How Do You Remove a Director from a Canadian Charity?

Directors play a crucial role in the governance of a charity in Canada. However, there may come a time when a director needs to be removed due to conflicts, misconduct, or failure to fulfill their duties. Removing a director involves a structured legal process to ensure compliance with federal or provincial laws, particularly under the Canada Not-for-profit Corporations Act (CNCA) or the Ontario Not-for-Profit Corporations Act (ONCA) if the charity is based in Ontario.

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Reasons for Removing a Director

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A director may be removed for several reasons, including:

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• Breach of fiduciary duty – Engaging in misconduct, conflicts of interest, or unethical behavior.
• Failure to attend meetings – Consistently missing board meetings without valid reasons.
• Non-compliance with governing documents – Failing to adhere to the charity’s bylaws or legal obligations.
• Conflict of interest – Situations where personal or financial interests interfere with the charity’s best interests.
• Loss of confidence – If board members believe the director is not acting in the charity’s best interest.

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Reviewing the Charity’s Governing Documents

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Before initiating removal, review the charity’s bylaws and articles of incorporation to determine:

• Whether there are specific provisions for director removal.
• The required vote threshold for removal (majority or two-thirds vote).
• Any notice requirements for board or member meetings.

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Step-by-Step Process to Remove a Director

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1. Create a Board Resolution

A board resolution is a formal written document stating the decision to remove the director. The resolution should include:

• The name of the director being removed.
• The reason for removal (if required by the bylaws).
• The date and details of the board meeting where the removal will be discussed.

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2. Notify the Director and Members

The director in question must be formally notified of the proposed removal. If member approval is required, a notice must be sent to all voting members specifying:

• The date, time, and location of the meeting.
• The agenda, including the motion for director removal.
• The voting requirements (majority or special resolution).

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3. Hold a Vote at the Board or Members’ Meeting

Depending on the charity’s bylaws, removal may require:

• Board Approval – A majority or two-thirds vote by the board members.
• Member Approval – Some charities require members to vote on director removal. In this case, a special resolution (typically a two-thirds majority) is needed.
• Quorum Requirements – Ensure the required number of board members or members are present for the vote to be valid.

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4. File a Change of Directors Form

After a director is removed, the charity must update its corporate records. This includes filing a Change of Directors form with the relevant government body:

• For Federally Incorporated Charities – File Form 4004 (Change of Directors) with Corporations Canada.
• For Ontario Charities – File the updated director information with the Ontario Business Registry under the ONCA.

The filing typically requires:

• The charity’s corporation number.
• The name of the removed director.
• The names and addresses of the remaining directors.

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5. Update Internal Records and Notify Stakeholders

Once the change is legally recorded, update:

• The charity’s official records and meeting minutes.
• Bank and financial institutions (if the removed director had signing authority).
• CRA (Canada Revenue Agency) if the director was listed on charity tax filings.
• Donors and stakeholders, if the director played a public role.

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Legal Considerations and Best Practices

• Fairness and Transparency – Follow due process to avoid legal disputes.
• Legal Advice – If unsure, consult a lawyer specializing in charity law to ensure compliance.
• Alternative Solutions – If removal is due to internal conflicts, consider mediation before initiating removal.

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Removing a director from a Canadian charity requires careful adherence to legal and governance requirements. By following the proper process, charities can ensure a smooth transition while maintaining compliance with federal and provincial laws. Always check the charity’s bylaws and consult legal professionals if necessary to avoid legal risks.