by Cameron Nolan, 2012 President

Members’ Rights

At a membership meeting last year, a motion was made and passed that the square footage field be removed from listing information forms. Of the 188 members at the meeting, 101 voted in favour of the motion and thus it was passed.

The Directors carefully considered the ramifications of the motion and agreed that making square footage an optional field would serve the interests of both those members who did not want a field for square footage and those members who wanted the field to be mandatory.

But that’s not what the members at the meeting asked for. How did the Board of Directors do something other than was contained in the motion?

We are an association of 2,500 members. How do we make decisions for that many people? Who makes the decisions? From where do they get their authority? What are their responsibilities and how are they held accountable and to whom? The answers to these questions are found in our governing documents The Ontario Corporations Act, R.S.O. 1990 (The Act) and our own bylaws.

The Corporations Act recognizes that where an organization is made up of a large number of members “as we are – it would be impossible for such a group to make most decisions. The Act sets out the decisions which are solely the responsibility of the members and then assigns responsibility to Directors for the rest, with some limitations. The Act also provides that an organization shall have objects (Articles of Incorporation) and allows the organization to create bylaws through which members may further limit Directors’ authority.

The Act says that only members have the authority to appoint an auditor, elect Directors and ratify bylaw changes. It further says that unless an organization’s bylaws say otherwise, the rest of the decisions are made by the Directors.

Our own bylaws place one other area of authority in the members’ hands “the approval of membership dues. All other decisions are in the hands of the Directors. The bylaws do limit some decisions for the Directors; for instance, the bylaws stipulate the mandates for such committees as Professional Standards, Discipline, Arbitration and Finance, which means that Directors have limitations on how they may change the structure of those particular committees.

When Directors are given so much authority, how do you know that Directors aren’t making decisions which are contrary to the needs and wants of the members?

The Act imposes on Directors the responsibility to make decisions in the best interests of the organization as a whole. To ensure this happens, Directors are held personally liable for any negligence in their actions. An example of how this works would be if Directors made a decision which left the association indebted to the Canada Revenue Agency (CRA) without funds to pay the debt; the Directors “not the membership” would be personally responsible to pay the debt. If a Director failed to declare a conflict of interest in any decision, that Director would be personally liable for the costs of that indiscretion. One further example would be where the Directors made a decision that was beneficial for a select group of the membership but caused harm to another group unnecessarily; the Directors may be liable for making that decision.

What it comes down to is that the Directors are responsible for making decisions on behalf of the members and the corporation, at all times taking into account the best interests of all concerned. That is their legal and fiduciary duty. They must consider the members’ desires as they make decisions; they must ensure they understand the responsibilities and risks of any issue and make the decision that is best for the membership as a whole. Directors must carefully exercise their legal and fiduciary duties to ensure they do not put the association at risk.

Now, back to the situation where the members passed a motion for one thing, and the Directors made a decision that went in another way. In that particular situation, removing square footage entirely meant that members who wish to include square footage as a searchable field as part of their service to their clients would be unable to do so, and we would be interfering with their business model by removing the field. To maintain the field as non-mandatory would allow those members who do not wish to use it the option of leaving it blank.

This situation illustrates exactly how the Board of Directors must operate “they must look at what members want, what the situation demands and what is the right thing to do for the members and the association.

This and other governance issues will be discussed at the upcoming Town Hall meetings, the Broker of Record/Manager meeting and the Annual General Meeting. As President and Chair of the Governance Committee, I encourage you to come out to take part in the discussion.

(Governance Corner is a column that will appear in REALINFO from time to time.  It is intended to give members an understanding of the issues the Board of Directors and the Association face during the ongoing governance review.)