Explanation of the Draft Articles of Continuance

SEPTEMBER 20, 2012

EXPLANATION OF THE DRAFT ARTICLES OF CONTINUANCE · As a federally incorporated non-share capital corporation, CDA is required to continue under the Canada Not-for-profit Corporations Act (the “New Act”) · The continuance process requires that CDA replace its letters patent and supplementary letters patent with a certificate of continuance - which includes the articles of continuance, and its current 2006 By-laws (the “Current By-Law”) with a By-law which conforms to the New Act (please see the summary of the draft By-law (the “Draft By-law”) below). Both the articles of continuance and the Draft By-law will need to be approved by CDA’s Members as part of the continuance process · The articles of continuance must contain a statement of purpose of the corporation. The statement of purpose that is set out in the articles of continuance is identical to the existing objects set out in CDA’s letters patent · In accordance with the New Act, the articles of continuance state that any property remaining on liquidation will be distributed to one or more qualified donees within the meaning of the Income Tax Act · The articles of continuance also contain information with respect to the classes of membership that CDA is authorized to create as well as restrictions related to the number of Directors of the corporation; this information is further described in the Draft By-law1

SUMMARY OF DRAFT BY-LAW OF THE CANADIAN DIABETES ASSOCIATION

MEMBERSHIP · Unlike the Current By-law which sets out four classes of Members - specifically, Registered, Associate, Life and Honorary Members, there are only two categories of Members under the Draft By- law – namely, Regular Members and Delegate Members. All Registered, Associate, Life and Honorary Members of CDA will become Regular Members under the Draft By-law · Under the Draft By-law, Delegate Members will continue to hold their status as such until their successors are elected or appointed or until they cease to be Regular Members · Under the Draft By-law, a process for removing Regular Members in certain circumstances is set out2. This differs from the Current By-law which does not set out any process for removing Members · As in the Current By-law, the Board has the power under the Draft By-law to designate special supporters of CDA as “Patrons” - a distinguished but non-membership status Regular Members · Under the Current By-law, the admission requirements and voting rights vary among the classes of Members. Under the Draft By-law, all Regular Members will have: (i) the same admission requirements; and (ii) the same voting rights except that voting members of the Clinical and Scientific

1 Please see the annotated Draft By-law delivered with this document and the Summary of the Draft By-law below for further information regarding CDA’s membership classes and Directors 2See Section 3.4 of the Draft By-law for further information

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Section (“C&SS”) and Diabetes Educator Section (“DES”) will also have the right to elect 5 Delegate Members to represent their respective sections · All Regular Members will be entitled to stand for office as a Director, to submit names of individuals for consideration as Directors and to nominate certain Delegate Members. However, Regular Members who are employees of CDA are not entitled to serve as Directors Delegate Members · The proposed configuration of the Delegate Members reflects the current automatic Delegates to the National Annual General Meeting (“NAGM”) except that: (i) it no longer includes the chair of the National Lions Club Liaison Committee; (ii) it no longer includes the two representatives designated by L’Association du Diabètes du Québec (the “LADQ”); (iii) there will be 2 categories of Delegate Members – Delegate Members (Ex-Officio) and Delegate Members (Elected); and (iv) the overall number of Delegate Members will vary dependent on the number of individuals the Board determines shall be elected as Delegate (Elected) Members (see below for more information) · Under the Draft By-law, the two categories of Delegate Members will have the same voting rights, but will have distinct terms of membership and obtain their status as Delegate Members in a different manner3 · The number of individuals to be elected as Delegate (Elected) Members under the Draft By-law will be determined by the Board from time to time provided, however, that: (i) the number will remain at 50 until the Board fixes another number; (ii) the number shall always be greater than 19; and (iii) the aggregate number of Delegate (Elected) Members4 entitled in be in attendance at any NAGM shall exceed the number of Delegate (Ex-Officio) Members entitled to be in attendance at such NAGM5 · Unlike the Current By-law, the Draft By-law does not provide Delegate Membership status to branches; however, because this status has not been granted to the special units for some time, this change will have little practical impact MEMBERS’ MEETINGS · The Draft By-law states that the Board, Chair and Secretary have the ability to call a meeting of the Members at any time, and that the Board must call a Special Meeting upon the request in writing of 5% of the Members having the right to vote at the meeting · The Draft By-law sets quorum for a meeting of: (i) Regular Members at 10% of the Regular Members; and (ii) Delegate Members at 25% of the Delegate Members. These proposed quorum requirements differ from the Current By-law in that the Current By-law does not contemplate a meeting of Regular Members (and therefore does not set out a quorum for such meetings) and sets quorum at 20 Delegates for Annual or Special Meetings of Members · Under the Draft By-law, Members will be given the right to vote by mailed-in ballot (subject to certain requirements6), and will maintain their right under the Current By-laws to vote by proxy. However, whereas currently only Members can be appointed as a proxy-holder, under the Draft By-law, and in response to the New Act, anyone may be appointed as a proxy-holder7 · Unlike the Current By-law, the draft By-law provides that Members’ meetings may be held entirely by

3 See Section 3.2 of Draft By-law for further information 4 Specifically, the Delegate (Elected) Members elected pursuant to Sections 3.2(a)(iv), 3.2(a)(v) and 3.2(a)(vi) of the Draft By-law 5 See Section 3.2(a) and (c) of the Draft By-law for further information 6 See Section 4.12(c) of the Draft By-law for further information 7 See Section 4.12(a) of the Draft By-law for further information

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telephonic, electronic or other communication facility, where certain requirements are met 8 · The Draft By-law provides that the Chair of a meeting of the Members, if a Member himself or herself, will be entitled to one vote on each matter put before the Members, but, unlike the Current By-law does not provide that the chair will be entitled to a second or casting vote in the event of a tie BOARD Board Composition and Related Matters · The Draft By-law increases the set number of Directors to 14 from 12 under the Current By-law · Under the Draft By-law, all 14 Directors will be elected by the Delegate Members at the NAGM. This differs from the Current By-law that provides that 4 Directors are elected at the NAGM while the remaining 8 Directors are either elected or appointed by certain groups (e.g. the DES) or the Board · The Current By-law provides for the C&SS chair9 and the DES chair10 to be Directors. While such officers will be eligible to stand for election as Directors under the Draft By-law, there is no certainty that such persons will be nominated or elected as Directors · The right of the LADQ to appoint a Director under the Current By-law is removed in the Draft By-law · Under the Draft By-law, the Council of Regions (the “COR”) will not have the right to elect 2 Directors as it does under the Current By-law (however, 2 Directors will be individuals who are serving on the COR) · Under the Draft By-law, the Board will be comprised of the following individuals: (i) 1 Director who is a C&SS Member who is elected by the Delegate Members from among those candidates nominated by either the Delegate (Elected) C&SS Members or the Board; (ii) 1 Director who is a DES Member who is elected by the Delegate Members from among those nominated by either the Delegate (Elected) DES Members or the Board; (iii) 2 Directors who are currently serving on the COR who are elected by the Delegate Members from among those candidates nominated by either the Board or a COR Member; and (iv) 10 Directors from among those candidates nominated by the Board or the Delegate Members (based, in part, on recommendations from the Regular Members) · Under the proposed By-law, Directors will hold office for 3 years and may only serve a maximum of 6 consecutive years (excluding the time spent serving the unexpired portion of another Director’s term) · Unlike the Current By-law, the Draft By-law does not allow the Board to remove Directors; instead, the Draft By-law provides that Directors may be removed by an ordinary resolution of the Delegate Members

BOARD MEETINGS · The Draft By-law allows Board meetings to be held by electronic or other means of communication that permit all of the people participating to communicate adequately (these means are in addition to the means set out in the Current By-laws - specifically, in person or by telephone) · Under the Draft By-law, the Chair of a meeting of the Board does not have the right to a casting vote in the event of a tie, as is the case in the Current By-law

8See Section 4.12(b) of the Draft By-law for further information 9 Or a member of the C&SS’ Executive Council 10 Or a member of the DES’ Senior Executive

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 The Draft By-law provides that the office of a Director will be deemed to be vacated where the Director misses: (i) 2 consecutive Board meetings; or (ii) 3 Board meetings in a calendar year (unless the Board resolves to excuse the absences). This is a new provision which is not included in the Current By-law · Under the Draft By-law, the Chair, the Secretary or any 3 Directors will be able to call a Board meeting; this provision differs from the Current By-law which does not allow the Secretary to call a Board meeting, and sets at 6 the number of Directors capable of calling a Board meeting

FUNDAMENTAL CHANGES · Under the Draft By-law, certain amendments to the Articles or By-law and other fundamental matters must be approved by Regular Members as well as the Delegate Members - these new provisions are in response to requirements of the New Act11 and are therefore not contained in the Current By-law

OFFICERS · Unlike the Current By-law, the Draft By-law does not specify the duties of CDA’s Officers but leaves it to the Board to decide · Under the Draft By-law, the office of Vice-Chair will be removed, and the Vice-President and Chief Operating Officer will no longer be designated as an Officer of CDA to be appointed by the Board SECTIONS · Under the Draft By-law, membership in the C&SS and DES is limited to Regular Members who meet specifications in the C&SS Charter or DES Charter; this differs from the Current By-law which does not limit membership in the C&SS and DES to CDA Members FINANCIAL STATEMENTS · The Draft By-law permits CDA to: (i) publish or deliver a notice to its Members that the annual financial statements are available at its Registered Office, rather than circulate them to each Member; and (ii) post the annual financial statements on its website or otherwise disseminate them

11 See Section 15.3 of the Draft By-law for further information

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