Details
Section: 3 - Governance Matters
Subsection: 3A - Board Policies | Overarching Duty
Created: June 2018
Purpose
The purpose of this policy is to outline the fiduciary responsibilities of AMAPCEO Directors and to delineate AMAPCEO’s means of fiduciary oversight and internal controls through established policy and procedures.
Policy
Fiduciary Responsibilities of Directors
All AMAPCEO Directors are legally responsible to provide fiduciary oversight to all aspects of the Union’s operations. Although AMAPCEO is a not-for-profit, unincorporated organization, Directors are subject to a parallel standard of fiduciary duties and liabilities that would apply to incorporated organizations.1
While operating in a strategic role, all Directors are responsible for fulfilling these principal duties:
1. Fiduciary Duty
2. Duty of Care
To properly fulfill these duties, Directors must focus on the following strategic responsibilities:
(i) Establish and clearly state the mission of the Union through long range objectives and strategic plans and monitor progress towards meeting goals and objectives
(ii) Through the Chief Operating Officer, hire and supervise management personnel to run the organization in accordance with the policies and objectives of the Union
(iii) Monitor and ensure the Union’s financial stability
1. Fiduciary Duty
Every Director and Officer of a Corporation in exercising their powers and discharging their duties shall act honestly and in good faith with a view to the best interests of the Corporation.2
Fiduciary duty obliges every Director to act honestly, in good faith and in the best interests of the Union. To ensure fiduciary duties are met, Directors are required to adhere to the following:
1. Every Director will act honestly as representatives of the Union and will not knowingly act fraudulently in any Union business.
2. Every Director, as a representative of the Union, will act within the sole interest of the membership as a whole. Personal interests will not be placed in conflict with the overall mission of the Union.
3. Every Director will be diligent in overseeing the affairs of the Union and ensuring compliance with the AMAPCEO Constitution and Bylaws, all AMAPCEO procedures and policies and applicable Federal and Provincial Law.
4. Every Director will be responsible for ensuring that the development and implementation of policies and direction is consistent with the long-range plans and strategic direction of the Union.
5. Every Director must declare and avoid any conflicts of interest or anything that gives a Director the appearance of a personal benefit.
6. Every Director will supervise the management of the Union by delegating certain responsibilities and/or authority to the Chief Operating Officer to ensure that Board decisions are implemented. Supervisory duties will include monitoring of program progress and outcomes and an annual performance review of the Chief Operating Officer’s position.
7. Every Director will provide prudent financial oversight by:
a) regularly monitoring financial statements
b) regularly monitoring internal controls and ensuring management responds to audit recommendations
c) reviewing and approving the annual budget to ensure funds are allocated appropriately to meet goals
To properly fulfill these duties, Directors must focus on the following strategic responsibilities:
(i) Establish and clearly state the mission of the Union through long range objectives and strategic plans and monitor progress towards meeting goals and objectives
(ii) Through the Chief Operating Officer, hire and supervise management personnel to run the organization in accordance with the policies and objectives of the Union
(iii) Monitor and ensure the Union’s financial stability
2. Duty of Care
Every Director of a corporation in exercising their powers and discharging their duties shall exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstance.3
Duty of Care obliges every Director to exercise a level care, diligence and skill that can reasonably be expected from a person with their personal level of knowledge and experience. While the interpretation of a subjective standard of skills will vary depending on the Director’s level of knowledge and experience, the minimum expectation would be the level of care expected from a “reasonably prudent person”.
To ensure a duty of care is met, Directors are required to adhere to the following:
1. Every Director will take reasonable steps to acquaint themselves of all pertinent information under the Board’s review by regularly attending board meetings, reviewing official reports and materials, and understanding the mission of the Union.
2. Every Director will bring their best independent judgement to deliberations and decisions and all decisions will be properly documented. Where advice of a specialized nature is required, Directors must obtain services of qualified professionals/consultants.
3. Every Director will adhere to the purposes described in the AMAPCEO Constitution and Bylaws, and AMAPCEO policies and procedures in a consistent manner and comply with relevant laws and regulations.
4. Every Director will observe and respect confidentiality obligations.
Internal Controls
There are various policies and practices in place to delineate AMAPCEO’s means of fiduciary oversite and internal controls. These policies provide means by which the Union can direct, monitor, and measure internal controls, assuring that the strategic responsibilities of the Directors can be met within the requirements of fiduciary duty and duty of care.
Policies/resources that delineate AMAPCEO’s means of fiduciary oversite and internal controls include:
1. The AMAPCEO Constitution and incorporated By-laws
The AMAPCEO Constitution clearly states the purpose and principles of the Union with detailed explanations on the governance structure, duties and authorities of Board Executive and Directors, financial matters, signing authority and rules of order. The AMAPCEO By-Laws provide further information on the Union’s structure and controls including the Establishment of an Audit Committee (By-law #2), and Code of Conduct for AMAPCEO Officials (By-law #9).
2. Board of Directors 5 Year Strategic Plan
These documents provide Directors with a comprehensive understanding of the strategic priorities of the Union. Progress on strategic goals is provided to Directors annually along with progress on key performance indicators and a full review/revision of strategic priorities occurring every 5 years.
3. Board Policy Manual
This comprehensive manual provides detailed information on all requirements of Directors for fiduciary oversight.
In addition to policies, AMAPCEO engages various practices that further delineate AMAPCEO’s means of fiduciary oversite and internal controls:
4. Monthly financial statements are submitted and reported to Directors at each Board meeting with prior year financial comparators.
5. Year to date investment performance along with holding summaries and prior year performances are submitted and reported to Directors at each Board meeting.
6. Regular meetings/telephone discussions/emails are held with AMAPCEO’s investment advisor, the AMAPCEO Treasurer, and financial staff with reports back to the Executive Committee and the Board on changes to portfolio holdings.
7. AMAPCEO’s investment advisor attends a Board meeting annually providing updates on investment performance and market trends.
8. AMAPCEO’s investment advisor and external auditors are available at every Annual Delegates’ Conference to answer questions from Delegates.
9. Directors review and approve a draft annual budget based on strategic initiatives and operational requirements. The budget approval process spans two Board meetings (June and September) to ensure Directors have adequate time for comments, questions, and deliberation.
10. AMAPCEO undergoes an annual external audit which reviews financial processes and financial stability. Audit findings, including internal control weaknesses are reported to Directors annually along with audited financial statements.
11. AMAPCEO engages an internal Audit Committee comprised of general members to separately review audit findings and report to the Board of Directors on identified internal control issues.
12. AMAPCEO engages a Finance Committee comprised of general members to regularly review financial policies and provide comments/recommendations to Directors on various financial initiatives that support the Union’s strategic plan.
13. Reports from the Chief Operating Officer are submitted to all Directors at every Board meeting which provide detailed updates on events and activities authorized by the Board.
14. Reports from the Chief Operating Officer are submitted at every Board meeting outlining initiatives delegated by Directors to the Chief Operating Officer and their progress/timeline for completion.
Indemnification of Directors
The adherence to requirements listed under fiduciary duties and duty of care through various financial oversight policies and internal controls will assist in providing defense against claims of negligence and statutory violations. Within this context, Directors will be able to demonstrate positive action taken to ensure compliance with fiduciary responsibilities.
To further protect Directors, AMAPCEO has both indemnified and carries Directors Liability Insurance as security against liabilities incurred while acting in their capacity as a Director.
1. Directors and Officers (D&O) & Employment Practices Liability (EPL) Insurance
The AMAPCEO office carries combined coverage of $2,000,000 in Directors and Officers (D&O) & Employment Practices Liability (EPL) Insurance.
The individuals insured include all duly elected or appointed Directors, Officers, Chief Operating Officer, Department Heads, Committee Members, or Employees of the Organization. Coverage is automatically applied to all new persons who are elected or appointed into these roles.
Losses covered under D&O insurance include amounts that the Directors and Officers of AMAPCEO are legally obligated to pay for including claims against them from for wrongful acts, including settlements, judgments, costs of litigation and investigation, attorneys’ fees and other related items.
Losses covered under EPL insurance include amounts that the Directors and Officers of AMAPCEO are legally obligated to pay for including claims against them from employment-based lawsuits based on wrongful discrimination, dismissal or failure to promote.
2. AMAPCEO By-law 8: Indemnification of Directors, Officers and Other Officials
All Officers are indemnified by the Organization through By-law #8 in the AMAPCEO Constitution.
This includes:
(i) All costs, charges, and expenses whatsoever that such director, officer, or other official sustains or incurs in or about any action, suit or proceeding that is brought, commenced, or prosecuted against them for or in respect of any act, deed, matter, or thing whatsoever, made, done or permitted by them in or about the execution of the duties of their office; and
(ii) All other costs, charges, and expenses they sustain or incur in or about or in relation to the affairs of the Union.4
1 Applicable Corporate laws include the Canadian Business Corporation Act R.S.C., 1985, c. C-44, Ontario Business Corporation Act R.S.O. 1990, c. B.16 and the Not-for-Profit Corporations Act, 2010, S.O. 2010, c. 15.2 Canadian Business Corporation Act, section 122 (1) (a).3 Canadian Business Corporation Act, section 122 (1) (b).4 The AMAPCEO Constitution, By-law #8