The B.C. Government recently enacted the Conflict of Interest Exceptions Regulation (B.C. Reg. 91/2016) (the "Regulation"), which seeks to clarify the conflict of interest rules related to societies and municipally incorporated corporations. The Regulation comes in response to the concerns raised by UBCM with respect to the B.C. Court of Appeal decision in Schlenker v. Torgrimson, 2013 BCCA 9. In this decision, the Court broadened the interpretation of a pecuniary interest that will be subject to the conflict of interest provisions of the Community Charter. We previously wrote a newsletter on this decision and the significant ramifications that it has for elected officials who serve as directors of societies or municipal corporations.
What the Regulation Does
The Regulation adds an additional category of pecuniary interest that is excepted from the conflict of interest restrictions in sections 100 to 103 of the Community Charter. To fall within the category, the pecuniary interest must be one that relates to a "specified interest", which may be broadly described as an expenditure of public funds or other benefit flowing to the society or municipally incorporated corporation (or "entity").
This "specified interest" must arise as a result of two factors. First, the elected official must be appointed to the board of the entity. Second, the elected official must be participating in the local government's consideration of the specified interest whether by simply attending the meeting or by participating in discussion or voting on the specified interest at the meeting. If the elected official can establish these two factors then he or she is not subject to the disqualifying provisions in the Community Charter.
Possible Remaining Confusion
The Regulation is a positive step forward in providing elected officials who serve on the board of societies and municipally incorporated corporations with a way to continue to serve both positions concurrently without fear of disqualification from office. However, by going beyond addressing the specific concerns raised by Schlenker, the Province has left some uncertainty for elected officials who wish to continue to participate on the board of non-profit organizations.
Ambiguity in the definition of "entity"
For an elected official to fall within the new exception, he or she must be on the board of an "entity". This category includes societies and municipally incorporated corporations "that provide a service" to the local government. It is unclear at what point a corporation will be found to be providing services to the local government. Municipally incorporated corporations already face hurdles in the incorporation process and it seems unnecessary to further narrow this category to those that "provide a service". It is quite possible that "services" will be broadly interpreted such that the exception is more widely available. However, absent further clarification from the Province, there remains uncertainty regarding the category of corporations to which this exception is available.
The need to be officially appointed
An elected official must show that he or she was officially appointed in order to qualify for this excepted category of pecuniary interest. Often, elected officials volunteer their time on the board of a non-profit organization without any such official appointment process. Again, requiring official appointment seems to be an unnecessary restriction on the availability of the exception. However, while this remains a requirement, elected officials should clarify their role by having the local government pass a resolution acknowledging and appointing them to a society or corporate board.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
