What steps need to be taken if a director of a charity or not-for-profit resigns or is removed?

By Benjamin Miller, Esq.

Q. We run a close-knit, small charity in Toronto, where we provide scholarships to at-risk, local teens to pursue higher education. One of our long-term directors is moving to sunnier locales and has resigned. What steps should we be taking to ensure compliance with all relevant regulations, legislation, and our Articles of Incorporation and Bylaws?

Answer:

If a quorum of directors remains, then the only steps that need to be taken from a corporate law perspective are generally:

• filing a notice of change with the government telling them the director has ceased to be a director
• depending on the statute the nonprofit is incorporated under, if the director has provided reasons for resigning or a defence against being removed, this must be circulated to the members (not a very hard thing to do if the directors and members are the same people).

If the resignation or removal results in there being less than a quorum left on the Board (the governing documents will typically specify what the quorum is), then in addition to the above steps, a members' meeting needs to be called and more directors need to be elected.

Obviously, depending on who the director was, signing authorities at the bank may need to change, as well as the account with the CRA.

Passwords may need to change if their departure gives rise to a privacy concern.

Depending on why they were removed (e.g. a complaint about harassment) other steps may also need to be taken.

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