Redress Risk Management (post until May 31/19)

Avoiding the pitfalls of a problematic AGM

With health-care organizations holding their annual general meetings (AGM) typically between May and July, it’s important they consider how to present it effectively, says Toronto health lawyer Kathy O’Brien

“Just because you’ve been doing it every year doesn’t mean you’re doing it well," she tells “There are things you can do to ensure a smoothly run meeting.”

It may also be useful to have legal counsel review the agenda before the meeting to avoid problems, adds O’Brien, a partner with DDO Health Law.

“The AGM presents a great time to sing the praises of the organization and talk about your successes.”

Ontario’s Corporations Act requires non-profit health-care organizations to hold AGMs to present their annual financial statements. Typically, they occur three months after the fiscal year’s end, O’Brien says. 

During those meetings, key action items must take place, including the approval of the minutes from the last meeting, the presentation of the financial statements, the election of directors and the appointment of the auditor. Sometimes there are changes to the bylaws or incorporating documents, which are taken to the members during a part of the meeting called “special business," she explains.

“Members need to know when they get the notice of the meeting if there is anything out of the ordinary on the agenda,” she says. "That notice is important because it allows them to make an informed decision about whether they want to attend. They aren’t required to go.”

O’Brien says one of the most common misconceptions is that the board requires approval of the financial statements from the members at the AGM. 

“The financial statements are approved at the board level and the members only have a right to receive them,” she says. “It’s one of the things that’s constantly done wrong. No vote is necessary to approve the financial statements.

"They’ve already been approved. They are just being presented for informational purposes.”

Another common mistake some organizations make is presenting what’s called a “whitewash resolution,” which asks the members to approve all of the board's actions over the last year, O’Brien says. 

“There is absolutely no need to do that and it has no legal effect whatsoever,” she says. “The members can’t approve or ratify something they don’t have the details about. That resolution shouldn't be on your agenda.”

If bylaw amendments will be presented during the meeting under "special business," the board must let members know where they can find the information about those changes, but it isn't required to send the actual bylaw, O'Brien notes. 

“That gets very expensive,” she says. “You should tell them in the notice of the meeting what the amendment is about, and if they are interested in seeing the language and educating themselves to make an informed decision, they should know where to get a copy of the bylaw. Provide a contact so anybody interested can get more information.”

O’Brien says the Corporations Act is antiquated and doesn’t contemplate sending email notices to members, and if organizations want to provide information to members electronically they have to obtain consent from them first.

While most AGMs shouldn’t take long, O'Brien says, they often attract members who are upset about certain issues such as reducing services in order to balance a budget or closing an emergency room.

“They feel an ownership interest in their local hospital — it’s where they were born and where their parents died. They feel a strong connection to it so you can have some heated AGMs," she says. 

Organizations also need to be aware that a member isn’t permitted to stand up at an AGM and table a new motion on the floor for a vote. 

“It’s not proper process. Members are entitled to receive notice of anything that’s going to happen at the meeting and on that basis they decide whether they will attend,” she says. 

"It's not fair to those members not in attendance for someone to table a new motion. You can't raise new business from the floor at an AGM and the chairperson needs to be aware of that.

"Discussion is permitted but there can be no vote. It would have to be deferred to either the next AGM or a special members’ meeting.”

O’Brien says it’s important never to raise a controversial issue for the first time at an AGM. 

“By the time the issue is discussed at the AGM the members should not have questions because there have been town halls and stakeholder meetings,” she says. “Getting the approval at the AGM should be a formality because they understand the issue and why it needs to happen."

It’s important for boards to provide the rules and procedures that govern each AGM to members. Some of those include time limits on speaking and that each speaker can only talk once on an issue, O’Brien says. 

DDO can provide a standard copy of those rules to any health-care organization that requires it.

“This will help the chairperson manage a potentially disruptive meeting,” she says. 

To Read More Kathy O'Brien Posts Click Here
Lawyer Directory
CosmoLexHexigent Consulting (to remain until August 31/19)MKD International (post until Sept. 30/19)Feldstein Family Law (post until May 31/19)Harold SchlesingerKotak Personal Injury LawyersSRH Litigation (post until May 31/19)Gelman & Associates