Act In Good Faith

I have often wondered what, "Act in Good Faith", really means when described in the BC Society Act [RSBC 1996] CHAPTER 433. In this Society Act Review - Discussion Paper December 2011, from the Ministry of Finance it;

1. 17) Allow societies to indemnify directors and officers: Currently, societies need court approval to indemnify their directors and officers for legal liability and expenses incurred as a result of their good faith actions. Allowing societies to provide indemnity without court approval would help ensure that individuals continue to be willing to take on these important roles.
2. 19) Provide defence of due diligence for directors and officers: This defence would allow directors to be relieved of liability if they rely in good faith on the statements and reports prepared by professional advisors, including lawyers, accountants and appraisers. As well, there would be a remedy allowing the court to relieve directors or officers of liability in a legal proceeding brought against them where they have acted in good faith and ought, in the circumstances, to be relieved. These defences will ease the legal risks of directing or managing a society. It is not proposed, however, to grant directors of not-for-profits blanket immunity for personal liability for negligence.

In a Not-for-Profit society I am well familiar with, the membership voted a few years ago to remove the Executive Director from position. The ED is a paid position, hired by the Board of Directors. When the vote was approved by membership, the ED hired a lawyer, threatened the society with an expensive wrongful dismissal case and stronghanded the directors and society to change the ED from term position to permanent with a nice raise. I guess my question is, if the membership of the society voted and approved the removal of the ED, by ignoring this vote and passing, was the Chair of the Board "Acting in Good Faith" by avoiding an expensive wrongful dismissal case and saving the society legal fees or would it have been "Acting in Good Faith" in carrying out the wishes of the society membership? I'd imagine this area is quite "grey" due to the employment aspect. Did the Chair of the Board and Board of Directors have the power to vito such a vote? I find it amusing that records associated with this vote have been removed from society meeting minutes.

The words, "Act in Good Faith", really is about honesty and integrity. Is it honest to ignore the membership's wishes? In the same society, the board of directors must approve all society membership applications and decline those they wish. You could say that the very thing that our forefathers fought for, democracy, is deteriorated with every added step. Can you imagine if there were conditions on voting in the Federal or Provincial election? Technically, the board could approve their friends and decline those that they feel are differing from the boards direction. Food for thought.