What Is a By-Law?
A by-law is a rule or set of rules that states how a co-op will deal with matters in a particular area. The Co-operative Corporations Act states that a co-op can pass by-laws to deal with all the details of the business of the co-op. However, the by-laws must not be contrary to the Act or the co-op’s Articles of Incorporation.
A by-law can be very broad, and state how the co-op and its members must act in a wide area. However, a by-law can also deal with a single item of the co-op’s operation.
By-laws can only be passed or amended through confirmation by a majority of the members present at a general members meeting. This means that by-laws enable members to control their co-op. The board should make sure that there are by-laws which control how the co-op should be governed, managed and run in all key areas. If the co-op does not have a by-law to deal with a particular matter, the board has the power to make management decisions (unless the Act deals with the matter specifically).
Agreements the co-op has with governments, such as its operating agreement with Canada Mortgage and Housing Corporation or the Ministry of Municipal Affairs and Housing, may require the co-op to pass a by-law to deal with some specific matters. Beyond this, the co-op decides which by-laws it will pass.
Passing a By-Law
This is the procedure for passing a by-law:
- The Board of Directors must pass the by-law.
- The members must receive at least ten days notice of a meeting at which they will consider the by-law and must receive a copy of the proposed by-law.
- There must be a quorum of members present at the members’ meeting.
- The members must confirm the by-law by a majority vote of the members who are present and vote at the meeting (abstentions are not counted as votes).
Amending a By-Law
A co-op that wants to amend a by-law can do so by either:
- Replacing an entire by-law with a new one, or
- amending only part of an existing by-law.
Some co-ops have adopted written policies rather than by-laws to deal with certain matters. These policies become written schedules to a by-law and must be passed in the same way as a by-law. It then becomes part of the by-law and has the same force as any other part of the by-law.
However, some co-ops have passed policies by a simple majority of the board of directors. These policies do not have the same force in law as a by-law or a schedule to a by-law. It is better to pass a by-law to deal with any matter that could come before a court of law. For example, an Arrears By-law would stand up in court in the case of an eviction for arrears. An informal policy passed by a simple majority may not do so.
Boards often adopt procedures which set out how a by-law or policy should be applied (for example, procedures for collecting arrears). The Board adopts a procedure by passing a resolution at a board meeting.