voting Procedures and Quorum Requirements
Voting procedures govern how decisions are made at member meetings and board meetings. Your bylaws must establish what constitutes a quorum, which is the minimum number of people required to conduct official business. Without a quorum, no valid decisions can be made. For board meetings, quorum is typically set at a majority of directors or a specific fraction like one-third, depending on your organization’s preference.
For member meetings, quorum requirements vary based on your membership size and engagement levels. Small organizations might require 20-30% of members to attend, while large organizations might set lower thresholds to ensure meetings can proceed. Your bylaws should also address whether proxies are permitted, allowing members to designate someone else to vote on their behalf, and whether electronic or telephone participation counts toward quorum.
Notice requirements go beyond statutory minimums to ensure members and directors receive adequate information before meetings. While legislation sets baseline notice periods, your bylaws can require longer notice or specific content in meeting notices, such as agenda items or financial statements. Any unique notice requirements for director and member annual general meetings beyond what is required by legislation should be clearly stated.
5. Committee Delegation and Structure
Committees allow boards to divide work efficiently and tap into specialized expertise. Your bylaws should explicitly permit committee delegation while clarifying that committees are advisory to the board and cannot make final decisions on major matters. The bylaws must specify which actions must be taken by the full board and cannot be delegated to committees.
Typically, matters like hiring or firing the executive director, approving the annual budget, amending bylaws, selling major assets, or dissolving the organization cannot be delegated to committees. However, committees can handle preliminary work, make recommendations, and manage specific programs or functions within their mandates.
The bylaws should state how committees are created and abolished, whether by board resolution or through specific bylaw provisions. They should also address committee composition, whether non-board members can serve, and how committee chairs are appointed. Common committees include governance, finance, fundraising, and program committees, but your organization’s needs will dictate the appropriate structure.
6. Conflict of Interest Policies
Conflicts of interest arise when a director or officer has a personal interest in a transaction involving the nonprofit. Canadian law requires nonprofits to manage these situations transparently to protect the organization’s interests. Your bylaws should include comprehensive provisions stating how the organization will manage transactions where there is a conflict of interest between the nonprofit and a director or officer.
A strong conflict of interest policy requires directors to disclose any potential conflicts before board discussions begin. The conflicted director should not participate in deliberations or vote on the matter, though they may provide factual information if requested. The decision should be made by the remaining disinterested directors, and the conflict and how it was managed should be documented in meeting minutes.
Your bylaws should also address related party transactions, such as paying directors for services, renting property from board members, or contracting with businesses owned by directors’ family members. While these transactions aren’t necessarily prohibited, they must be handled at arm’s length with proper disclosure, board approval, and fair market terms. The Canada Revenue Agency scrutinizes these transactions closely for registered charities.
7. Amendment Procedures
Your bylaws must clearly explain how they can be amended in the future. This procedural clarity prevents disputes when changes become necessary. Amendments may require approval by the board, the membership, a third party such as a founding organization, or some combination of these. The amendment process should balance the need for flexibility with appropriate safeguards against hasty changes.
Most organizations allow the board to amend bylaws, subject to member confirmation at the next member meeting, or require a special resolution of members (typically two-thirds vote). Some provisions, particularly those protecting charitable purposes or fundamental governance structures, might require higher thresholds or unanimous approval. The amendment process should also specify whether notice of proposed amendments must be provided in advance and whether members can propose amendments from the floor.
For registered charities, certain bylaw amendments may require advance approval from the Canada Revenue Agency, particularly if they affect charitable purposes, dissolution clauses, or fundamental restrictions. Your lawyer should review proposed amendments before they’re adopted to ensure continued compliance with charity law.
Additional Bylaw Provisions to Consider
Beyond the essential elements, comprehensive bylaws address several additional areas that protect your organization and streamline operations:
Indemnification and Insurance
Indemnification provisions protect directors and officers from personal liability for decisions made in good faith on behalf of the nonprofit. Your bylaws should state that the organization will indemnify directors and officers for legal costs and damages arising from their service, except in cases of fraud, dishonesty, or willful misconduct. This protection is crucial for attracting qualified board members who might otherwise worry about personal risk.
Directors and officers liability insurance (D&O insurance) provides additional financial protection. While bylaws cannot require the organization to purchase insurance, they can authorize it and establish expectations around coverage. Many funding organizations and government programs require nonprofits to maintain D&O insurance as a condition of receiving grants.
Borrowing Powers and Financial Authority
Your bylaws should clearly authorize the organization to borrow money, issue debt instruments, and secure loans with organizational assets. Without explicit borrowing powers in your bylaws, your nonprofit may face challenges obtaining necessary financing. The bylaws should specify whether borrowing requires board approval, member approval, or specific authorization thresholds.
Banking and signing authority provisions determine who can sign cheques, enter contracts, and bind the organization legally. Many organizations use a dual signature requirement for cheques over a certain amount or establish separate approval levels for different contract values. Clear signing authority prevents unauthorized commitments and reduces fraud risk.
Financial Year and Fiscal Matters
While it may seem minor, your bylaws should specify your financial year-end. This determines when your fiscal year closes, when financial statements are prepared, and when annual meetings occur. The financial year-end affects tax filing deadlines, audit timing, and grant reporting schedules, so it should align with your operational calendar.
Many organizations choose a year-end that falls during a slower operational period, making it easier to complete year-end tasks. Schools often use August 31, while organizations with summer programs might prefer December 31. The financial year-end specified in your bylaws must match what you report to government agencies.
Dissolution and Surplus Distribution
Dissolution clauses explain what happens if your nonprofit winds up operations. For registered charities, the Canada Revenue Agency requires specific language ensuring that remaining assets are distributed to other qualified donees rather than to members or directors. Even if you never plan to dissolve, these provisions are legally required and protect your charitable registration.
The bylaws should outline the dissolution process, including who can propose dissolution (typically requiring special member approval), how assets are liquidated, how debts are paid, and which organizations can receive surplus assets. The dissolution clause must comply with your incorporating legislation and, for charities, with CRA requirements.
Meeting Procedures and Electronic Participation
Modern bylaws should address virtual meetings, electronic voting, and remote participation. The COVID-19 pandemic proved that organizations need flexibility to meet electronically when in-person gatherings aren’t feasible. Your bylaws can authorize telephone or video conference meetings, electronic voting, and email ballots, subject to any legislative requirements.
Proxy voting allows members who cannot attend meetings to designate someone else to vote on their behalf. If your bylaws permit proxies, they should specify the required format, how long proxies remain valid, and whether proxy holders must be members. Some organizations prohibit proxies to encourage direct participation, while others embrace them for accessibility.
Record Keeping and Document Access
Canadian nonprofit legislation requires organizations to maintain specific corporate records, including articles of incorporation, bylaws, member lists, director lists, meeting minutes, and financial statements. Your bylaws should identify who is responsible for maintaining these records, where they’re kept, and how members and directors can access them.
Member rights to examine corporate records are typically protected by legislation, but your bylaws can provide additional detail about reasonable access procedures. Balancing transparency with privacy protection is important, particularly for sensitive information like donor records or personnel matters.
Federal vs. Provincial Bylaws: Understanding the Difference
Canadian nonprofits operate under either federal legislation (the Canada Not-for-Profit Corporations Act) or provincial statutes, and this choice significantly affects bylaw requirements. Federal nonprofits are incorporated through Corporations Canada and can operate nationwide, while provincial nonprofits are incorporated through their province’s corporate registry and primarily operate within that province.
The NFP Act includes mandatory bylaw provisions that federal nonprofits must include, such as director qualifications, notice of meetings, and member proposal procedures. Provincial statutes like Ontario’s ONCA have similar but not identical requirements. For example, the NFP Act requires that a majority of directors be Canadian residents, while Ontario’s ONCA requires a majority to be ordinarily resident in Canada. These subtle differences matter for compliance.
Federally incorporated nonprofits benefit from name protection across Canada and simplified extra-provincial registration if expanding operations. However, they face stricter corporate governance requirements and must file annual corporate information returns. Provincial nonprofits have simpler filing obligations but may need to register extra-provincially if operating outside their home province.
If you’re unsure which legislation governs your nonprofit, check your articles of incorporation. They’ll indicate whether you incorporated federally or provincially. If you incorporated provincially, identify which province’s nonprofit corporations act applies to your organization. Your bylaws must comply with the correct legislation to remain valid and enforceable.
Common Bylaw Mistakes to Avoid
Even well-intentioned nonprofits make serious bylaw errors that create legal and operational problems. Understanding these common mistakes helps you avoid them:
Copying bylaws from American organizations is perhaps the most frequent error. U.S. nonprofit law differs fundamentally from Canadian law in areas like charitable registration, tax receipting, director liability, and governance requirements. American bylaws typically won’t comply with Canadian legislation and may include provisions that create problems with the Canada Revenue Agency. Always use Canadian bylaw templates drafted for your jurisdiction.
Inconsistencies between articles and bylaws create confusion about which document controls. Your articles of incorporation are your nonprofit’s constitutional document and take precedence over bylaws when conflicts arise. If your articles say something different than your bylaws on fundamental issues like corporate purposes, dissolution, or membership classes, the articles govern. Regular legal reviews help identify and resolve these inconsistencies.
Missing mandatory provisions makes your bylaws legally deficient. Every incorporating statute requires specific provisions in bylaws, such as director election procedures, meeting notice requirements, and amendment processes. If your bylaws don’t include these mandatory elements, they may be deemed invalid or incomplete by government authorities.
Overly restrictive amendment procedures can trap your organization in outdated bylaws. While you want reasonable safeguards against hasty changes, requiring unanimous member approval or consent from organizations that no longer exist makes sensible updates impossible. Build in realistic amendment procedures that balance stability with necessary flexibility.
Unclear membership categories lead to disputes about voting rights and eligibility. If your bylaws create multiple membership classes without clearly defining privileges, obligations, and qualifications for each category, conflicts will arise. Be specific about who qualifies as a voting member, who can hold office, and how membership is acquired and terminated.
No conflict of interest policy or inadequate conflict provisions leave your organization vulnerable to improper transactions. The Canada Revenue Agency expects registered charities to have robust conflict of interest policies that require disclosure, recusal from voting, and documentation. Bylaws that ignore conflicts or handle them casually risk your charitable status and organizational reputation.
Understanding what to include in your bylaws is the first step. If you’re ready to start the drafting process, our comprehensive guide walks you through each stage of writing compliant, effective bylaws for your Canadian charity or nonprofit. Learn the step-by-step process in our article: How to Write Bylaws for a Charity Organization in Canada.
Conclusion
Well-crafted bylaws form the foundation of effective nonprofit governance in Canada. They prevent internal conflicts, protect directors and officers, ensure compliance with federal or provincial corporate law, and allow your organization to focus on its charitable mission instead of resolving governance disputes. The consequences of inadequate bylaws are serious from governance paralysis and board conflicts to jeopardized charitable registration and director liability. If you’re incorporating a new nonprofit, updating existing bylaws to comply with legislation like ONCA, or addressing governance challenges, contact Northfield & Associates for experienced legal guidance.
Our charity and nonprofit lawyers draft, review, and update bylaws for organizations across Canada, ensuring compliance with the NFP Act, provincial statutes, and Canada Revenue Agency requirements. We serve nonprofits and registered charities throughout Ontario and beyond with comprehensive services including incorporation, bylaw drafting, CRA compliance, and governance restructuring.
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Frequently Asked Questions
Do all Canadian nonprofits need bylaws?
Yes, every incorporated nonprofit in Canada must have bylaws. Whether you incorporated federally under the NFP Act or provincially under statutes like ONCA, bylaws are legally required. They’re one of the first documents you create after incorporation and must be filed with your corporate records. Unincorporated nonprofits (informal associations) aren’t legally required to have bylaws, but they should adopt governing documents to prevent internal disputes.
Can we amend our bylaws ourselves without a lawyer?
Legally, you can amend your bylaws following the procedures outlined in the bylaws themselves and your incorporating legislation. However, working with a charity lawyer is strongly recommended because bylaw amendments can have unintended legal consequences. For registered charities, certain amendments may require Canada Revenue Agency approval before implementation. An experienced lawyer ensures your amendments are legally compliant, don’t jeopardize your charitable status, and actually achieve your intended goals.
What’s the difference between articles of incorporation and bylaws?
Articles of incorporation are your nonprofit’s constitutional document that establishes its legal existence, corporate name, charitable purposes, and fundamental governance structure. Articles are public documents filed with the government. Bylaws are your internal operating rules that provide detailed procedures for running the organization. Bylaws are more easily amended than articles and typically aren’t filed publicly. When conflicts arise, articles take precedence over bylaws.
How often should we review and update our bylaws?
Best practice is reviewing your bylaws every three to five years, or whenever significant governance changes occur. Changes in legislation, such as when Ontario’s ONCA replaced the old Corporations Act, require bylaw updates to maintain compliance. You should also review bylaws when leadership transitions occur, when organizational growth changes governance needs, or when you discover provisions that don’t work well in practice. Regular legal audits help identify necessary updates before problems arise.
Do bylaws need to be filed with the government?
Requirements vary by jurisdiction. Federally incorporated nonprofits under the NFP Act must submit bylaws when first adopted and any subsequent amendments to Corporations Canada. Some provinces require bylaw filing, while others only require that you maintain bylaws with your corporate records without filing them. Check your incorporating statute’s requirements, but regardless of filing obligations, you must maintain current bylaws and make them available to directors and members.
Can bylaws override the articles of incorporation?
No. Articles of incorporation are the supreme governing document for your nonprofit. If bylaws conflict with articles, the articles control. This is why consistency between these documents is crucial. If you want to change something in your articles, you must formally amend the articles through the proper legal process, which typically requires member approval and government filing. You cannot work around article provisions by simply changing your bylaws.
Disclaimer: The information contained in this article is provided for general information purposes only and does not constitute legal or other professional advice. Readers should seek tailored legal advice in relation to their personal circumstances.
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