Quorum, Vacancies, Board of Directors Viability

On another thread I wrote:

“It was incumbent on the Board members to remain within the law. They could have called a special meeting and added one or more Board members - elected by the home owners - up to NINE.” – and - “Instead they were oblivious of their responsibility to comply with the law and didn't even attempt to find a 5th member for a number of weeks after James' death.”

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1) From our Bylaws:

A. Board of Directors Composition and Selection.

Section I. Composition. The affairs of the Association shall be governed by a Board of Directors consisting of not Less than five (5) and no more than nine (9) members.

State law:

2) CHAPTER 3 - NONPROFIT CORPORATIONS
ARTICLE 8 - DIRECTORS AND OFFICERS
PART 1 - BOARD OF DIRECTORS
§ 14-3-803 - Number of directors
O.C.G.A. 14-3-803 (2010) (Official Code of Georgia Annotated)
14-3-803. Number of directors

"(a) A board of directors must consist of one or more natural persons, with the number specified in or fixed in accordance with the articles or bylaws."

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So…If you take those two aspects together, a Board of Directors at our HOA that drops to only four (or fewer) members due to death or resignation can take no action at all. It can’t call a quorum. This comes from coupling the state law which specifies the that number of directors must match the Bylaws which in turn state that there must be at least five directors.

All this below pertains to our particular BOD

In a Board with 6 members, if a member dies or resigns, the five remaining members have the power under law and the Bylaws to replace that departing members under the section on vacancies below.

In a Board with only 5 members, if one dies, resigns or cannot continue -- that leaves 4. Since the Bylaws require 5 members to conduct business, that Board is out of business. It cannot call a quorum.

From our Bylaws:

"Quorum. A quorum shall be deemed present throughout any meeting of the Board of Directors if a majority of the number of Directors is present at the beginning of such meeting. A decision of the Board of Directors shall be by a majority of those Directors present at a duly called meeting and every act or decision done or made by a majority of the Directors present at a duly held meeting at which a quorum is present shall be regarded as the act of the Board. The President may vote. If any Board of Directors meeting cannot be held because of the absence of a quorum, a majority of the votes present and voting may adjourn the meeting to a later time. The necessary quorum shall be required at the adjourned session. At any such adjourned meeting, any business which might have been transacted at the meeting as originally called may be transacted without further notice."

This paragraph contains the legal “out” – the word 'duly'. At not just any meeting of the Board but one duly called. That is, called under the requirements of the laws and Bylaws, which require at least 5 seated members.

I do take as a given that once you die or resign, you are no longer counted among the Board members.

So allowing the five person Board to drop to four with the death of a Board member was if nothing else, a seriously derelict action by that Board. It could create serious legal liability for the corporation.

For reference:

"Special Meetings. Special meetings of the Board of Directors may be called by the President on three (3) days' notice to each Director given by mail, in person; by telephone or by facsimile, which notice shall state the time, date, place, and purpose of the meeting. Special meetings of the Board of Directors shall be called by the President, Secretary, or Treasurer in like manner and on like notice on the written request of at least a majority of the Directors."

Vacancies. Vacancies in the Board of Directors caused by any reason other than the removal of a Director by vote of the Members shall be filled by a vote of the majority of the remaining Directors at any meeting of the Board of Directors. Each person so selected shall serve for the remainder of the vacating Director's term. Vacancies in the Board of Directors caused by removal of a Director by vote of the Members shall be filled by the Membership in accordance with Section 3 hereof.

oops:

ARTICLE III
Meetings of Members

"Special Meetings. Special meetings of the Members for any purpose may be called at any time by the President, the Secretary, or Treasurer, and shall be called by request of any two or more members of the Board of Directors, or upon written request of at least twenty-five percent (25%) of the Owners . Unless by consent of at least seventy-five percent (75%) of the voting weight of the Owners present in person or by proxy, only the business stated in the notice may be transacted at a special meeting."

The Board could have called a special meeting of the Association at any time to add more Board members up to nine.

This is also the mechanism that would be used to recall Board members.

(3) If the directors remaining in office constitute fewer than a quorum of the board, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office.

Janet, that would appear to close the loop hole I didn't see. Thanks for finding it.

That is in the HOA Bylaws.

So, as you can see, Walter, the Board can meet and appoint a new director even if "less" than a quorum, or, obviously, fewer than the full 5 directors slots whether occupied or vacant. The key word is "quorum."

There should be no meeting of the Members (homeowners). It's the Board's job to fill the vacancy in your case. Now our Bylaws do go further and state that the members MAY fill such vacancies if the board does not. It states no time limit or anything.

Before we got rid of the old secretive board, they had a vacancy for 2+ months. We owners were ready to appoint someone, when the board finally acted. They were, of course, waiting to get a friend of theirs to agree to serve and not "our" two who applied.

A "duly called" meeting, by the way, is one that's called per PROCEDURES specified by law or in the bylaws having to do with notice to all parties, etc. In this case, duly means "due to," or "for the purpose of." It it NOT related to whether or not the board has a full complement of directors.

Walter wrote here and elsewhere: "It can’t call a quorum." That's incorrect usage. Do you (incorrectly) mean "can't call a meeting"?

I hope, Walter, you'll answer Janet's question.

I learned a lot!

Thanks.

Good topic, Esther, but it's quite a lot different than Walter's since yours wants to know how to attract candidates. best to start a new three. maybe your subject line would be: How to attract candidates to fill a board vacancy?

Maybe revise your wording a little. suggestions below, but, of course, do as you like.

The Board had a recent resignation. The bylaws and ccr's, which are oddly combined, states the board can elect someone to fill that vacancy till that term is done and its time for an election.

The issue is that in this neighborhood of 85 homes in SC, most complain but none want to be on the board. We do have a FB page and did put the information that we need another board member temporarily till the new elections. Is there something else we can do to try to recruit candidates that we haven't thought of? Thank you.

Please add when this term will end-- a few months form now? Over a year from now?