Below is a guide to writing bylaws in Manitoba. 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 Manitoba, the Cooperatives Act governs a co-op’s operations, and the bylaws are required by this legislation. In Manitoba, the government has provided several sample sets of bylaws to support new co-ops. You should customize these bylaws to fit the requirements of every unique co-operative within what is allowed by the Act.
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 alongside our sample bylaws to create your own. You can find a copy of these and other bylaws here.
In this section include definitions of important words or phrases that are used throughout the bylaws. Some commonly used terms to define in your bylaws include:
In our sample bylaws, you’ll find some examples of these standard definitions you can use. Likely other terms specific to your co-op will also need to be defined.
In this section, provide general information about the co-op, including the co-op’s financial year. Most organizations set their financial year to follow the calendar year (January 1 – December 31). But it might be useful to align with other institutions like a school year or government budget.
Outline authority for signing as well. Naming the offices with signing authority (treasurer and president, for example) or simply outlining the process for assigning this authority is good place to start. Tasking the board with creating and maintaining policies on purchasing, borrowing, spending limits, and signing authority also goes here.
Who gets access to the co-operative’s records/information should also be outlined here. Section 29 of the Act says members, investment shareholders, and creditors can have access to records, including minutes, member lists, financials, resolutions, and incorporating documents, upon request. Your bylaws can restrict this access if the board considers certain documents confidential, or require a fee be paid to the co-op for making a copy of a document. The bylaws can also require the board to approve requests to access this information.
A procedure for amending the bylaws needs to go here as well. The Act says directors can amend the bylaws by ordinary resolution if it is confirmed by the members at a members’ meeting. Written notice of a bylaw amendment should be sent to members along with the notice of the meeting. In general though, you have two choices: follow the procedure set out by the Act or restrict the ability of the co-op’s board to alter the bylaws.
In this section you should create bylaws that regulate the co-op’s board of directors, their election, meetings, and responsibilities. Consider some of these basic provisions:
You should include provisions outlining the qualifications of directors. The Act requires the following:
You can create bylaws that place further qualifications on board candidates and might require a nominations committee to screen candidates before nominations are finalized.
In this section outline the nomination, election, and term of office for directors. Directors may be:
The bylaws must clarify this process. Directors are elected by the members by secret ballot and the candidates with the highest number of votes are elected.
Most co-operatives allow directors to serve terms longer than one year (the Act does not specify a maximum, but 3 years is a standard maximum) and have staggered elections. Staggered elections allow a portion of the board to come up for election each year. Your bylaws can include provisions that allow this. For example, individuals that receive the highest number of votes at the first Annual General Meeting will serve the longest term (e.g. 3 years) and the fewest votes will serve the shortest term (e.g. 1 year). Directors elected at subsequent meetings will be elected to 3-year terms. If a tie occurs, a run-off election (a second ballot with the tied candidates on it) must be held.
Outline why a director might ‘cease to hold office.’ There are standard reasons a director may leave office including:
The bylaws can include a provision allowing directors to remove a director if he/she is absent from 3 consecutive board meetings. A director may be removed from office by ordinary resolution of the members at a special meeting.
A vacancy on the board created by the removal of a director can be filled at the same meeting. A vacancy that does not prevent the board from meeting quorum can go unfilled or the board could appoint a director to fill the vacancy by ordinary resolution. If the board can no longer meet quorum, it must call a special meeting to fill the vacancy. A director that fills a vacancy may only serve the remainder of the term of the director he/she replaced.
The Act also says directors must declare any conflicts of interest. Consider including bylaws that outline a process for directors to follow if a conflict of interest emerges. The Government of Manitoba includes provisions like this in its sample bylaws. In short, if a director or their family might benefit (i.e. receive a monetary benefit) from a decision of the co-operative, the director must declare a conflict of interest. The director may be restricted from participating in the discussion of, or vote on, the decision.
In this section of the bylaws you should include provisions for how committees of the co-operative are created and, if desired, the types of committees that must be created. The Act requires co-operatives to appoint an audit committee, but boards are given discretion over what other committees they create. Some examples might include a nominations committee, a fundraising committee, or a governance committee. Committees are formed by ordinary resolution at a board meeting and must be comprised of at least 3 directors. Committees can develop their own procedures.
In this section, you can also include bylaws that define the duties of officers. But providing this authority to the board is also a good option. That way, the board can determine its officers. Standard officers include:
Unless you include them in the bylaws, the board can also specify the duties, powers, and remuneration of officers.
For this section, the sample bylaws includes 3 important provisions. The first two deal with the ‘duty of care of directors and officers’ and ‘indemnity.’ These are required by the Act and the entries included in the sample bylaws do not need to be amended. It’s also worth noting that, if you don’t include these, this section would be governed by the Act.
The third provision deals with directors’ dissent. Directors’ consent is assumed on all decisions made by the co-operative unless dissenting (opposing) directors formally recognize their dissent. They can do this by requesting their dissent be recorded in the minutes at meetings, sending notice of dissent to the secretary, or mailing a letter of dissent to the co-operative after the meeting.
Operationally, this portion of your bylaws includes some of the most important provisions for the co-op: who can become a member. There should be a bylaw outlining the qualifications or restrictions on membership. This must reflect the provisions created in Article 5 of the co-op’s Articles of Incorporation, but typically includes an age requirement, submission of an application form, and payment for the minimum number of membership shares required for membership. Other requirements might be necessary and usually depend on the type of co-op that is being created (e.g. a worker co-op may require members complete a 2-month probationary period before applying for membership).
You should also create bylaws that outline the process for a member to leave the co-operative. This can take place through a formal request to withdraw their membership, automatically in the case of death or dissolution (for corporate members), or if the board terminates a member’s membership. Each of these provisions should outline the process to be followed by the member, the co-op, and the board including the amount of notice required and how long the co-op has to redeem the shares of the withdrawing/terminated/deceased member (no later than 1 year as required by the Act).
In the case of a termination of membership ‘for cause’, you should include
NOTE: A membership may also be terminated by special resolution at a members’ meeting.
In this section you should include provisions outlining whether the co-op will issue membership share certificates (normally co-ops will not, but they may issue receipts for the purchase of membership shares) and liens for indebtedness if members are allowed to borrow from the co-operative. The co-operative can enforce liens on members’ shares, any property held in the co-op, or sums payable to the member (e.g. patronage returns or dividends).
This section of the sample bylaws contains provisions for two important financial aspects of a co-operative: the general reserve and surplus. Bylaws regulating reserves should establish the creation of a general reserve fund and identify the minimum percentage of the co-op’s total assets (including property, cash reserves, and working capital) that the general reserve must make up before patronage returns will be issued. Unless the co-operative owns property, the general reserve will make up most of the co-op’s assets; it may be useful to set a target based on the co-op’s revenue or expenses (e.g. 80% of one year’s revenue).
In this section you should outline how profit might be shared with the members. The sample bylaws include a section identifying how patronage returns might be allocated based on use of the co-op’s services; issuing dividends on shares may be an alternative in some cases (e.g. investment co-ops). Your bylaws should also include the co-op board’s authority to determine the amount of profit allocated to members and the ability to issue shares instead of cash. Issuing shares instead of cash can allow the co-op to hold on to its cash if it wants to make a special investment in an expansion or other operations. It’s useful to outline the minimum patronage return the co-op will issue a cheque for (e.g. $5) and how the co-op will provide notice of patronage returns to members. (This form must be created by the board and should outline the cash and shares the member will receive as their share of the profit).
Section 7.07 of the sample bylaws provides a list that prioritizes how the co-op will repurchase the membership shares of various members. This will help organize the buy-back (redemption) of shares mentioned in Section 6 and should be customized to suit the co-op’s preferences and realities. For instance, a worker co-op may prioritize redeeming the shares of a deceased member and may not redeem members’ shares once they reach a certain age. The Act only allows for co-ops to take up to one year to buy back shares of outgoing members therefore they should be prioritized. Payments to remaining members usually have the lowest priority as they can be issued membership shares instead of cash.
This section of the sample bylaws provides regulations and guidelines for members’ meetings. Your bylaws should outline some of the basics including:
You should include provisions that either allow or prevent electronic meetings. The bylaws don’t have to include instructions on how these meetings should be conducted, but should require that such meetings adequately accommodate all members. Also, your bylaws should clarify the process for mail-in or electronic voting, if you decide to allow these processes.
Outline how members receive the information required to vote and rules that clarify how voting is governed (e.g. one member, one vote; votes are counted on the day of the members’ meeting; etc.). Any rules placed on voting at members’ meetings should be included in this section; however, standard rules are provided for it in the Act (e.g. one member, one vote, majority rule, resolutions are defeated in the event of a tie, etc.). One rule that should be considered is how members vote at meetings — typically votes are by show of hands unless a secret ballot is requested by a set number of members (e.g. 5).
This section of the sample bylaws outlines the method of giving notice to members, directors, officers, or committee members. The board may give additional notice using various types of media (social media, newspapers, etc.), at its discretion. Notice that must be given to an individual is sent by mail to the person’s recorded address. Individuals must update their recorded address with the co-operative. The co-operative is not obligated to provide further notice if successive attempts to provide notice fail.
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