Page 32 - Directors manual final

Potential Consequences to Red Door (as Well As Other Directors Who Do Not
Have a Conflict) if a Director Has a Conflict of lnterest and Contravenes the
Societies Act or Bylaws

The lncome Tax Act provides for penalties on registered charities which confer an "undue benefit"
on Directors and Members and "undue benefit" is defined as including "...any part of ...property...
of... the charity that is paid...for the personal benefit of any...member".

There is also a serious question whether a contravention by a Director of the Bylaws would consti-
tute a legal and/or practical impediment, or risk, to Red Door - considerations include Red Doo/s
relations and legal arrangements with both CRA and BC Housing for which the underlying concept
of no personal gain is foremost.

Section 59(1) of the Societies Act provides that Directors who pass resolutions authorizing a

"distribution" contrary to the Bylaws are jointly and severally liable to restore to the society any mon-
ey that is so distributed and not recovered. 4

4 While EKB hos not specifically researched, "distribution" could in some circumstances include a payment
by Red Door to a Director.

4.

RDHS Directors Manual 32