Amending Articles of Incorporation, Bylaws, and Rules

Started by BanksS • 9 replies • 1859 views

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BanksS
Posts: 403

Posted:

My Association is holding it's annual meeting soon. I am thinking of proposing amending our documents. The CCR expired so those do not need amending. There are several reasons for the proposal. The Articles of Incorporation refer to the Covenants so the portion referring to them should be stricken. Also some of the provisions in the bylaws and rules I believe are in conflict with Iowa law. The current board does not adhere to some of the articles in the bylaws. I do not know their reason and but can make a pretty informed guess. The last time amendments were made to the bylaws was in 2000. The BOD of directors has changed members many times since then.

The current bylaws say that amendments to them may be made with 2/3 member approval. It says exactly "These bylaws may be amended by 2/3 vote at any annual or special meeting of the membership, provided written notice has been mailed to all members at least thirty days prior to the meeting. Does this mean 2/3 member approval in attendance at the meeting or 2/3 member approval overall? What about members not in good standing? Are they allowed to vote? The bylaws are silent on that. If it is 2/3 members overall, not likely enough members would even vote. If absentee voting is allowed, is it by 2/3 affirmative for those voting.

I have many questions and just seeking some opinions and guidance with this issue. Thanks.

BanksS
Posts: 403

Posted:

Quote:

Posted By BanksS on 06/04/2014 5:31 PM
My Association is holding it's annual meeting soon. I am thinking of proposing amending our documents. The CCR expired so those do not need amending. There are several reasons for the proposal. The Articles of Incorporation refer to the Covenants so the portion referring to them should be stricken. Also some of the provisions in the bylaws and rules I believe are in conflict with Iowa law. The current board does not adhere to some of the articles in the bylaws. I do not know their reason and but can make a pretty informed guess. The last time amendments were made to the bylaws was in 2000. The BOD of directors has changed members many times since then.

The current bylaws say that amendments to them may be made with 2/3 member approval. It says exactly "These bylaws may be amended by 2/3 vote at any annual or special meeting of the membership, provided written notice has been mailed to all members at least thirty days prior to the meeting. Does this mean 2/3 member approval in attendance at the meeting or 2/3 member approval overall? What about members not in good standing? Are they allowed to vote? The bylaws are silent on that. If it is 2/3 members overall, not likely enough members would even vote. If absentee voting is allowed, is it by 2/3 affirmative for those voting.

I have many questions and just seeking some opinions and guidance with this issue. Thanks.

Forgot to add that there are 8 directors for a very small Association. I think 8 is too many and an even number. I will propose a reduction in the number of directors to 5.

LarryB13 (Arizona)
Posts: 4,099

Posted:

Banks,

The reduction in number of directors is a good move.

State law may dictate how many votes are needed when the bylaws do not address an issue. Usually you need to have a quorum of members either present in person, present by proxy, and/or voting by absentee ballot. The 2/3 requirement would be met by 2/3 of the quorum unless your bylaws dictate some other number.

TimB4 (Tennessee)
Posts: 21,059

Posted:

As Larry pointed out, providing you meet quorum requirements, I interpret that section to mean 2/3 of the votes cast at that meeting. Otherwise, it would have said 2/3 of the membership (period).

GlenL (Ohio)
Posts: 5,491

Posted:

Bank as I understand from your various posts, the Covenants expired and were not renewed in a timely manor so the HOA per se doesn't exist, the corporation in question only administers the water & sewer. So my question (and I'm not an attorney) is what does the Board derive it's power from? If the primary purpose of the original incorporation is the implementation and operation of the HOA and the HOA Covenants which no longer exist (per your posts) give them the power to regulate the water and sewer, then in my not legal opinion they would have to start from scratch.

Studies show that 5 out of 4 people have problems with fractions

BanksS
Posts: 403

Posted:

Quote:

Posted By GlenL on 06/04/2014 11:54 PM
Bank as I understand from your various posts, the Covenants expired and were not renewed in a timely manor so the HOA per se doesn't exist, the corporation in question only administers the water & sewer. So my question (and I'm not an attorney) is what does the Board derive it's power from? If the primary purpose of the original incorporation is the implementation and operation of the HOA and the HOA Covenants which no longer exist (per your posts) give them the power to regulate the water and sewer, then in my not legal opinion they would have to start from scratch.

Well Glen, it is a complicated scenario. But Iowa has no specific HOA laws so they are nonprofit corporations and derive their authority from the Iowa nonprofit code.

The Corporation manages the sanitary sewer, 2 recreational ponds, a fence, and some common property at the entrance. We get our water from a rural water association.

To revive the Covenants, they would have to start from scratch but in Iowa they would need 100% approval from all of the property owners. This has been researched and the BOD decided not to pursue this.

Anyway, I reread the bylaws and it states that nine members at a meeting constitutes a quorum so my conclusion is that it would take 2/3 of the quorum to amend the documents.

Thanks for all your input.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By BanksS on 06/05/2014 5:57 AM

Anyway, I reread the bylaws and it states that nine members at a meeting constitutes a quorum so my conclusion is that it would take 2/3 of the quorum to amend the documents.

I believe you are mistaken.

A quorum is simply the minimum number of people/lots to be in attendance for business to be conducted at the meeting. You can have more people/lots attend then the quorum.

The language you provided stated "These bylaws may be amended by 2/3 vote at any annual or special meeting of the membership . . ." Therefore, its based on the number of votes cast, which is dependent on the number of participants at the meeting.

Yes, if only 9 lots show up, then you would need 6 yea votes to amend. However, if 10 lots show up, then you would need 7 yea votes to amend (etc., etc.).

BanksS
Posts: 403

Posted:

Quote:

Posted By TimB4 on 06/05/2014 6:12 AM

Oh yes. That is what I meant but I didn't state it correctly.

JeffT2 (Iowa)
Posts: 880

Posted:

Amending the bylaws usually takes a number of steps, such as preparing a draft, review by an attorney, member comment, and often the exact text is distributed to all members prior to the meeting. Perhaps a proxy form or ballot for the amendment vote. The annual meeting can certainly start the discussion, but:

Iowa nonprofit law 504.1022 AMENDMENT BY DIRECTORS AND MEMBERS...
4. If the board or the members seek to have the amendment
approved by the members at a membership meeting, the corporation
shall give notice to its members of the proposed membership meeting
in writing in accordance with section 504.705. The notice must also
state that the purpose, or one of the purposes, of the meeting is to
consider the proposed amendment and contain or be accompanied by a
copy or summary of the amendment.

This law concerns amendment of the bylaws, and there is another similar law for amendment to the articles.

BanksS
Posts: 403

Posted:

Quote:

Posted By JeffT2 on 06/05/2014 9:03 AM
Amending the bylaws usually takes a number of steps, such as preparing a draft, review by an attorney, member comment, and often the exact text is distributed to all members prior to the meeting. Perhaps a proxy form or ballot for the amendment vote. The annual meeting can certainly start the discussion, but:

Iowa nonprofit law 504.1022 AMENDMENT BY DIRECTORS AND MEMBERS...
4. If the board or the members seek to have the amendment
approved by the members at a membership meeting, the corporation
shall give notice to its members of the proposed membership meeting
in writing in accordance with section 504.705. The notice must also
state that the purpose, or one of the purposes, of the meeting is to
consider the proposed amendment and contain or be accompanied by a
copy or summary of the amendment.

This law concerns amendment of the bylaws, and there is another similar law for amendment to the articles.

Thanks Jeff. The bylaws will need to be reviewed and discussions followed. I am hesitant to make the proposal because my relationship with some of the BOD has not been amicable to put it mildly. But I have nothing to lose, so I will give it a try.

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