ONTARIO DISC SPORTS
ASSOCIATION
INCORPORATION, LIABILITY and
GOOD GOVERANCE
NATURE OF A CORPORATION
• An Artificial Person
• A legal entity
• Separate and distinct in law from
its members
• Perpetual
OWNERSHIP
• Shareholders/Members own the
Corporation through their
membership/shares of the Corporation.
• Shareholders/Members do not own
business or the property belonging to the
corporation.
• Not-for-profit corporation may not be
operated for gain of its members, directors
or officers. (Directors may receive
reasonable remuneration and expenses for
acting as a director)
Should You Incorporate?
Advantages
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Separate Legal Entity
Carry on business
Sue and be sued
No personal liability (debts, lawsuits)
Perpetual
Corporate Shield
Buy, Sell, Mortgage Property
Borrow Money
Enter Contracts and Leases
Employ Persons
Should You Incorporate?
Disadvantages
• Initial Filing Fee
• Supervision by the Government
• Administrative Requirements
– Minutes
– Financial Statements
• Affairs in accordance with the Corporations Act
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Audits
Elections
Calling of Meetings
Bylaws
Corporations Act
Requirements
Head Office  Situated in Ontario
Directors  No fewer than 3
Annual Meeting Every 15 months
Election of Directors Election or by virtue of
office.
Quorum  BOD not less than two fifths.
Audit  Mandatory unless revenue less than
$100,000 and all members consent.
Record Keeping Requirements
• Proper Books of accounts and accounting
records
• Minutes of meeting of members and
directors
• Maintain copies of the Letters Patent,
Bylaws and Resolutions
• Register of its Members and Directors
WHAT IS A DIRECTOR?
• An individual who is a member of the
governing board of an organization
• Responsible for overseeing the operation
of the organization on behalf of its
members
• Have a relationship of ‘trust’ with the
members, from which arise legal duties
• Manage and supervise the affairs of the
organization.
• Exercise all of the Powers of the
organization.
LEGAL DUTIES OF DIRECTORS
• Diligence 
to act honestly, reasonably,
prudently, in good faith and with a view to the
best interests of the organization and as a
reasonably prudent person.
• Loyalty 
to not use one’s position as a
director to further private interests
• Obedience 
to act within the governing
bylaws and within the laws and rules that apply
to the organization
Disclosure of Interests
• Every director must declare any indirect
or direct interest in in a proposed
contract (Section 71.(1)) at a meeting of
directors.
• Disclosure must be immediate and in
writing.
Conflict of Interest
• “Conflict of Interest” – A real or seeming
incompatibility between one’s private interests and
one’s fiduciary duties.
• “Pecuniary Interest” - An interest that an individual
may have in a matter because of the reasonable
likelihood or expectation of financial gain or loss for
that individual, or another person with whom that
individual is associated.
• “Non-Pecuniary Interest” - Family relationships,
friendships, volunteer positions in organizations or
other interests that do not involve the potential for
financial gain or loss.
• “Perceived Conflict of Interest” – A perception by an
informed person that a conflict of interest exists or
may exist.
Indemnity of Directors
Indemnity - To restore someone to the same
financial position as before
• Section 80:
– Upon consent of the organization, directors may be
indemnified out of the funds of the organization from
costs, charges and expenses related to any action or
law suit.
• The director acted honestly and in good faith, in the best
interests of the organization.
• Reasonable grounds to believe the conduct was lawful.
– Directors may be personally liable for unpaid
employment wages.
Protecting Yourself as a
Director
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Understand the mission of the organization.
Commit to doing the job well.
Ask for a written job description.
Educate yourself about your legal duties.
Ensure the board can govern effectively and provide competent
direction.
• Confirm the organization indemnifies its directors and carries
directors liability insurance.
• Disclose any real or perceived conflict of interests and ensure it
is recorded in the meeting minutes.
• Ensure all decisions are not rushed and proper materials are
received and reviewed.
Protecting Yourself as a
Director
• Review regularly the financial reports and
budgets.
• Know who is authorized to sign cheques.
• Ensure contracts entered into are reviewed.
• Have a copy of the organization’s policy manual.
• Be familiar with the organization’s constitution
and bylaws.
• Support professional development.
PERFORMANCE EXPECTATIONS OF
BOARD MEMBERS
• Give ample notice, with reasons, if you are unable to attend a
meeting
• Everything that you would like to present to the Board, put in
writing
• Read minutes before the meeting, identify errors, and note
actions that were to be followed up
• Develop a working knowledge of meeting procedures
• Keep delicate matters confidential
• Participate in the maintenance of friendly, positive working
relationships
• Speak positively of the organization to the public
• Disclose any conflicts
Good Governance
ONTARIO DISC SPORTS
ASSOCIATION
GOVERNING DOCUMENTS
Give the sport organization:
•Structure
•Power
•Methods by which it
governs or rules itself
SPORT ORGANIZATIONS RUN
INTO TROUBLE WHEN:
• They do not set out rules [policies] or
procedures to deal with something
• They set out rules [policies] but they are
incomplete, vague or contradictory
• They set out rules [policies] but then
choose not to follow them
• They have rules [policies] that do not “fit”
with their culture or their resources
POLICIES ARE YOUR BEST FRIEND
• They provide you with a guide for your
actions
• They help you to avoid a problem or crisis
• In the event you cannot avoid a problem or a
crisis, they will help you to act uniformly,
consistently and fairly in how you manage
your problem or crisis
STRUCTURE & PROCESS
Corporations Act
Constitution (Purposes)
By-laws
Key Governance Policies
Other Policies
BYLAWS
• Bylaws are the foundation of the private
organization’s contract with its members.
• This contract provides the legal authority
to establish and enforce the rights,
privileges and obligations of
membership.
POWERS OF THE BOARD
Except as otherwise provided in the Act or this
bylaw, the Board has the powers of the
Association and may delegate any of its powers,
duties and functions. Without limiting the
generality of the foregoing:
a) The Board may make policies, procedures and
regulations for managing the affairs of the
Association in accordance with the Act and this
bylaw
b) The Board may make policies, procedures and
regulations relating to the discipline of
members, and shall have the authority to
discipline members accordingly
(continued)
POWERS OF THE BOARD
(cont’d)
d) The Board may establish committees to assist
in performing the work of the Association, and
may delegate authority to committees
e) The Board may employ such persons as it
deems necessary to carry out the work of the
Association
KEY GOVERNANCE POLICIES
Selection -> award benefits in sport
Conduct, Discipline, Harassment -> revoke
benefits of sport
Appeals, Mediation, Arbitration -> disputes
over allocation of benefits
Personnel -> employees, volunteers, contractors
Conflict of interest -> statutory requirements
Privacy -- > protects personal information
“For many sport organizations, it is
a sobering lesson to learn that
policy is what’s written on the paper
and not what’s in the mind of the
drafters of the policy, or in the
collective memory of the
organization”
[Your Risk Management Program:
A Handbook for Sport Organizations, 1998]
POLICY WRITING
• Be clear! - Show your policy to an
outsider to see if they understand it
• Be concise! – Do not use three
words when one will do
• Be consistent! - in your use of terms
• Be friendly to your reader! - make
ample use of headings,
subheadings, bullets
POLICY TEMPLATE
1. Statement of purpose of the policy
2. Scope and application of the policy (what
and whom does the policy apply to?)
3. Exclusions from the policy (what does the
policy not apply to? - just to be safe!)
4. Policy “scheme” (who does what, when,
how)
SELECTION - WHAT SHOULD
BE IN POLICY
• Purpose (selection of •
what, for what)
•
• Goals for selection
• Authority for selection •
• Criteria to be eligible
to be considered for •
selection
• Criteria to be selected •
• Process for selection •
Timeline for selection
Exceptions to selection
policy
Dealing with unexpected
circumstances
Criteria to remain
selected
Who will make selections
Appeal
WHAT SHOULD BE IN A CODE
OF CONDUCT
• A statement of the •
organization’s
values, beliefs and
expectations of
members and
participants. This
is usually a
“positive”
statement.
The standard of
behavior which is
expected is further
defined by giving
examples of conduct
which breaches that
standard. This is
usually a series of
“negative” statements.
WHAT SHOULD BE IN
DISCIPLINE POLICY
• Purpose
• Application
• Reporting an
infraction/making a
complaint
• Minor v. Major
infractions
• Investigation Discipline
Panel
• Preliminary meeting
• Hearing
• Decision as to whether
there is a breach
• Sanctions in the event
there is a breach
• Serious infractions and
automatic sanctions
• Confidentiality
• Appeal
PROCEDURAL FAIRNESS
1. Authority - authority to make a
decision has been delegated to the
decision-maker
2. Right to a hearing - the person
affected has a reasonable opportunity to
present his case
3. Rule against bias - the decision-maker
listens fairly to both sides to reach a
decision untainted by bias
FAIRNESS
The content of “fairness” is
not the same in every
situation. It is a spectrum that
depends on the seriousness
of the sanction and the
impact on the individual.
APPEAL POLICY
• What may be appealed
• Grounds for appeal
• Who does what & when
• Scope of authority of decisionmakers
• Arbitration
“Sound policies lead to informed
and transparent decision-making
and such decision-making results
in improved management of time,
resources, disputes and risk
exposures. Together, these are the
hallmarks of good governance.”
SOME THINGS WE’VE LEARNED
• It is definitely better to have policy than
to not have it
• “The law should remain stable but must
not stand still…”
• The law expects you to have policies and
does not relieve you of this responsibility
because you’re non-profit, because
you’re small, because you don’t have the
resources, because you don’t have time,
because ….
Steven Indig
[email protected]
905-482-8987
www.sportlaw.ca