PRIMER FOR DIRECTORS OF NOT-FOR-PROFIT CORPORATIONS

PRIMER FOR DIRECTORS OF NOT-FOR-PROFIT CORPORATIONS CO-ORDINATING EDITOR Peter Broder TEXT EDITOR Norah McClintock CONTRIBUTORS Wayne Amundson Jane Burke-Robertson Terrance Carter Jacqueline Connor Paul Martel David Stevens Industry Canada, 2002 © Industry Canada, 2002 This document is available for downloading from the Industry Canada website: ENGLISH: http://strategis.ic.gc.ca/epic/internet/incilp-pdci.nsf/vwGeneratedInterE/h_cl00020e.html FRENCH: http://strategis.ic.gc.ca/epic/internet/incilp-pdci.nsf/vwGeneratedInterF/h_cl00020f.html Disclaimer This document is not intended to replace professional advice. If legal advice or other expert assistance is required with respect to a specific issue or circumstance, the services of a competent professional should be sought. The content of this document should not be taken as being either official or unofficial policy of any governmental body. Cover design and page layout by: Wioletta Wesolowski Industry Canada Primer for Directors of Not-for-Profit Corporations Cat. No. lu4-12/2002E ISBN 0-662-32550-8 53769E Une version française de cette publication est aussi disponible Cat. No. Iu4-12/2002F ISBN 0-662-87519-2 53769F |ii| Table of Contents PREFACE............................................................................v INTRODUCTION................................................................vii The Reason for this Book..........................................................................................................................vii Terms Used in this Book ..........................................................................................................................viii Our Approach ................................................................................................................................................x CHAPTER 1: CORPORATIONS & DIRECTORS What, Who, Why & How..........................................1 Introduction....................................................................................................................................................1 Types of Not-for-Profit Corporations......................................................................................................4 Special Categories of Directors ................................................................................................................5 Organization Mandate ................................................................................................................................7 Accountability................................................................................................................................................8 Elements of Good Governance................................................................................................................11 Checklist........................................................................................................................................................12 CHAPTER 2: DUTIES OF DIRECTORS............................................14 Introduction ................................................................................................................................................14 The Duty of Care ........................................................................................................................................16 The Duty of Loyalty....................................................................................................................................21 Duties Towards Members..........................................................................................................................27 Checklist........................................................................................................................................................29 CHAPTER 3: LIABILITY OF DIRECTORS........................................31 Introduction..................................................................................................................................................31 Liability and Contracts..............................................................................................................................32 Liability in Tort............................................................................................................................................32 Liability for Breach of Fiduciary Duty ..................................................................................................33 Liability for Breach of Trustee Duties ..................................................................................................33 Common Law Liabilities............................................................................................................................36 Statutory Liabilities ..................................................................................................................................36 Checklist........................................................................................................................................................44 CHAPTER 4: RIGHTS AND POWERS ............................................46 Introduction ................................................................................................................................................46 Directors’ Rights..........................................................................................................................................46 Directors’ Powers ......................................................................................................................................48 Checklist........................................................................................................................................................52 CHAPTER 5: COMMITTEES ............................................................53 Introduction ................................................................................................................................................53 Types of Committees ................................................................................................................................54 Checklist........................................................................................................................................................61 CHAPTER 6: RISK PROTECTION....................................................63 Introduction ................................................................................................................................................63 Due Diligence ..............................................................................................................................................64 Indemnification ..........................................................................................................................................68 Insurance ......................................................................................................................................................71 Statutory Protection..................................................................................................................................73 Other Means of Reducing Liability Exposure ....................................................................................74 Checklist........................................................................................................................................................76 CHAPTER 7: TAXATION ..................................................................78 Introduction ................................................................................................................................................78 Not-for-Profit Corporations....................................................................................................................78 Charities........................................................................................................................................................79 The Regulation of Charities ....................................................................................................................82 The Treatment of Gifts to Registered Charities and Qualified Donees........................................84 Corporate Structures ................................................................................................................................87 Checklist........................................................................................................................................................90 CHAPTER 8: DIRECTOR DEVELOPMENT......................................91 Introduction ................................................................................................................................................91 Tools ..............................................................................................................................................................91 Checklist........................................................................................................................................................94 ENDNOTES..........................................................................................95 ... - tailieumienphi.vn