WOODSWORTH HOUSING CO-OPERATIVE INC.
By-law No. 78
CONFLICT OF INTEREST BY-LAW
Passed by the Board of Directors on March 30, 2016 Confirmed by the Members on May 17, 2016. Replacing By-Law 42 (October 5, 1995)
Conflict of Interest
1. Purpose of this Article
The rules in this Article are to help avoid conflicts of interest and to have fair ways to deal with them. They apply in addition to the requirements of the Co-op Act and other legal and government requirements. The first part of this Article explains conflict of interest. The second part of this Article states rules for different situations.
2. Understanding Conflict of Interest
People who make decisions on behalf of the co-op should make the decisions in the best interests of the co-op – not in their personal interests. This includes directors, officers, committee members and staff.
3. What is Conflict of Interest?
Two things create a conflict of interest:
• someone takes part in a decision on behalf of the co-op, and
• the decision benefits that person or a relative or friend in a way that is different from most co-op members.
(a) Taking part in a decision
People who take part in a decision on behalf of the co-op include:
– directors voting on a motion
– committee members making a decision or recommendation
– staff making a decision or giving advice to the board about a decision
(b) Benefits of a decision
Benefits of a decision include:
– direct or indirect benefits
– actual or potential benefits
– benefits to relatives and friends
– non-financial benefits
4. Conflict Situations
Two kinds of situations can become conflicts of interest:
· manageable situations
· prohibited situations
(a) Manageable situations
Manageable situations are part of the ordinary operation of the co-op. They could become conflicts of interest if the person getting the benefit takes part in the decision. Examples:
· A director puts in a work order for major renovations to their unit.
· A friend of a director is given a Notice to Appear.
· An employee requests a pay raise.
(b) Prohibited situations
Prohibited situations are things that do not happen in the ordinary
operation of co-ops. They are often illegal. Examples include:
· A director gets a reduced price on carpeting from the same company that is contracting for carpeting for the co-op.
· A property management company or an employee receives an incentive or commission in connection with a contract signed by the co-op.
· A director is a partner or shareholder in a company that is bidding on the co-op’s snow shovelling contract.
5. Rules for Directors
If a director has a conflict of interest or is involved in a situation that could become a conflict of interest, the director must declare it in writing before the next board meeting. If the director learns about it at a board meeting, the director must declare it at the meeting.
(b) If in doubt, declare
If a director is not sure whether something would be a conflict of interest, the director must report it to the board in the same way as stated in the previous paragraph. If other directors or members think a director could have a conflict of interest or is involved in a situation that could become a conflict of interest, they should also report it to the board.
The board has to decide if there is a conflict of interest and what to do about it. It should be considered at the first meeting after it is declared or reported or the next one after that.
The persons who might have a conflict cannot participate in the process of deciding. They cannot be present while the decision is being made.
The conflict declaration and the board decision must be recorded in the minutes of the meeting. This could be in the confidential minutes if appropriate.
(d) If there is a manageable situation
If there is a manageable situation, the person with the potential conflict cannot vote or participate in any decision-making relating to the item cannot be present at a meeting while the item is under discussion cannot see any of the documents or materials relating to the item, either before or after the decision is made
(e) If there is a prohibited situation
If there is a prohibited situation, the circumstances have to be changed so the prohibited situation no longer exists. It may not be enough for the director to leave the board since the director may have learned something that would give an advantage to someone, such as a bidder on a contract.
Steps to be take could include one or more of the following:
The person involved can resign as a director.
The board can remove the person involved from the board. Despite Article IV, Section 6 (b) and Article V, section 1, Removal of a Director, removal under this section is effective as soon as the board passes the motion. There is no appeal to the members. If there is enough time, the director should be given written notice of the board meeting to discuss removal including the time and place of the meeting and the grounds for removal. The director can appear and speak at the meeting. The board decides and votes on the removal without the director present.
C. Deal with someone else
If the situation involved bidding on a contract with the co-op or selling something to the co-op, the co-op can reject the bidder or seller that is involved.
D. Change the situation
The situation that created the prohibited conflict can be changed in
other ways so there will not be a prohibited conflict.
(f) Government requirements
Individual directors and the board as a whole must also follow government and funder reporting and procedural requirements about conflict of interest.
6. Rules for Officers
Officers have to follow the same rules as directors, including any officers who are not directors.
7. Rules for Committee Members
Committee members must declare conflicts of interest and situations that could become a conflict of interest to the committee in the same way as directors declare them to the board. In addition, a copy of all conflict declarations should be given to the board, including those made during a committee meeting. If other members think a committee member could have a conflict of interest or is involved in a situation that could become a conflict of interest, they should also report it to the committee or the board of directors.
A committee has to decide about conflict of interest in the same way as the board. In addition, the chair of the committee has to give the board a written report on the situation no later than three days after the committee meeting.
(c) Dealing with committee conflicts
A committee has to deal with conflict of interest in the same way as the board. In addition, the board can make a decision about a committee conflict. The committee has to follow the board decision.
8. Rules for Staff
(a) Declaration by property management company
If the co-op has a contract with a property management company, that company has to declare conflicts of interest and any situation that could become a conflict of interest by giving a written report to the president as soon as possible. This has to be presented to the board at the next meeting. This could be a conflict of interest or situation involving the property manager’s staff at the co-op or involving the company or its owners or personnel who do not work at the co-op. The written report should state proposed steps to deal with the situation.
(b) Service companies or others who are not employees
Service companies and others who are not employees have to follow the
same requirements as property management companies under (a).
(c) Declaration by manager
If the manager is an employee of the co-op and has a conflict of interest, or is involved in a situation that could become a conflict of interest, the manager has to give a written report and explanation to the president as soon as possible. This has to be presented to the board at the next meeting.
(d) Declaration by other staff
Other co-op employees who have a conflict of interest, or are involved in situations that could become conflicts of interest, have to report it to the manager immediately. The manager will give any immediate directions that are needed and give a written report and explanation to the president as soon as possible. This has to be presented to the board at the next meeting.
(e) Board action
The board will decide if there is a conflict of interest and what steps to take.
9. Members’ Conflict of Interest
At members’ meetings, all members can discuss and vote as they wish, even if they have a conflict of interest. Members are encouraged to declare the conflict of interest before taking part in the discussion. Members should try to act in the best interests of the co-op as a whole.
(a) When required
The board can ask someone for evidence to prove that there is no conflict of interest or that the conflict of interest rules have been followed. It does this when deciding if there is a conflict of interest or investigating compliance with conflict of interest requirements.
Members and staff must give complete proof and details in response to a request under this section. This may require showing documents and getting sworn statements from everyone involved. Failure to provide proof under this section is a breach of this By-law. Also, failure to provide proof can be evidence of non-compliance with conflict of interest requirements.