The starting point for my question is this by-law for a not-for-profit organization in Canada (the by-law is about the make-up of the board of directors):
"(b) A majority of the Directors must not be employed or directly related to organizations that meet both of the following criteria as determined in the discretion of the Board:
- (i) it is a university or college in Canada; and
- (ii) it has one or more researchers who has(have), during the eighteen (18) month period immediately prior to the election, utilized an advanced computing system through access provided by the Corporation as designated by the Board from time to time."
But 9 members of the board of directors satisfy those two criteria and only 3 do not, despite the above by-law saying that the majority must not.
When I brought up my concern about this to the President and CEO there was no response, and when I later brought it up to the chair of the board of directors his response by e-mail was:
"Please be advised that we are not in violation of section 504 of the CC By-Laws.
The recommended slate of Directors was unanimously approved by our institutional members at the annual general meeting in September."
But the by-laws don't say anything about "unanimous approval" and they clearly state that the majority have to be from outside the two given categories (I could show you the whole by-law PDF if anyone needs to be convinced, and the only reason I didn't do it was because it would give away which organization I'm talking about).
Earlier I asked here: What happens when a Canadian not-for-profit organization does not comply with its own by-laws?, and in the comments I was directed to Part 3 and Part 16 of the Canada Not-for-profit Corporations Act (S.C. 2009, c. 23).
Now I start to get so much more confused. Perhaps I was being directed to "Part 3" because of this clause:
"(2) A corporation shall not carry on any activities or exercise any power in a manner contrary to its articles.",
where "articles" means:
"articles means original or restated articles of incorporation or articles of amendment, amalgamation, continuance, reorganization, arrangement, dissolution or revival. (statuts)"
so doesn't explicitly include by-laws, but that part isn't as confusing as what's next:
"19 (1) No corporation, no guarantor of an obligation of a corporation and, in Quebec, no surety may assert against a person dealing with the corporation or against a person who acquired rights from the corporation that
(a) the articles, the by-laws or any unanimous member agreement has not been complied with;".
Here's an attempt at making the above quote easier to read for my purposes:
"No corporation, n̶o̶ ̶g̶u̶a̶r̶a̶n̶t̶o̶r̶ ̶o̶f̶ ̶a̶n̶ ̶o̶b̶l̶i̶g̶a̶t̶i̶o̶n̶ ̶o̶f̶ ̶a̶ ̶c̶o̶r̶p̶o̶r̶a̶t̶i̶o̶n̶ ̶a̶n̶d̶,̶ ̶i̶n̶ ̶Q̶u̶e̶b̶e̶c̶,̶ ̶n̶o̶ ̶s̶u̶r̶e̶t̶y̶ may assert against a person dealing with the corporation o̶r̶ ̶a̶g̶a̶i̶n̶s̶t̶ ̶a̶ ̶p̶e̶r̶s̶o̶n̶ ̶w̶h̶o̶ ̶a̶c̶q̶u̶i̶r̶e̶d̶ ̶r̶i̶g̶h̶t̶s̶ ̶f̶r̶o̶m̶ ̶t̶h̶e̶ ̶c̶o̶r̶p̶o̶r̶a̶t̶i̶o̶n̶ that the articles, the by-laws or any unanimous member agreement has not been complied with".
- What's the point of having by-laws if "no person can assert that they haven't been complied with"?
- Why is it talking about people "dealing with the corporation" rather than just "the corporation itself"?
- What if the "by-laws" and "unanimous member agreement" are in contradiction with each other as is the case I described at the beginning?
Perhaps more reassuring is "Part 16" which says:
"259 On the application of a complainant or a creditor of a corporation, a court may make an order directing a corporation or any director, officer, employee, agent or mandatary, public accountant, trustee, receiver, receiver-manager, sequestrator or liquidator of a corporation to comply with this Act, the regulations or the articles, the by-laws or a unanimous member agreement of the corporation or restraining any such person from acting in breach of them and make any further order that it thinks fit."
But what happens when "by-laws" and "unanimous member agreement" contradict each other as this case does based on the by-law quoted at the top of this question, and the quote from the chair of the board?