CBA Internally Restricted Reserve Policy

Effective Date: February 25, 2026

1. Purpose

The Canadian Bar Association (CBA) recognizes that maintaining adequate financial reserves is a cornerstone of prudent fiscal management and long-term financial sustainability. Reserves provide financial flexibility, allowing the CBA to respond to unexpected events, manage risk, and invest in strategic priorities that align with its mission and objectives.

The CBA’s reserves may be established to:

• Provide a financial buffer against economic uncertainties and unforeseen liabilities.
• Ensure the continuity of operations in the event of revenue fluctuations.
• Support strategic initiatives, infrastructure projects, and membership services.
• Comply with legal, regulatory, and contractual obligations.
• Facilitate long-term financial planning and sustainability.

2. Policy

Subject to oversight by the Finance Committee and Audit & Risk Committee and approval by the Board of Directors, the CBA may establish and maintain wind-up, operating, capital reserves and ancillary and special purpose reserves as follows:

• Operating Reserves: These reserves will be used to manage operational risks, fund strategic initiatives, and support the organization’s long-term stability; reserves dedicated to operational risk should be maintained at a minimum level sufficient to sustain 4–6 months of operations.
• Wind-Up Reserves: These reserves will be set at a level sufficient to cover the Association’s statutory liabilities in the event of closure — including employment standards termination and severance obligations and all required tax remittances — thereby ensuring directors are protected from personal liability.
• Capital Reserves: These reserves will be allocated to major capital expenditures, such as technology upgrades, office infrastructure, and other long-term investments; the Finance Committee will set capital reserve levels reflecting the Association’s anticipated needs.
• Ancillary and Special Purpose Reserves: The CBA may establish specific reserves for particular initiatives and to fund projects, such as for example:
  • Legal and Advocacy Initiatives: To support strategic litigation, law reform, and policy advocacy efforts.
  • Technology and Digital Transformation: To fund IT infrastructure improvements and digital service enhancements.
  • Emergency Contingency Fund: To provide financial stability in times of crisis or unexpected events such as a pandemic.
  Each special-purpose reserve must have a defined purpose, funding strategy, and approval process.

Reserves will be reviewed annually as part of the CBA’s budgeting and financial planning process to ensure alignment with strategic priorities. The review will consider the annual budget’s impact on reserves and whether the organization should deploy or replenish reserves in light of its long-term sustainability, fiduciary duty objectives and strategic objectives and projects.

3. Scope

This policy applies to all CBA operations and covers all funds designated as operating or capital reserves.

4. Process for Establishing and Using Reserves

Operating and capital reserves will be managed as follows:

1. Review and Approval:
   • The Finance Committee will review reserve levels annually and recommend adjustments based on financial forecasts and strategic priorities.
   • The Audit and Risk Committee will identify whether organizational or external risks require larger or different reserves and will provide its views to the Finance Committee.
   • The Finance Committee will consider the Audit and Risk Committee’s perspective on overseeing the budget process and will recommend reserve adjustments to the Board of Directors with the annual budget recommendation.
   • Should the Finance Committee be unable to recommend a budget that achieves the reserve levels recommended by the Audit and Risk Committee, the positions of both committees will be presented to the Board of Directors.
   • The Board of Directors will approve any changes to reserve levels as part of the annual budgeting process.
2. Use of Reserves:
   • Reserves require the approval of the Board prior to use.
   • Reserves shall not be used for purposes other than their designated purposes without prior approval of the Board.
3. Reporting and Transparency:
   • Reserve balances will be reported to the Finance Committee quarterly.
   • An annual report on reserves will be presented to the Board of Directors as part of the audited financial statements.
   • This policy will be reviewed next year and thereafter every 5 years, or sooner if deemed necessary by the Board of Directors.
   • The CFO will ensure compliance with applicable financial regulations and best practices.

5. Compliance and Review

• This policy will be reviewed next year and thereafter every 5 years, or sooner if deemed necessary by the Board of Directors.
• The CFO will ensure compliance with applicable financial regulations and best practices.

6. Contact Information

For inquiries related to this policy, contact the Chief Executive Officer (CEO) or Chief Financial Officer (CFO).