Guest Guest Posted November 9, 2015 at 07:22 PM Report Posted November 9, 2015 at 07:22 PM Do the members of a mutually benefit corporation have the ability to override a board of directors decision. This is a "for profit corporation
Josh Martin Posted November 9, 2015 at 07:41 PM Report Posted November 9, 2015 at 07:41 PM Do the members of a mutually benefit corporation have the ability to override a board of directors decision. This is a "for profit corporation"Except in matters placed by the bylaws exclusively under the control of the board, the society's assembly can give the board instructions which it must carry out, and can rescind or amend any action of the board if it is not too late (see 35). It should be noted, however, that exactly the opposite condition prevails in connection with boards of business corporations, in which the board has exclusive power and authority to operate the business." (RONR, 11th ed., pg. 483)
Guest wayne a Posted November 10, 2015 at 07:17 PM Report Posted November 10, 2015 at 07:17 PM Mr. Martin-thank you for your response. I tried to post this redirect question to you earlier but it dumped on me.After scouring our bylaws further I observed the following clause. "A member of the corporation shall not solely. because of such membership, be personally liable for the debts, obligations, or liabilities of the corporation". Our bylaws also state that we are governed by RRofOrder unless they are in conflict with the bylaws, the articles of incorporation of this corporation or the law. If the membership can override a Board decision do they not also assume liability for such action? I would think that they cannot have it both ways. I think a lawyer (should we be sued for anything) would have a field day with this precedent set should the occasion arise. The bylaws were changed years ago to shield the individual members from tax liabilities. Any thoughts on this from the forum would be appreciated. As President I am not concerned with the content of the motion but only with the legality of the process.ThanksWayne A.
Josh Martin Posted November 10, 2015 at 07:27 PM Report Posted November 10, 2015 at 07:27 PM After scouring our bylaws further I observed the following clause. "A member of the corporation shall not solely. because of such membership, be personally liable for the debts, obligations, or liabilities of the corporation". Our bylaws also state that we are governed by RRofOrder unless they are in conflict with the bylaws, the articles of incorporation of this corporation or the law. If the membership can override a Board decision do they not also assume liability for such action? I would think that they cannot have it both ways. I think a lawyer (should we be sued for anything) would have a field day with this precedent set should the occasion arise. The bylaws were changed years ago to shield the individual members from tax liabilities. Any thoughts on this from the forum would be appreciated. As President I am not concerned with the content of the motion but only with the legality of the process.I think that the citation I have already provided is all the help that RONR (and this forum) can provide on this subject. If you wish to continue to research your questions of whether the membership of your organization can override its board and, if so, whether the members are liable for this decision, it will be necessary to review carefully what your bylaws and applicable law have to say on this subject.
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