Annual Meeting (no quorum)

Started by RichardD • 20 replies • 2758 views

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RichardD (North Carolina)
Posts: 66

Posted:

In our condo association of 86 patio type homes, yesterday was annual meeting day.
We were to elect 2 board members. Problem is there was no quorum and hence, no election.
My belief is that the board should reschedule another annual meeting and do whatever is
necessary to insure that a quorum would be present at that meeting.

I have 2 questions:
1) Should the annual meeting be rescheduled? and
2) Do the 2 directors, whose term expires, stay as board members until another election is held?

Neither our documents nor NC law 47C covers the above.

TimB4 (Tennessee)
Posts: 21,059

Posted:

I have answers:

1) By asking should means it's a personal judgement call. Should they? perhaps.
Must they? This is a different question and one that can only be answered by looking within your governing documents.

Typically, based on the documents and laws I have read, calling another meeting is an option not a requirement.

BTW - did you go around and solicit proxies from residents to make sure there was a quorum?
Members have this option (just as the board has this option). You simply can't make someone show up to a meeting who doesn't want to go. You can't make them vote either.

2) Expecting your Association is incorporated as a nonprofit (most are, but check to be sure), the answer would be yes.

See North Carolina Nonprofit Corporation Act, specifically § 55A-8-05, which states:

"Despite the expiration of a director's term, the director continues to serve until the director's successor is elected, designated, or appointed and qualifies, or until there is a decrease in the number of directors"

RichardD (North Carolina)
Posts: 66

Posted:

Thanks Tim. As always your advice is spot on. You caught me red handed with 55A.
I didn't read that one although I have it bookmarked. Does seem that 47C or some
of our documents would cover it though.

As to the first question, if a second annual meeting is not required , then would
it be proper to call a special meeting to elect directors, or could they just
be appointed by the current board? (ugh!!!)

KerryL1 (California)
Posts: 14,550

Posted:

Can't you, Richard, petition for a specula meeting to recall those directors if they w0n't call a new election? It will, of course, take a lot of work, but oemtimes that's the only way to get our HOAs back on track.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By RichardD on 06/17/2017 3:41 PM

As to the first question, if a second annual meeting is not required , then would
it be proper to call a special meeting to elect directors, or could they just
be appointed by the current board? (ugh!!!)

Per the statute, the current board remains unless they resign. If anyone resigns, the remaining board members typically appoint individuals to fill the vacancy (this is normally within your Bylaws)

Keep in mind that this is not unusual.

The cost for a meeting can be fairly high (printing, mailing, room rental (if needed), etc.).
Therefore, it is not unusual for there not to be a second meeting. This is because apathy is apathy and unless there is something highly contested (rate increase or special assessment for example) it's more likely that the same individuals will be in attendance.

The issue is with the membership for not attending or not taking the time to send in proxies. The issue (about the meeting anyway) is not with the Board.

As a member of the Association, if you do not like the Board staying in place, the options are:

1) Gather support and call a special meeting of the membership to recall the current board and, if successful, elect new Directors. The process to do this should be within your governing docs.

2) Gather support and be ready at the next election to meet quorum and elect new Directors.

KerryL1 (California)
Posts: 14,550

Posted:

Time, is right. But t does take hard persistent work. Much easier if you can find others who agree with you, band together, study your docs and work to make change. Many of us here have done it, but it isn't easy.

RichardP13 (California)
Posts: 3,868

Posted:

At an annual meeting, it's the responsible of the Members present to call to adjourn to a new meeting, many times with a reduced. Remember, this is NOT a Board meeting, but a meeting of the Members. The president might preside over the meeting, but it is the duty of the members to know the rules.

GwenG (Florida)
Posts: 669

Posted:

RichardP13: You have again identified an important deficiency in association governance ie the lack of knowledge of Members--even BOARD members--that the Members have ONE MEETING per year that is theirs and theirs alone.

Members do not know this and it is still treated like a regular board meeting by all. (This may be an intentional management oversight.) It is not specifically stated anywhere that I am aware of that it is a legal business meeting that should be planned by Members, agenda'd by Members, noticed by Members, moderated and facilitated by Members and the Minutes should be made by Members. Members should gather proxies necessary to establish the quorum and conduct business, if authorized in the Bylaws to do so, by directed proxy. By doing so, Members can at least assure that an election can take place and seat new directors.

The only limitation I can think of is that many statutes forbid removal/recall of Directors within 60 days of an election meeting. Other than that, Members can do any business of the Association that is within their voting powers.

The mechanics are not described in any laws that I am aware of except to say "Elections are customarily conducted at the Annual Meeting". The planning of Annual Meetings should include the Board because they are also members and should provide all the administrative and experienced advice and support necessary to accomplish the business goals of the Annual Member Meeting.

It is regrettable that one of the very few powers authorized by governing documents for the members is virtually unknown, not understood and not utilized. Members should plan for THEIR Annual Meeting on some kind of formalized basis and IMO, boards should support this by appointing a committee and a director liaison.

TimM11
Posts: 354

Posted:

My association has been in this situation before, and when it's happened, we've rescheduled for a later date. Not much else you can do if you're required to have a quorum (and we provided several weeks' advance notice and the ability to designate proxies).

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Richard

Do you have a problem with the two staying on the BOD?

If they do not wish to stay on the BOD have them resign and the BOD appoint new.

Your last resort is call for new election and/or recall them but with no quorum originally I doubt you will get a quorum and/or enough votes for either.

GenoS (Florida)
Posts: 4,276

Posted:

Can't you make a motion to "Fix the Time to Which to Adjourn"? Essentially the dame meeting would be continued with the same business pending. You could collect more proxies in the meantime to reach a quorum. Proxies are only valid for the meeting for which they are given, but it would really be the same meeting.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By GenoS on 06/18/2017 2:07 PM

Proxies are only valid for the meeting for which they are given, but it would really be the same meeting.

This depends on the wording of the proxy form.

RichardD (North Carolina)
Posts: 66

Posted:

JohnC46
The two members whose term was to expire were the only candidates applying for reelection.
I have no problems with them staying in their position, but for how long? If no
election is held, we could eventually end up with all the director terms ending
at the same time. That would be in conflict with staggered terms as set up
in our By-Laws.

I'm still of the opinion that we should call a second meeting and vote for directors.
I've read somewhere, but can't put my hands on it now, that for a second
meeting the quorum number could be reduced. Maybe someone here could shed some
light on this.

RichardP13 (California)
Posts: 3,868

Posted:

Richard

A moment either by the presiding officer or one of the owners should have made a motion to adjourn the meeting to a later date at which time the quorum would be reduced (if allowed by your Bylaws), typically by 1/2. The member present or represented by a proxy would have to approve the adjournment. If no motion, no second meeting.

RichardD (North Carolina)
Posts: 66

Posted:

Just found what I was looking for in NC Planned Community Act 47F

"(c) In the event business cannot be conducted at any meeting because a quorum is not present, that meeting may be adjourned to a later date by the affirmative vote of a majority of those present in person or by proxy. Notwithstanding any provision to the contrary in the declaration or the bylaws, the quorum requirement at the next meeting shall be one-half of the quorum requirement applicable to the meeting adjourned for lack of a quorum. This provision shall continue to reduce the quorum by fifty percent (50%) from that required at the previous meeting, as previously reduced, until such time as a quorum is present and business can be conducted. (1998-199, s. 1.)"

This action should have occurred at the Annual Meeting but how can board members know all these State Laws and Acts?

RichardD (North Carolina)
Posts: 66

Posted:

RichardP13
You are correct. Should have waited for your post, but then I wouldn't have the needed reference, ie: 47F

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By TimB4 on 06/18/2017 5:04 PM

Posted By GenoS on 06/18/2017 2:07 PM

Proxies are only valid for the meeting for which they are given, but it would really be the same meeting.

This depends on the wording of the proxy form.

Yes ... And sometimes your State Laws.

GenoS (Florida)
Posts: 4,276

Posted:

Quote:

Posted By JanetB2 on 06/18/2017 9:49 PM
Yes ... And sometimes your State Laws.

I suppose that is correct. My suggestion is straight from Robert's Rules so it's entirely possible that state laws may provide otherwise.

MichaelB44 (California)
Posts: 33

Posted:

Quote:

Posted By GwenG on 06/18/2017 7:42 AM
RichardP13: You have again identified an important deficiency in association governance ie the lack of knowledge of Members--even BOARD members--that the Members have ONE MEETING per year that is theirs and theirs alone.

Members do not know this and it is still treated like a regular board meeting by all.

Yeah, it's really good information to know. Our last annual meeting started to get heated and the president simply stated, "gdmt, this meeting is over!" without any motion, vote, or even authority to do so it turns out.

A lot of questions remained unanswered and now we're going to have to schedule something again to resolve them, which as you can imagine is hard on everyone who did take the time to show up.

KerryL1 (California)
Posts: 14,550

Posted:

MichaelB, to keep the next Members or Association meeting on an even keel, make sure there are discussions & votes on nothing except published agenda times, as per CA's Davis-Stirling Open Meeting Act.

I'm sure that like our HOA, your bylaws also state that Members (Owners) also can call special meetings of the members, but it must be done right.

We generally have only one Members meeting/ann., the annual election. Our board prez presides and our HOA attorney sits in and makes a few remarks.

JanetB2 (Colorado)
Posts: 4,219

Posted:

Quote:

Posted By RichardD on 06/17/2017 2:40 PM
In our condo association of 86 patio type homes, yesterday was annual meeting day.
We were to elect 2 board members. Problem is there was no quorum and hence, no election.
My belief is that the board should reschedule another annual meeting and do whatever is
necessary to insure that a quorum would be present at that meeting.

I have 2 questions:
1) Should the annual meeting be rescheduled? and
2) Do the 2 directors, whose term expires, stay as board members until another election is held?

Neither our documents nor NC law 47C covers the above.

Unfortunately your belief which I have in bold above is not the BOD's responsibility. Their responsibility is to send out notices of the meeting and it is then the OWNER's responsibility to attend or submit proxy to a neighbor so that quorum is met. As your HOA found out there is consequences when the Owners do not participate. The BOD certainly cannot round up owners, hog tie them, and cart their carcasses to an annual meeting ... LOL ... not sure what else would be necessary to insure quorum.

1. Technically the meeting should have been rescheduled because technically you have not had an Annual Meeting due to no quorum. Do your documents require an annual meeting?

2. YES ... As Tim pointed out they stay until resign or replaced via election.

If they do not want to schedule another meeting then the members can take steps to hold a special meeting. However, before doing that work and taking those steps it might be wise make sure you have needed participation. Or, you will end up in the same boat. Next time be sure to get proxies from your non participating neighbors!!!

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