Not-for-Profit Conflict of Interest Policy - Form Pro · EN-CA-law

CONFLICT OF INTEREST POLICY

Organization name: ________ (the "Organization")

Jurisdiction of incorporation: ________

Governing statute: ________

Date of adoption / update: ________

Article I — INTRODUCTION

§ 1.01  The Organization is a corporation without share capital incorporated and continued under ________ (the "Act"), and operated on a not-for-profit basis. Where the Organization is a registered charity, it is also governed by the Income Tax Act (Canada) and the requirements of the Canada Revenue Agency.

§ 1.02  The Organization is committed to the highest standards of ethical and fiduciary conduct in its activities and expects its directors, officers, employees and volunteers to uphold those standards. The board of directors of the Organization (the "Board", and each member a "Director") has adopted this Conflict of Interest Policy (the "Policy") to protect the integrity and charitable or not-for-profit purposes of the Organization.

Article II — PURPOSE

§ 2.01  The purpose of this Policy is to protect the interests of the Organization when it contemplates entering into any transaction, contract or arrangement that might benefit the private interest of a Director, officer or other person in a position of authority, and to supplement, and not replace, the fiduciary and statutory duties owed under the Act and at common law.

§ 2.02  This Policy is also intended to ensure that the Organization continues to operate in a manner consistent with its not-for-profit and, where applicable, charitable purposes, and to maintain compliance with the Act and the Income Tax Act (Canada).

Article III — FIDUCIARY DUTIES

§ 3.01  Every Director and officer of the Organization is required by the Act to act honestly and in good faith with a view to the best interests of the Organization, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

§ 3.02  Directors, officers, members of committees of the Board, and senior employees and other persons exercising significant decision-making authority on behalf of the Organization (each an "Interested Party") owe a duty of loyalty to the Organization. This duty requires each Interested Party to avoid using their position for personal advantage or gain, and to refrain from any action, including voting where applicable, where the personal interest of the Interested Party, including any financial interest, may conflict with the interests of the Organization.

Article IV — DEFINITIONS

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The following examples are illustrative but not exhaustive of circumstances that may give rise to a conflict of interest:

a. Where an Interested Party may derive a personal financial benefit from a transaction in which the Organization is or may be involved;

b. Where an Interested Party has an interest, including by way of investment, in another entity with which the Organization proposes to deal or do business;

c. Where an Interested Party enters into or maintains an arrangement to be indemnified by the Organization (and, for this purpose, a Director who is also an employee of the Organization may be conflicted, such as on a vote respecting indemnification);

d. Where an Interested Party joins or establishes an organization that competes with the Organization;

e. Where an Interested Party, or an entity in which an Interested Party has an interest, competes with the Organization in respect of any purchase, sale, contract, interest or service;

f. Where an Interested Party uses confidential information of the Organization for any purpose unrelated to their role, including personal gain or the benefit of another entity;

g. Where an Interested Party uses the resources of the Organization to further any competing interest; or

h. Where an Interested Party participates in decision-making or negotiations on behalf of the Organization in a matter in which that Interested Party, a related person, or an entity in which the Interested Party has an interest is also involved.

§ 4.02  Potential Conflict of Interest: A potential conflict of interest exists where an Interested Party recognizes that a conflict of interest may arise if no remedial action is taken. A potential conflict does not always become an actual conflict. Because even the appearance of impropriety may harm the Organization, all potential conflicts must be treated with care and disclosed in accordance with this Policy.

§ 4.03  Material Contract or Transaction: Has the meaning given to that expression under the Act and the by-laws of the Organization, and includes any proposed contract or transaction in which a Director or officer has a material interest required to be disclosed under the Act.

Article V — DISCLOSURE OF CONFLICT

§ 5.01  Statutory Disclosure: In addition to the requirements of this Policy, every Director and officer shall disclose to the Organization, in the manner and at the times required by the Act, the nature and extent of any interest in a material contract or transaction, whether existing or proposed, with the Organization. Such disclosure shall be entered in the minutes of the meeting of the Board.

§ 5.02  Disclosure: Any person who becomes aware that a conflict of interest or potential conflict of interest may exist in respect of any matter shall disclose it to the Organization as soon as reasonably practicable so the situation may be assessed. An Interested Party shall not unilaterally determine whether a conflict exists, and shall disclose to the Board at least the following, and in any event sufficient information to give the Organization a clear understanding of the matter:

a. All material facts;

b. Any potential or existing financial interest;

c. Any potential or existing competing interest, whether or not financial;

d. Any related personal or proposed transaction.

§ 5.03  Disclosure of Conflicts of Others: A person who becomes aware of a potential conflict of interest involving another party shall promptly report it to the Board.

§ 5.04  Recipient of Disclosure: Disclosure may be made to the Chair of the Board or to the full Board.

§ 5.05  Recusal: An Interested Party shall advise the Organization where the Interested Party intends not to attend a meeting of the Board or a committee because the Board or committee may vote or act on a matter in which the Interested Party may have a conflict of interest.

Article VI — PROCEDURES IN CASE OF CONFLICT

§ 6.01  An Interested Party shall disclose potential conflicts of interest to the Board as soon as reasonably possible after becoming aware of them, and shall complete the annual disclosure form appended to this Policy describing any continuing interest that may create a conflict.

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§ 6.03  Factors to Consider: In determining whether a conflict exists and how to address it, the Board may consider any relevant factor, including:

a. Whether the financial interest of the Interested Party is minimal relative to the transaction;

b. The degree of the Interested Party's involvement in another entity to the transaction;

c. The extent to which the Interested Party could personally benefit from the transaction or relationship;

d. Whether the proposed transaction is fair and reasonable to, and in the best interests of, the Organization.

§ 6.04  Conflicting Material Contract or Transaction: Where the Board or committee determines that an actual conflict exists in respect of a material contract or transaction, the transaction may proceed only where it is fair and reasonable to the Organization and approved by the affirmative vote of the disinterested Directors. For transactions involving sophisticated counterparties or professional advisers, the Board shall require approval by at least two-thirds of the disinterested Directors. The fixing of reasonable remuneration of a Director acting in their capacity as a Director or officer is dealt with under Article IX.

§ 6.05  Transactional Conflict of Interest: Where the Board or committee determines that an actual conflict exists in respect of a financial transaction or arrangement that is not otherwise dealt with under § 6.04, the Board shall consider whether a reasonable alternative exists that would not give rise to a conflict. If an appropriate alternative exists, the Organization shall pursue it. If none exists, the Board shall determine whether the originally proposed course of action is in the best interests of the Organization and, if so, may approve it by a majority of the disinterested Directors.

§ 6.06  Other Conflicts: In any other case where the Board or committee determines that a conflict exists, it shall recommend and implement a reasonable and appropriate course of action to protect the Organization in the circumstances.

§ 6.07  Charitable Compliance: Where the Organization is a registered charity, no transaction shall be approved that would confer an undue private benefit on any person or otherwise jeopardize the Organization's registered charity status under the Income Tax Act (Canada).

Article VII — FAILURE TO COMPLY

§ 7.01  If an Interested Party fails to disclose a potential or actual conflict, the Board shall first request an explanation. The Organization may then take any appropriate action, including disciplinary measures, the avoidance of the affected transaction in accordance with the Act, the requirement that any improper benefit be accounted for to the Organization, and, where warranted, removal from office or from the Board in accordance with the Act and the by-laws of the Organization.

Article VIII — RECORDS

§ 8.01  The Board, or the appropriate committee, shall keep records of all disclosures, discussions and votes concerning any actual or potential conflict of interest. The records shall include:

a. The name(s) of the Interested Party or Parties;

b. The manner in which the conflict was brought to the attention of the Board (whether disclosed or discovered);

c. The nature of the conflict, including any financial interest involved;

d. The steps taken by the Board or committee to investigate the conflict or potential conflict;

e. The discussion, decision and vote of the Board or committee; and

f. The names of all persons present during any discussion or vote.

§ 8.02  Such records shall be maintained with the minute books of the Organization for the period required by the Act.

Article IX — REMUNERATION

§ 9.01  No Director who is remunerated for services rendered to the Organization shall vote on, or be present during the vote on, their own remuneration. Any remuneration paid to a Director shall comply with the Act, the by-laws of the Organization and, where the Organization is a registered charity, the restrictions of the Income Tax Act (Canada) and applicable provincial law governing payments to directors of charities.

Article X — ANNUAL STATEMENTS

§ 10.01  Each Interested Party shall annually sign a statement, in the form appended to this Policy, affirming that such person:

a. Has received a copy of this Policy;

b. Has read and understood this Policy;

c. Has agreed to comply with this Policy; and

d. Understands that the Organization is a not-for-profit organization and, where applicable, a registered charity, and that it must operate primarily to advance its not-for-profit or charitable purposes.

Article XI — PERIODIC REVIEW

§ 11.01  The Organization shall periodically review the following to maintain alignment with its purposes and applicable law:

a. Compensation and benefit arrangements, to confirm that they are reasonable and the result of arm's length negotiation;

b. Transactional arrangements, including partnerships and joint ventures, to confirm that they are consistent with the Organization's policies and do not confer an undue private benefit on any party; and

c. The remuneration of the senior officers of the Organization.

§ 11.02  The Organization may retain external advisers to conduct such reviews, but the ultimate responsibility for them rests with the Board.

§ 11.03  Compliance and Severability: This Policy shall be interpreted and applied in a manner consistent with the Act, the Income Tax Act (Canada) where applicable, and all other applicable statutory and legal requirements. Any provision of this Policy that is inconsistent with applicable law shall be deemed severed, the remaining provisions shall continue in full force and effect, and the applicable law shall prevail.

§ 11.04  This Policy is governed by the laws of ________ and the federal laws of Canada applicable therein.

CERTIFICATION

The undersigned, ________, as President of ________, and ________, as Secretary, certify that this is a true copy of the Organization's Conflict of Interest Policy and that this Policy was adopted by the Board of Directors on ________.

President's signature: __________________________________

Name: ________   Date: ________

Secretary's signature: __________________________________

Name: ________   Date: ________

ANNUAL CONFLICT OF INTEREST DISCLOSURE FORM

The undersigned, ________, in the capacity of ________ (director, officer, manager, committee member or key employee) of ________, acknowledges and affirms:

1. That he or she has received a copy of the Organization's Conflict of Interest Policy;

2. That he or she has read and understood the Policy;

3. That he or she has agreed to comply with the Policy;

4. That he or she understands that the Organization's not-for-profit status and, where applicable, its continued registration as a charity and exemption from tax under the Income Tax Act (Canada) depend upon it operating primarily to advance its not-for-profit or charitable purposes; and

5. That the following continuing relationships and interests may present a conflict of interest (please describe; if none, write "N/A" or leave blank):

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__________________________________________________________________

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Signature: ________________________________

Name: ________

Title: ________

Date: ________