Good Governance Begins with Good Records
Consider three situations familiar to many BC societies. A director requests copies of board minutes. A member asks for the register of members before an upcoming election. A journalist requests the society’s financial statements for the last five years.
Requests for society records are common occurrences and can frequently lead to disputes. Society directors, who are generally volunteers, often struggle with apparently competing or contradictory requirements to provide document access while protecting personal, private, confidential or sensitive information.
The Societies Act, which governs BC societies, addresses these issues. It establishes what records a society must maintain, who may inspect them and when copies must be provided. Importantly, record retention and record access are not separate obligations. A society cannot comply with its disclosure obligations if it has failed to preserve the relevant records.
Further, since 2019, the BC Civil Resolution Tribunal (“CRT”) has generated a growing body of decisions concerning access to society records. These decisions provide useful guidance to societies navigating the often difficult balance between transparency, accountability and privacy (for more information on the CRT, please see our bulletin B.C. Civil Resolution Tribunal Assumes Responsibility for Deciding “Society Claims”).
This bulletin reviews the records societies must maintain under the Societies Act and who may access them. It does not address document retention or access obligations arising under other legal regimes, such as tax, employment or litigation-related requirements.
Society Records Are Governance Records
Section 20 of the Societies Act requires every society to maintain a series of core governance records. These include the society's constitution and bylaws, registers of members and directors, minutes of meetings and written resolutions of members and directors, financial statements and certain other corporate records. We will refer to these documents collectively as “society records”.
The purpose of the society records extends beyond administrative compliance. They establish who the members and directors are, document how decisions were made and provide evidence of the society's financial affairs. They also become critical when disputes arise concerning elections, membership rights, bylaw amendments or financial management.
A useful starting point is to recognize that the Societies Act does not require a society to preserve every document it creates or receives. Rather, the legislation identifies specific categories of records that are sufficiently important to require their maintenance and, in many cases, their disclosure.
How Long Should Records Be Retained?
Many societies ask when society records can safely be destroyed. The answer is often: later than you think.
The Societies Act does not establish a single retention period applicable to all society records. Rather, retention depends on whether the society record remains relevant to the society’s activities and internal affairs. For the purposes of the Societies Act, a society may dispose of a society record required only when the record is no longer relevant to the society’s activities or internal affairs and at least ten years have passed since the record was created or last altered.
Both conditions must be satisfied. As a result, societies should not assume that a record becomes disposable merely because it is old. Conversely, a record that remains relevant to the society's affairs should not be destroyed simply because ten years have passed.
As a risk-management practice, societies should consider retaining most core governance records permanently. This includes constitutions, bylaws, registers of members and directors, minutes and resolutions of members and directors, and financial statements.
The reason is straightforward. Questions concerning membership status, board composition, director elections, special resolutions, governance disputes and historic decisions often arise many years after the relevant events occurred. If the records have been destroyed, a society may not only be in breach of its document retention obligations, proving what happened may become difficult or impossible. Given the low cost of electronic storage, permanent retention of key governance records is often the lowest-risk approach.
Not Every Society Document Must Be Disclosed
One of the most significant themes emerging from CRT and court decisions is the scope of a member's or other person's statutory right of access to society documents. Generally, such right extends only to the records identified in the Societies Act, together with any additional access granted by a society's bylaws.
This limitation is important. Members and the public sometimes assume that anything connected to the affairs of a society must be disclosed on request. Boards, on the other hand, sometimes make the opposite mistake and assume that access to all society records may be restricted. Neither assumption is correct.
The relevant question is not whether a document exists, but whether it constitutes a society record and who is requesting access to it.
Who May Inspect Society Records?
Directors
Directors are responsible for overseeing or managing the affairs of the society and cannot fulfill those responsibilities without access to the information necessary to make informed decisions. Accordingly, directors are entitled to inspect all society records.
Members
Members generally enjoy substantial access rights to society records, although those rights are not unlimited.
Members may access most society records. This includes directors' meeting minutes, directors' consent resolutions and adequate accounting records unless the society's bylaws provide otherwise. Even where the bylaws restrict access to those records, members remain entitled to inspect records relating to conflict-of-interest disclosures by directors and senior managers.
A society receiving a member request for documents should therefore review both the Societies Act and its bylaws before responding.
The Public
The public generally has no right to inspect society records. There are, however, two important qualifications.
- A society's bylaws may permit non-members to access some or all society records, other than the register of members.
- Any person may generally request a copy of a society's financial statements and any auditor's report upon payment of the applicable fee.
Special rules apply to member-funded societies, which are generally exempt from the requirement to provide financial statements to the public.
Special rules exist for “member-funded societies”, which need not share their financial statements with the public (for more information on member-funded societies, see our bulletin A New BC Advantage: Member-funded Societies Under the Societies Act).
Inspection Is Not the Same as Obtaining Copies
The right to inspect a record is generally accompanied by the right to request a copy.
Under the Societies Act, a person entitled to inspect a record may request a copy of that record. Subject to payment of any permitted fee, the society must provide the copy within 14 days after receiving the request and any such fee.
Directors may obtain copies of all society records without charge. Members are also entitled to receive one copy of the current constitution and bylaws, and the most recent financial statements without charge.
The prescribed maximum fees for inspections and obtaining copies are modest. As a practical matter, societies should ensure that their records are organized so they can respond within the statutory deadline.
The Privacy Objection
One of the most common reasons societies give for refusing access to records is privacy. Directors often worry that member registers, accounting records or financial information contain personal information and therefore cannot be disclosed.
That concern may be misplaced. Generally, where the Societies Act requires or authorizes the society to disclose a document, it is also permitted under the Personal Information Protection Act (“PIPA”). Privacy is therefore not, in itself, a basis for refusing a valid statutory request or redacting information from a requested record. This does not mean privacy considerations are irrelevant. Rather, PIPA and the Societies Act must be read together. A society cannot simply rely on privacy concerns to avoid a disclosure obligation imposed by statute.
Special Rules for Registers of Members
The Societies Act nevertheless recognizes that certain records may contain sensitive information and imposes limits on the information certain records may contain and how that information may be used.
For example, a member register need contain only member names, contact information and, where applicable, membership class information.
Further, if the directors are of the opinion that inspection of the register of members would be harmful to the society or to the interests of one or more members, they may pass a resolution restricting access. Such a resolution does not create an absolute prohibition. A member may still apply in writing to inspect the register, but must confirm that the information will be used only for one of the purposes expressly permitted by the Societies Act. Those purposes are:
- requisitioning or calling a general meeting;
- submitting a member proposal at an annual general meeting;
- calling a general meeting to fill a vacancy in the office of liquidator; or
- attempting to influence the voting of members.
Importantly, the timing of a director’s resolution matters. A society cannot respond to an existing request by retroactively imposing restrictions. Boards concerned about potentially harmful use of the register should therefore consider adopting proactively adopting resolution limiting the use of the member register and the information contained in it.
Accounting Records Remain a Developing Area
A BC society must retain “adequate accounting records” for each financial year, including a record of each transaction materially affecting the society's financial position.
Determining what constitutes an adequate accounting record has emerged as one of the most significant issues in responding to member requests for financial records. The question is usually not whether a document relates to the affairs of the society, but whether it forms part of the society records that a member is entitled to inspect. Recent CRT decisions have drawn a distinction between an "adequate accounting record" and the underlying source documentation from which those accounting records were created.
Examples of adequate accounting records from the CRT jurisprudence include:
- General ledgers
- Records recording receipts and expenditures and the reasons for each
- Records capable of showing the society's financial position and transactions
On the other hand, source documents which support accounting entries are not accessible to members. These include, for example:
- Bank statements
- Cancelled cheques
- Deposit slips
- Credit card statements
As a practical takeaway, societies should ensure that their accounting systems are capable of producing clear and reliable records of their financial activities.
What Happens if Access Is Refused?
A person who believes that they are entitled to inspect or obtain a copy of society records is not limited to repeatedly asking the society for compliance.
Depending on the circumstances, remedies may include:
- an application to the BC Registrar of Companies
- a claim before the CRT
- proceedings before the Supreme Court of British Columbia.
The creation of the CRT has given members a relatively inexpensive, expeditious and accessible forum for resolving document-access issues. The CRT can order societies to produce society records to which members are entitled.
Practical Lessons for Society Boards
The Societies Act and recent CRT decisions suggest several practical lessons for society boards:
- Ensure that all society records are maintained at the registered office or an approved alternative location.
- Ensure that records remain accessible for inspection and providing copies as required by the Societies Act.
- Retain key governance records permanently as a matter of prudent risk management.
- Review bylaws to determine whether access to directors' records and accounting records has been appropriately addressed.
- Consider whether a resolution restricting the use of the register of members is appropriate for the society.
- Do not assume that privacy concerns justify withholding society records.
- Ensure that accounting systems produce records capable of demonstrating the society's financial position and transactions.
Conclusion
Records disputes are rarely just about records. More often, they concern accountability, transparency and confidence in the governance of the organization.
The Societies Act seeks to balance those interests by requiring societies to maintain key records while granting meaningful inspection rights to members, directors and, in limited circumstances, the public.
A society that maintains complete and accessible records is better positioned to respond to member concerns, resolve disputes and demonstrate good governance. Conversely, poor record-keeping practices often become governance problems long before they become legal problems.
In an era of increasing transparency and growing CRT jurisprudence concerning access to records, a thoughtful records management strategy is no longer simply good administration. It is an essential component of effective society governance.
Disclaimer: This bulletin is for general information purposes and is subject to the particular facts of each case; certain requirements may have been simplified, and the law may have changed since the date of this bulletin.
