Step 3 - Create By-laws

A lengthy and comprehensive set of by-laws was required under the old Act to govern the corporation's internal affairs. This is not the case with the NFP Act since the Act already contains many rules. It specifies which by-law provisions are mandatory and provides default rules that apply if the corporation's by-laws do not address certain matters.

There are only two by-law provisions that are mandatory under the NFP Act.^{Footnote 1} At minimum, a corporation's by-laws need to address the following:

• Conditions required for membership
• Notice of meetings to members who are entitled to vote at the meeting

If there are no other provisions in the by-laws, the default rules will apply. If these default rules do not meet the needs of your corporation, you may want to create by-laws to override them.

There may be rules that a corporation wishes to have that are not addressed by the default rules. An example of this is consensus decision-making by members. This rule should be included in the by-laws if the corporation operates in this fashion. Other types of rules that fall under this category are those dealing with discipline of members and dispute resolution mechanisms.

Annex C provides more information on the mandatory by-law provisions and default rules. To assist you in creating by-laws under the NFP Act, refer to the Model By-laws, which would apply to a typical not-for-profit corporation.

Corporations Canada has also developed an online interactive tool called a By-law Builder that can generate the by-laws you want. It allows you to choose provisions that meet the specific needs of your corporation from a number of available options.