Dismissal of the director of a non-for-profit organization and a cooperative.
All boards of directors are well aware of this: the powers and capacities that directors exercise are conferred on them by the assembly of members of their non-profit organization (NPO) or their cooperative.
In any form of democratic governance, the confidence of the assembly of members who elected a director could be taken away from him during his mandate term.
This process is called dismissal or removal.
The Companies Act and the Cooperatives Act have in common a little detailed procedure for submitting a director to the vote of the members of the body aiming to revoke his office of director, that is to dismiss him from office. It should be noted that NPO and cooperative’s internal regulations may specify these terms in order to complete them.
Which approach to follow?
According to the above-mentioned provisions of both acts, the following steps should be taken so that the dismissal of the director does not become an unfair process, and therefore highly contestable in court:
The secretary in office of the board of directors must receive the original, complete and clearly worded copy of a collective request (a petition) to convene an extraordinary general meeting, signed by 25% of the members in good standing of the cooperative, or by 10% of the members in good standing of the NPO.
Board of directors could also decide to instigate this process and call a director to meet the general meeting of the members of its organization ;
This request must include an agenda and the reasons invoked to proceed to a vote on the dismissal of the director concerned.
The names and signatures of each member in good standing of the cooperative or of the NPO must appear on this request so that the secretary can verify their number and quality (if the signatory members are in good standing; for example, a signature of a member suspended or expelled from a cooperative would not be valid).
If these prerequisites are met, the secretary of the board of directors must then call this extraordinary general meeting, which must be held within 21 days of the presentation of this request, for the sole purpose of proceeding with the agenda set out therein..
The secretary of the board of directors must ensure that the director concerned has received a notice for this meeting, within the minimum delay applicable to call a meeting. The grounds invoked in support of his dismissal must be mentioned there with all the necessary related documents. The administrator in question must be able to defend himself fully, which is his fundamental right, moreover, recognized by the Charter of Human Rights and Freedoms.
During the extraordinary general assembly, we will follow the same rules for holding a meeting. The director concerned will therefore have the right to plea his position in order to defend himself, before the vote decides his fate.
This can, however, be more complex. For example, a minority of members of your organization or cooperative could lead the way to dismiss entirely the board of directors. This procedure is indeed a powerful tool and it is important to preserve the director’s right in the course of this process, and to recognize him a right to a full defense. Otherwise, the director could challenge the outcome of the vote and then attempt to have it canceled by filing a motion in nullity before the appropriate court.
Contact us to discuss this further.
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