Below is a guide to writing bylaws in Alberta. Writing bylaws is an important step in the process of creating your co-op. Bylaws are the rules and regulations that govern and define various aspects of a co-operative’s business.
Bylaws can vary widely across organizations and reflect both the business of the co-operative and values and interests of its members. They also outline the procedures the organization uses to carry out its business.
Co-ops are legally required to have bylaws, but they are also an important tool for a co-op. Done properly, bylaws ensure all members are clear about the organization’s purpose and processes. Moreover, good bylaws engage member shareholders in the business and keep it healthy.
A good set of bylaws are:
In Alberta, all co-ops are governed by the Cooperatives Act, and bylaws are required by this legislation. The Alberta government has assembled a document meant to help clarify some of the legislation. We find the document a bit confusing but it can be a helpful guide.
To help navigate the process better, try our sample set of bylaws as a starting point. You can (and should) customize these sample bylaws to fit the requirements of your unique situation. Also, do your best to keep these changes within what is allowed by the Act.
The process can be daunting. If you have any questions or would like feedback on your draft bylaws, we’re happy to look them over for you. Get in touch.
Below is an overview of each section included in a standard set of bylaws. This overview gives insights and examples that may be relevant for you. You can use this information in conjunction with our sample bylaws to create your own.
In this section, you include definitions of important words or phrases used throughout the document. Some commonly used terms you may want to define in your bylaws include:
In our sample bylaws, we have examples of these standard definitions that you can use. There will likely be other terms that you’ll need to use in the bylaws of your specific co-op, and it’s important to define those as well.
In this section you might also include a provision like this (we’ve included it in our sample bylaws):
1.02 Conflicts with the Act and Regulations
What this means is that, if you inadvertently include something in your bylaws that doesn’t comply with what it says in the Act (which can happen!), it doesn’t mean your bylaws are invalid as a whole. It also means that if there is a conflict between your bylaws and the Act, the Act wins. If you choose to make your bylaws stricter than the Act in some ways, then your bylaws will take precedent. For example:
In this section of the bylaws you will define membership in the co-operative and outline some key processes to govern members. The most important part is the qualifications or requirements of membership. In short, what does it take to become a member? This section outlines who can become a member and the process they need to follow to apply for membership. Typically, an individual must meet a minimum age requirement. They must submit an application for membership. They must purchase the minimum number of membership shares. Also, they must agree to support the co-op.
You may also want to allow joint membership. Joint membership allows a single membership to be held by two or more people. This type of membership can be useful if you’re starting a consumer co-op or housing co-op used by families.
How and when to remove a member is another important consideration. Your bylaws should include provisions for the removal of memberships.
In Alberta, the Act allows a co-operative to remove members that have not done business with the co-op in 2 years. Beyond this provision, you should also include processes for when a member might withdraw their shares/membership. For example, a member might request a withdrawal of membership if they move out of the trading area, die, or become bankrupt. How will your co-op deal with this request?
Some consumer co-ops allow members to redeem their shares (other than those required for membership) once they reach 60 or 65. If you allow this, you should also provide general timelines for processing these requests.
Likewise, your bylaws should include provisions for the termination of a membership. Generally, this process is done by special resolution at a directors’ meeting. If you choose this option, your bylaws should outline the timeline for delivering a notice of termination and the member’s rights to appeal the decision.
Some optional provisions to consider include:
Provisions in the sample bylaws that do not apply can be left out of your draft bylaws. Keep in mind that any required provisions you don’t include will by default be regulated by the Act.
Member meetings are usually called by the board of directors. These meetings bring the co-op’s membership together in some way. The goal of these meetings is to provide reports from the organization and make decisions that impacts the full membership.
In your bylaws, you should outline when the Annual General Meeting (AGM) should take place. Generally, bylaws indicate a meeting must be held within 6 months of financial year-end. Acting within this guideline, the board of directors usually decide the time and place of the meeting. Your bylaws should also determine what will be discussed as general business at each AGM. General business usually includes things like approving an auditor, reviewing financial statements and a report from the board and/or manager.
In addition to the AGM, the board or membership can call special meetings at any time. Special meetings, as indicated in the name, only happen for exceptional reasons. These reasons might include the need to approve a new auditor, hold board elections, or to approve spending that exceeds a predetermined limit. The number of members required to call a special meeting should be outlined in your bylaws.
Other important procedures for members’ meetings include:
Members may submit proposals, which would be discussed at a members’ meeting. To do this, a member who wishes to submit a proposal should follow procedure set out in the bylaws. Likewise, timeframes for submitting various proposals should be included. For example, a co-op may require proposals amending incorporating documents to be submitted 30 days before the AGM.
One of the most important items in a set of bylaws is defining and regulating the board of directors and their powers within the organization. A key provision is the qualifications of directors. This normally includes being an individual (not a corporation), not having the status of bankrupt, being at least 18 years old, not being a “represented adult”, a formal patient as defined in the Mental Health Act, subject of an order under the Mentally Incapacitated Persons Act, or found to be of unsound mind by a court.
You should outline some of the basic parameters for the board in the bylaws:
Make sure to include provisions for the removal and replacement of directors. Obviously a director ceases to be a director if they die or resign. But a director may also be removed from office if they cannot meet the qualifications of directors. Directors can be removed from office by ordinary resolution at a special members’ meeting and may be replaced at this same meeting. A vacancy on the board may be filled by an appointment of the directors or by calling a special meeting to elect a replacement.
The nomination and election of the board is also regulated by bylaws. As such, the process for receiving and calling for board nominations should be outlined. Elections take place every year at the AGM. Some bylaws include staggered terms so a portion of the board comes up for election every year. The reason for this is to avoid risking a full board election every two or three years. In general, elections are determined by secret ballot and the ballots must be retained by the co-op for a certain period of time.
Bylaws regulate officers and committees of the board. So, include bylaws that identify the offices of the co-op and determine their powers. Some commonly-used offices include: president, vice-president, secretary, and treasurer (or one position of secretary-treasurer).
The board can form committees. These committees can include general members. Common committees include an audit committee, nominations committee, and a governance committee. That said, bylaws do not need to include the types of committees a board can create. Instead, bylaws should outline the process for creating a committee. A committee is typically created by ordinary resolution at a board meeting. In the resolution, the board should name the powers given to the committee and a separate terms of reference should be created to govern its operations.
In this section of the bylaws are important financial regulations. For example, the amount of surplus revenue put into reserves or the process for allocating funds to reserves each year might be included.
The financial year end of the co-op is declared in this section. Each year on this date the co-op closes its books. Passing this date also sets in motion the auditing process. December 31st is a common year-end, but the year-end should reflect the co-op’s operations. Sometimes a fiscal year should align with another organization, such as a government’s budget.
If the co-op intends to share its profit with members, your bylaws must set out regulations for patronage returns. The board needs the authority to allocate a portion of the co-op’s profits to patronage returns. There also needs to be a system for how patronage will be allocated. For example, in a worker co-op this is often based on the hours worked. In a consumer co-op, patronage is generally allocated based on the amount of money spent with the co-op.
Other provisions might include:
In this section, outline how notice should be provided to members, directors, officers, the auditor, or a committee. Notice can generally be issued by personal delivery, physical mail, or electronic means (like e-mail).
Notice mailed out physically is usually considered received after 5 days, while notice sent by e-mail is considered received on the following business day.
In this section, outline the process for amending, enacting, or repealing bylaws. In Alberta, the Act offers two options: members can amend bylaws by ordinary resolution at a members’ meeting or the directors can amend the bylaws and confirm the changes at the next members’ meeting.
In general, an amendment comes into force on the day the resolution is accepted.