1. Directors Liability Workshop Agenda (Pamela Iriye, Communitas Group) 1. What is the Board 2. Role of Directors 3. Duties of Directors 4. Functions of the Board 5. Consequences 6. Directors & Officers Liability Insurance

2. What is the Board Elected by Members Follow the Co-op Principles and Aims in Managing the Co-op. Exists to Represent the Interests of Those Who Will Benefit from what the Corporation Does May Delegate but are the Final Authority Responsible to the Members Act by Decision at Proper Board Meeting

3. Accountable to the members that will receive the benefit from what it does

4. Ensures That The Organization: Is providing as much benefit as possible to the members, improving the quality of life for those affected by its mission Is doing its work within a clearly articulated core of shared values and philosophies Has the ongoing capacity to provide the benefit it is accountable for providing

5. How discussing & delving into the guiding principles by which their goals should be achieved, monitoring to ensure those values are being adhered to creating proactive plans and policies to ensure the organization is actively engaged with whom it is accountable

6. Board Must Obey: the by-laws and procedures of the co-op the Articles of Incorporation the co-op’s funding agreements provincial legislation for co-operatives “Cooperatives Act” in Alberta federal, provincial and municipal laws any decisions that the members have passed at a members’ meeting

7. ROLE OF DIRECTOR TRUSTEE first trustees appointed time of crusaders .loyal .honest .to act in complete good faith take care

8. ROLE OF DIRECTOR AGENT person unable to act for himself appoints someone to act on his behalf  act as carefully and as diligently as if acting for themselves

9. ROLE OF DIRECTOR AS A MEMBER OF THE BOARD A PERSON MUST VOTE IN THE BEST INTERESTS OF THE COMPANY

10. DUTIES OF DIRECTORS HONESTY LOYALTY CARE SKILL DILIGENCE PRUDENCE

11. DUTY OF HONESTY Directors must act honestly at all times when dealing with or on behalf of the co-op

12. DUTY OF LOYALTY Directors must give their undivided loyalty to the co-op, and must not let matters of personal interest or profit be brought into conflict with the interest of the co-op.

13. DUTY OF CARE Directors must use their common sense when making decisions for the co-operative. They must use as much sense and good judgment when making co-op decisions as they would use if they were ordinary, reasonable people making the decisions on their own behalf. They are the “care- takers”, the persons who look after the co-op as if it were themselves

14. DUTY OF SKILL Directors are not required to be experts. They are required to exercise as much shill as any reasonable person with the degree of skill that they have. This means that someone with no training in accounting, for example, would be expected to take as much care as we all do when looking after our own budgets and cheque books. If a Board member also happened to be an accountant, he or she would be expected to take as much care as a trained accountant when dealing with co-op financial matters.

15. DUTY OF DILIGENCE ATTENDING MEETINGS RELYING ON OTHERS RELYING ON OUTSIDERS DOING NOTHING

16. DUTY OF PRUDENCE This is very much like the duty of care. It means that Directors are expected to exercise caution and common sense on behalf of the co-op

17. FUNCTIONS OF THE BOARD OF DIRECTORS TO LEAD TO DECIDE TO ADVISE TO MANAGE TO PLAN TO CARE FORE TO PERPETUATE

18. TO LEAD a)making themselves thoroughly familiar with the by-laws, agreements, policies, and procedures of the association in order to be able to act within those rules and to advise others of the content of the rules; b)ensuring that by-laws, policies, and procedures of the association are established and regularly reviewed;

19. TO LEAD – CONT’D c)ensuring that a clear set of goals and objectives are adopted by the members to guide the association's operations d)determining the agenda for general membership meetings and reporting on Board and committee activities to the members; e)developing leadership skills for themselves

20. TO LEAD – CONT’D f)chairing all general membership meetings, or ensuring that all general membership meetings are properly run; g)providing leadership in conflict resolution in both formal and informal ways (eg. a quiet non-threatening chat with a member will often be all the conflict resolution required);

21. TO LEAD – CONT’D h)ensuring that the social and community needs of the association are addressed; i)ensuring the participation of the association in the broader association movement

22. TO DECIDE a) developing their own skills in decision-making both by consensus and by majority vote; b) conducting general membership meetings in ways that enhance consensus and democratic decision-making; c) ensuring that adequate research has been done and that adequate information is available for making responsible decisions

23. TO ADVISE a) providing appropriate association education and training to all members so that members are able to act as responsible members; b) researching and developing policies and procedures to recommend to the general membership for the operation of the association; c) informing members of problems in the association and of various possible solutions.

24. TO MANAGE a) ensuring that the day to day business of the association is carried out according to the law and policies of the Association; b) entering into contracts on behalf of the association; c) ensuring that the appropriate records are kept for the association

25. TO MANAGE – CONT’D d) supervising and monitoring the financial affairs of the association, and recommending to the members prudent financial decisions in the best interests of the association; e) hiring, supervising, and dismissing any employees, and fixing their remuneration; f) ensuring that the Board and all committees have up-to-date job descriptions;

26. TO MANAGE – CONT’D g) ensuring that all committees report regularly to the Board and the general membership so that all members are aware of all association operations; h) ensuring that a corporate plan for the association is established and carried out annually

27. TO PLAN a) ensuring that long-term financial, maintenance, and member development plans are established and regularly reviewed

28. TO CARE FOR a) ensuring adequate performance of all legal obligations and agreements of the association

29. TO PERPETUATE a) ensuring that the association's property is adequately maintained for long- term good maintenance; b) ensuring that the association maintains an adequate level of insurance coverage; c) ensuring that the by-laws and procedures for the selection and housing of good members are followed, including approving or rejecting membership applications

30. TO PERPETUATE – CONT’D d) developing strong links with other community organizations. e) developing strong links between the association and the surrounding community

31. CONSEQUENCES When a person is a member/shareholder in a co- op, his liability is limited to the amount of his share or membership. But a Director is in a position of particular trust in the co-op. Thus, if the Directors do not fulfill their duties properly, they may find themselves personally responsible for the results. For example, if the Directors knew that the person in charge of accounts receivable was not applying the collections policy, and if the co-op suddenly couldn’t pay its bills because so many clients weren’t paid up on their accounts, the Directors might be personally responsible for those arrears

32. PERSONALLY LIABLE FOR Non Payment of Wages Failure to Deduct and or Remit Payroll Deductions from Employees Failure to Charge and or Remit Goods and Services Taxes if Applicable Participation in a Fraud if some Third Party is Tricked/Cheated in some Fashion

33. LIABILITY Directors and Officers of the association could be sued, for example, by an individual who alleges that your association’s funds were mismanaged, or for any other actual or alleged neglect, breach of duty, error, misstatement, omission or other act done or wrongfully attempted by them

34. WRONGFUL ACTS Mismanagement of Company Wrongful Dismissal Breach of Contract (With Employees, Contractor or Others) Improper Expenditures /Excessive Spending

35. WRONGFUL ACTS – CONT’D Unauthorized Company Borrowing Violation of Securities Laws Misrepresentation of Tender Offer

36. WRONGFUL ACTS – CONT’D Negligence Causing Devaluation of Shares Violation of Various Statutes/Acts Various Misrepresentations During Contract Negotiations

37. WRONGFUL ACTS – CONT’D ANY ACT OR ALLEGED BREACH OF DUTY NEGLECT ERROR MISTAKE MISLEADING STATEMENT OMISSION OR OTHER ACT DONE OR WRONGFULLY ATTEMPTED

38. D&O LIABILITY INSURANCE To pay for Direct Loss sustained by Directors for actual or alleged wrongful acts arising while serving in their individual or collective capacities as directors of the cooperative subject to the terms, conditions and limitations of the Policy Policy may/will also cover costs for legal defence of any suit or proceeding

39. TYPICAL POLICY EXCLUSIONS: slander Libel illegal personal gains by directors losses caused by the directors’ failure to maintain other sufficient insurance losses covered by other insurance wrongful acts which are known prior to the policy being issued intentional dishonest acts