East and West Learning Connections Duties of Directors Policy
TARGET AUDIENCE: All Voting members of the Board of Directors
Adopted 17 May 2021
1.0 Rationale
To ensure the smooth, efficient, effective governance of the East and West Learning Connections Organization (hereinafter ‘the Organization’), it is imperative that all voting Directors on the Board, or anyone wishing to become a Director, be familiar with the duties and responsibilities of a Director of a Not-for-profit corporation in general, and the policies and protocols, rules and regulations that govern the Organization in particular.
2.0 Purpose
This policy will acquaint all Directors on the Board of Directors of the Organization with the primary duties expected to be exercised by anyone serving in the capacity of a voting Director on the Board.
3.0 Duties of Directors of the Organization
The Organization is a Federally registered, incorporated Not-for-profit corporation.
A director is a person who actively participates in the administration, guidance, and supervision of the affairs of the Organization by being part of the governing body of the Organization — the Board of Directors. A Director, in the not-for-profit context, is one person in a collective body that governs the Organization and provides strategic leadership for the Organization.[1]
In addition to the statutory powers set out in the corporate legislation, a not-for-profit organization is only allowed to carry on those activities and do those things that are set out in its objects described in its letters patent. Objects are essentially corporate “purposes” and set out a list of things that the organization can do. Directors have a fiduciary obligation to safeguard the organization’s corporate objects and to make sure that the organization’s activities and programs are permitted by its objects. If directors cause or permit the organization to act outside the corporate objects, then the actions taken by the directors are void and “ultra vires”[2] and the directors may be held personally liable for any loss or damage that results from such action.[3]
Any voting Director on the Board of the Organization has a legal responsibility to fulfill their fiduciary duty to the Organization. Fulfilling one’s fiduciary duty means putting the interests of the Organization ahead of any personal interest, and exercising a Duty of Care and a Duty of Loyalty as outlined in sections 3.1 and 3.2 below.
In general, a Director is responsible for:
- ensuring the purposes of the corporation are properly carried out
- setting the corporation’s long-range objectives and strategic plans
- being responsible for all aspects of the corporation’s operations
- ensuring the corporation’s financial stability
- where applicable, supervising the corporation’s management and staff.[4]
All Directors must become thoroughly familiar with, and agree to uphold the corporate objects and the principles embodied in,
- the Mission, Vision and Values of the Organization, and its articles of incorporation;
- the Organization’s bylaws;
- the Organization’s operating procedures;
All Directors must become familiar with current legislation governing the Organization
- the Canada Not-for-profit Corporations Act (S.C. 2009, c. 23) and its general requirements[5];
- the Province of Ontario’s Not-for-Profit Corporations Act, 2010, S.O. 2010, c. 15 and its general requirements[6];
- a general awareness of any Provincial and Municipal laws and regulations having jurisdiction over the operation or good governance of the Organization;
All Directors must become thoroughly familiar with, and agree to abide by, the Organization’s policies, including, but not limited to, its Code of Conduct and Ethics Policy, Conflict of Interest Policy, Anti-discrimination Policy, Harassment and Violence Policy, Privacy Policy, and any other policies adopted by a resolution of the Board and in force during the tenure of a Director;
3.1 Duty of Care
Directors have a duty of competence i.e., a requirement to act with a certain level of skill. The duty of care describes the level of attention required of a director. It is a “duty to be informed” and to act with competence and diligence. A director must generally be informed about an issue before making a business decision relating to it.
However, the law does not require directors to be experts but rather to act in accordance with a particular standard of care.[7]
The Ontario Not-for-profit Corporations Act “says that a director is not legally liable under section 39[8] if they acted with the care, diligence and skill with which a reasonably careful person would have acted in similar circumstances.”[9]
3.2 Duty of Loyalty
The duty of loyalty requires that a director act honestly and in good faith in the best interests of the organization. The duty of loyalty is a personal duty and cannot be delegated. This means, among other things, that a director is not allowed to profit from his/her office and must avoid all situations in which his/her duty to the organization conflicts with his/her interests or duties to others.[10]
3.3 Board meetings
All voting Directors are required to regularly attend Board Meetings, which will be held at intervals to be determined by the Board.
All voting Directors are expected to fully participate in the good governance of the Organization by informing themselves on the matters before the Board, by exercising their best judgment and by participating in the voting on resolutions with respect to those matters.
If a Director cannot attend a meeting of the Board for any reason, he/she must notify the Chair of the Board, with as much notice as possible. Failure to attend more than two consecutive Board meetings will result in disciplinary action, including but not limited to, suspension from the Board.
3.4 Confidentiality
All Directors must abide by the general provisions for confidentiality outlined in the Code of Conduct and the Organization’s Privacy Policy. These provisions remain in place in perpetuity unless required by law or authorized by the Board.
**End of Duties of Directors Policy**
[1] https://capacitycanada.ca/wp-content/uploads/2015/06/20_questions_directors_of_not-for-profit_organizations_should_ask_about_fiduciary_duty.pdf, pp.4. (accessed 25 March, 2021)
[2] Ultra vires (Latin: “beyond the powers”) is a Latin phrase used in law to describe an act which requires legal authority but is done without it. Its opposite, an act done under proper authority, is intra vires (“within the powers”). Acts that are intra vires may equivalently be termed “valid”, and those that are ultra vires termed “invalid”. https://en.wikipedia.org/wiki/Ultra_vires , (accessed 27 March 2021)
[3] https://capacitycanada.ca/wp-content/uploads/2015/06/20_questions_directors_of_not-for-profit_organizations_should_ask_about_fiduciary_duty.pdf, pp.16. (accessed 25 March, 2021)
[4] https://www.ontario.ca/page/guide-not-profit-corporations-act-2010, (Accessed 27 March 2021)
[5] https://laws.justice.gc.ca/eng/acts/c-7.75/ [accessed 25 Mar 2021]
[6] https://www.ontario.ca/laws/statute/10n15 (accessed 26 March, 2021)
[7] https://capacitycanada.ca/wp-content/uploads/2015/06/20_questions_directors_of_not-for-profit_organizations_should_ask_about_fiduciary_duty.pdf, pp.11. (accessed 25 March, 2021)
[8] Directors’ liability for money or property distributed or paid
[9] https://www.ontario.ca/page/guide-not-profit-corporations-act-2010, (Accessed 27 March 2021)
[10] Ibid, pp.11. (accessed 25 March, 2021)