A new game for non-profits.
November 2010 saw third reading and passage of Bill 65 – Ontario’s non-profit organizations answer to enhance corporate accountability and governance. This is the first revision of the original 1907 Act since 1953! The Bill will take effect in 2012 and not- for profit organizations will have three years to amend their letters patent, update their by-laws and resolutions and conform to new Act requirements. Details of the new Bill are available on the Legislative Assembly of Ontario website.
This Bill provides a clearer and modern set of rules that will be easier to administrate. A modern governance regime for directors and officers will still assume the burden of choosing and finding the right liability insurance as protection. Indeed such insurance could be the key to attracting and retaining a strong Board.
The fundamentals of Directors and Officers (D&O) Liability insurance have not changed. Directors and officers have three basic duties of: diligence, loyalty and obedience. They must meet the standard of a reasonably prudent person. Common liability exposures are accountability, breach of the Business Corporations Acts or other Statutes such as Labour Relations, Income Tax Act, Occupational Health and Safety, false and misleading disclosures, improper use of funds, improper activities or loans to directors, conflict of interest, employment law which includes wrongful dismissal, pay equity, unpaid wages, or failure to file annual reports. The sources of D&O Liability suits could be from the organization itself, customers (parents), suppliers, competitors, creditors, government and employees.
A non-profit D&O Liability policy covers the directors and officers (Board of Governors), the organization where it has indemnified the directors and officers under an indemnification agreement, and the employees, volunteers and committee members. The benefits under these policies are protection against personal liability, protection for the organization against claims brought directly against it and legal defense cost coverage with expert legal counsel.
Important distinctions between insurance products can dramatically affect the handling of a claim. Examples of key items
like non-cancellation by the insurer, “non-rescindable” options, retention amounts for the individual director and officer, the organization, and whether the retention is applicable to defense costs or ”first dollar” defense – these are just a few areas where MySchool shines. Ask your broker to define these for you or contact Deborah Gibson at CCV Insurance & Financial Services Inc. for a handy checklist of comparison and further infor-mation. Bill 65 may be a game changer but MySchool is the game winner!