Definition of Board vacancy

Started by ScotJ • 16 replies • 2206 views

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ScotJ (Arizona)
Posts: 19

Posted:

We currently have a three member board. In order to increase the size of the board to seven, our President stated he could appoint people to fill these additional positions. Our bylaws state the board can fill vacancies on the board. Are these additional positions considered to be vacancies?

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Scot,

How many BOD members are required or optionally allowed by your ByLaws?

MicheleD (Kentucky)
Posts: 4,491

Posted:

Scot:

Our board has used the exact same passage to add to our board over the years.

Our docs allow us up to 9.

We usually get 5 or 7, once had 6.

Our president used the appointment language to add two more people one year.

Actually, he didn't add them himself.

The entire board voted. Our docs don't allow just the president to appoint, it's left to the entire board.

ScotJ (Arizona)
Posts: 19

Posted:

Minimum of three and up to seven. Since we currently have a three member board, I thought the board only had power to appoint someone, if one of the three positions became vacant. In order to increase the size to seven, wouldn't the additional four members have to be voted on by the entire association?

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Quote:

Posted By ScotJ on 01/19/2009 11:52 AM
Minimum of three and up to seven. Since we currently have a three member board, I thought the board only had power to appoint someone, if one of the three positions became vacant. In order to increase the size to seven, wouldn't the additional four members have to be voted on by the entire association?

Scot,

You COULD parse it that way, as in, the slot never existed, so how can it be vacant? However, if you have 4 warm volunteer bodies willing to serve on your BOD, and the current BOD sees some benefit in adding to the BOD, I'd recommend your BOD, via resolution, increase the BOD to 7, then appoint the new members as outlined in your docs. Volunteers are tough to get. Seize the moment and opportunity!

MicheleD (Kentucky)
Posts: 4,491

Posted:

I have no idea the state laws in AZ that might apply.

But here there is nothing that (here) would prevent that, since a vacancy is a vacancy.

ScotJ (Arizona)
Posts: 19

Posted:

John,

We have at least ten people seeking these four positions.

Also, what protection does the entire association have to prevent a stacked board?

MicheleD (Kentucky)
Posts: 4,491

Posted:

Quote:

Posted By ScotJ on 01/19/2009 12:13 PM
John,

We have at least ten people seeking these four positions.

Also, what protection does the entire association have to prevent a stacked board?

There should be steps in your documents for a recall.

The HOA members tend to forget, they do have power. Collective power, to be sure, but power all the same.

DonnaS (Tennessee)
Posts: 5,671

Posted:

It seems that the current Board of 3 does have the ability to appoint members to fill the vacancies. BUT with at least 10 people wanting to become board members, I would highly suggest an election. Appointing that many board members without member participation, IMHO, would cause a riot or at least alot of discord. Sometimes we have to go just outside of the box to do the right thing.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Wait a minute!!

You have a 3-member board for some reason or another, but the point is, 3 is your board.

There are no vacancies. No one was elected to fill those OTHER potential slots.

So, I don't believe that anyone can fill those slots by appointment. (Why even have an election, then?)

At the next election, 7 spots are open. If 10 people want the positions, then the ballot will have 10 names and the top 7 beocme the board. If only 3 people run, then the board will be comprised again of just 3.

At least that's how I see it . . .

(I believe the power to "appoint" board members is for a situation when there is a resignation or removal from the current board.)

ScotJ (Arizona)
Posts: 19

Posted:

Quote:

Posted By SusanW1 on 01/19/2009 2:34 PM
Wait a minute!!

You have a 3-member board for some reason or another, but the point is, 3 is your board.

There are no vacancies. No one was elected to fill those OTHER potential slots.

So, I don't believe that anyone can fill those slots by appointment. (Why even have an election, then?)

At the next election, 7 spots are open. If 10 people want the positions, then the ballot will have 10 names and the top 7 beocme the board. If only 3 people run, then the board will be comprised again of just 3.

At least that's how I see it . . .

(I believe the power to "appoint" board members is for a situation when there is a resignation or removal from the current board.)

Hi Susan,
That's the way I see it also. There has never been an election to fill those potential slots. But according to others that have posted, it doesn't matter. We have a situation where several relatives of one board member could be appointed to these positions.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Many bylaws have immediate relative restrictions, too.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Scot,

Below is the statute from the nonprofit corp act, which, by the way, HOAs must also follow. As you will read, either the board or the members can fill the vacancy. I would certainly recommend waiting until the next annual meeting and including 4 more vacancies on the ballot. I can't imagine there would be such a pressing need to have these positions filled immediately.

Frankly, until I read this statute my thought was that they would have to be elected by the members. The reason being is that appointed directors only serve the remainder of term of the person they're replacing. But, after reading the statute, which explicitly says, "including a vacancy resulting from an increase in the number of directors", I now know I was wrong in my thinking.

10-3811. Vacancy on board

A. Unless the articles of incorporation or bylaws provide otherwise, and except as provided in subsections B and C of this section, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors, either:

1. The members, if any, may fill the vacancy.

2. The board of directors may fill the vacancy.

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

B. Unless the articles of incorporation or bylaws provide otherwise, if the vacant office was held by a director elected by a class, chapter, region or other organizational or geographic unit or grouping, only members of the class, chapter, region, unit or grouping are entitled to vote to fill the vacancy if it is filled by the members.

C. Unless the articles of incorporation or bylaws provide otherwise, if a vacant office was held by an appointed director, only the person who appointed the director may fill the vacancy.

D. If a vacant office was held by a designated director, the vacancy shall be filled as provided in the articles of incorporation or bylaws. In the absence of an applicable article or bylaw provision, the vacancy may not be filled by the board.

E. A vacancy that will occur at a specific later date by reason of a resignation effective at a later date under section 10-3807, subsection B or otherwise may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.

F. If at any time by reason of death or resignation or other cause a corporation has no directors in office, any officer or any member may call a special meeting of members.

SusanW1 (Michigan)
Posts: 5,202

Posted:

There was not an INCREASE in the number of board members.

There was ALWAYS up to 7 slots and they did not all get filled, due to lack of candiates (or some other reason).

Sorry, but I don't think this applies to his situation.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Susan,

If there are 3 board members and the BOD wants to now have 7, that is an increase. I don't what else you would call it. The bylaws allow for 3 to 7 members. Up until the present there have been 3 now the board wants to increase to 7. There have never been more than 3, so by adding more it equates to an increase.

ScotJ (Arizona)
Posts: 19

Posted:

Quote:

Posted By MaryA1 on 01/19/2009 3:03 PM
Scot,

Below is the statute from the nonprofit corp act, which, by the way, HOAs must also follow. As you will read, either the board or the members can fill the vacancy. I would certainly recommend waiting until the next annual meeting and including 4 more vacancies on the ballot. I can't imagine there would be such a pressing need to have these positions filled immediately.

Frankly, until I read this statute my thought was that they would have to be elected by the members. The reason being is that appointed directors only serve the remainder of term of the person they're replacing. But, after reading the statute, which explicitly says, "including a vacancy resulting from an increase in the number of directors", I now know I was wrong in my thinking.

10-3811. Vacancy on board

A. Unless the articles of incorporation or bylaws provide otherwise, and except as provided in subsections B and C of this section, if a vacancy occurs on a board of directors, including a vacancy resulting from an increase in the number of directors, either:

1. The members, if any, may fill the vacancy.

2. The board of directors may fill the vacancy.

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

B. Unless the articles of incorporation or bylaws provide otherwise, if the vacant office was held by a director elected by a class, chapter, region or other organizational or geographic unit or grouping, only members of the class, chapter, region, unit or grouping are entitled to vote to fill the vacancy if it is filled by the members.

C. Unless the articles of incorporation or bylaws provide otherwise, if a vacant office was held by an appointed director, only the person who appointed the director may fill the vacancy.

D. If a vacant office was held by a designated director, the vacancy shall be filled as provided in the articles of incorporation or bylaws. In the absence of an applicable article or bylaw provision, the vacancy may not be filled by the board.

E. A vacancy that will occur at a specific later date by reason of a resignation effective at a later date under section 10-3807, subsection B or otherwise may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs.

F. If at any time by reason of death or resignation or other cause a corporation has no directors in office, any officer or any member may call a special meeting of members.

Thanks Mary.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Scot,

10 warm bodies want a shot at those 4 slots?!? Man, that would be the envy of most of us.

But tell us:
1. How big is your Membership?
2. Are you one of the three current BODs?
3. If so, are the other 2 in favor of the appointment process (for possible stacking purposes) and you are opposed for that potential outcome?

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