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Special Rule of Order?


Guest Inquirer
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Hello.

I serve on the board of a not-for-profit organization. 

We've had a situation arise where a board member was personally involved in a situation we had to decide upon. It was extremely awkward to be discussing (debating) this -- and then voting -- with that person involved (much less in the room).

I understand that there is nothing in RONR that requires a member to excuse themselves from a discussion and/or vote, whether or not they are in a conflict-of-interest situation.

Can we adopt a special (standing?) rule or order that would make such a requirement of board members? Could that be approved by just the board (for use at board meetings), or would the general membership have to approve it (for use at board meetings)? 

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Guest Who's Coming to Dinner

And a tricky provision it might be. Who will decide when members have their rights taken away? Do the victims get to vote on their own disenfranchisement? It would be craftier to set an adjourned meeting for an extremely inconvenient time and place and then postpone the matter to it.

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On 9/21/2017 at 11:04 PM, Guest Who's Coming to Dinner said:

And a tricky provision it might be. Who will decide when members have their rights taken away? Do the victims get to vote on their own disenfranchisement? It would be craftier to set an adjourned meeting for an extremely inconvenient time and place and then postpone the matter to it.

It's not tricky at all.  You just place the following statement into the By-laws:  "No member of the Board will participate in, or vote on, any issue before the Board where he or she has a direct or indirect conflict of interest.  If in a conflict of interest , the member should announce the conflict each time the conflict comes before the Board and shall excuse himself or herself until after the matter is dealt with at that meeting.  A direct or indirect conflict, for the purposes of this By-law includes, but is not limited to, the following:  operating a business that will receive a contract from the organization; working for a business that will receive a contract from the organization; having a close relative (i.e. spouse, child, grandchild, brother, sister, parent, uncle, aunt) who works for, or operates, a business that will receive a contract from the organization; has a friend that works for, or operates, a business that will receive a contract  from the organization; or any other situation that might place the member in a situation where their loyalty to the organization may be questioned due to a connection with another person or organization.  Should a member be found to have been in a conflict of interest and has not adhered to this By-law, the member may be removed from office by a majority vote of the entire Board."

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1 hour ago, Rev Ed said:

 the member may be removed from office by a majority vote of the entire Board."

I think you need to be a bit more precise here, as your phrasing, as quoted, does not correspond to any of the sample wordings explained on page 403 and is therefore a tad ambiguous.

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4 hours ago, jstackpo said:

I think you need to be a bit more precise here, as your phrasing, as quoted, does not correspond to any of the sample wordings explained on page 403 and is therefore a tad ambiguous.

Two points here:

1)  This would be in a By-law - that over rules anything found in RONR.

2)   Okay, it could state "a majority vote of the entire Board, not including the member in question."  How is that?

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Still ambiguous, but I agree that "not including..." is a good addition.

When you write "a majority vote of the entire Board"  do you mean a "majority vote" in the standard sense of more than half the members actually voting?  Abstentions don't count one way or another.

or

do you mean a vote of the majority of the board, i.e. more than half of the total number of board members (a number) have to vote "Yes".  Abstentions are in effect a "no" vote because they don't contribute to the sum of the "Yes" votes.

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1 hour ago, Rev Ed said:

. . .  Okay, it could state "a majority vote of the entire Board, not including the member in question."  How is that?

Ambiguous. Do you mean a "majority vote of the entire board" or the "vote of the majority of the entire board"? There is a difference, or at least can be. The first is ambiguous. The second is not...and is the suggested wording in RONR if it is meant that a majority of ALL board members must vote yes.

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On ‎9‎/‎21‎/‎2017 at 11:04 PM, Guest Who's Coming to Dinner said:

And a tricky provision it might be. Who will decide when members have their rights taken away? 

 

17 hours ago, Rev Ed said:

It's not tricky at all.  You just place the following statement into the By-laws:  "No member of the Board will participate in, or vote on, any issue before the Board where he or she has a direct or indirect conflict of interest.  ....  A direct or indirect conflict, for the purposes of this By-law includes, but is not limited to, the following:  .... "

Yeah, that'll nail it down.  :)

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4 hours ago, Daniel H. Honemann said:

Yeah, that'll nail it down.  :)

Yes, that could be taken out.  At the same time, a By-law stating that a member cannot be involved in a motion/resolution where they have a conflict of interest is not hard to do.  Basically, when you are in a situation where you have a direct or indirect interest in the transaction could require you to step aside or should if it's a requirement found in the By-laws.  That's basically what I was getting at.  It's not hard to do a "Step aside or out are out" statement in the By-laws.  In some situations, I agree that the 'interest' may actually be a benefit to the organization, but there are a lot of cases where it can, at least on the surface, be a situation where the member may not (intentionally or unintentionally) make a decision that is not in the best interest of the organization.

Here's my point: If the organization uses Bank A and I work for Bank B.  If the organization is looking at changing banks, I have an indirect interest in the transaction as it benefits my employer (Bank 'B') if the organization moves to Bank B.  So, if I vote in favour of moving to Bank B because I think it is in the best interests of the organization, or because I want my employer to have another customer?  While it may not seem like one more customer will make a difference to a bank, but it could - and it doesn't have to be a bank, what about a roofer or landscaper or any other organization.  Another customer could make a difference to a company.

 

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16 hours ago, Rev Ed said:

Two points here:

1)  This would be in a By-law - that over rules anything found in RONR.

2)   Okay, it could state "a majority vote of the entire Board, not including the member in question."  How is that?

The question is about the apparent conflict of the phrase "majority vote" which is well defined, and the phrase "of the entire Board" which seems either superfluous or contradictory, depending on how you read it.  Perhaps you meant a vote of a majority of the entire board?

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23 hours ago, Rev Ed said:

It's not tricky at all.  You just place the following statement into the By-laws:  "No member of the Board will participate in, or vote on, any issue before the Board where he or she has a direct or indirect conflict of interest. "

Given many of the questions on this board, I see this as open to abuse despite how it is structured.

 

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1 hour ago, Gary Novosielski said:

The question is about the apparent conflict of the phrase "majority vote" which is well defined, and the phrase "of the entire Board" which seems either superfluous or contradictory, depending on how you read it.  Perhaps you meant a vote of a majority of the entire board?

I guess I don't see it that way - to me "majority vote of the entire Board" means that if there are 10 directors, 6 must agree.  But, I will agree it could be written differently.

1 hour ago, SaintCad said:

Given many of the questions on this board, I see this as open to abuse despite how it is structured.

 

But I don't see how there's an issue with telling a director what a conflict of interest is.  If they do not declare the conflict and excuse themselves, then they are off the Board.  That's not an 'abuse' that's common sense.  If the person works for company A and that company may get a contract (i.e. they put in a bid) then the director needs to state "I work for company A and am excusing myself from dealing with this issue" and then leave.  If the director does not do this then they are in breach of the By-law.  Two options to prevent any chance of 'abuse' would be to either let the general membership make the decision or to let an independent 'arms length' committee to hear the accusation and make a decision.

There are cases where the Board could use something to remove a director, such as an Ethics By-law, but I see a Conflict of Interest By-law to be more clear cut.  Either the person is wrong or they are innocent. 

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1 hour ago, Rev Ed said:

I guess I don't see it that way - to me "majority vote of the entire Board" means that if there are 10 directors, 6 must agree.  But, I will agree it could be written differently.

But I don't see how there's an issue with telling a director what a conflict of interest is.  If they do not declare the conflict and excuse themselves, then they are off the Board.  That's not an 'abuse' that's common sense.  If the person works for company A and that company may get a contract (i.e. they put in a bid) then the director needs to state "I work for company A and am excusing myself from dealing with this issue" and then leave.  If the director does not do this then they are in breach of the By-law.  Two options to prevent any chance of 'abuse' would be to either let the general membership make the decision or to let an independent 'arms length' committee to hear the accusation and make a decision.

There are cases where the Board could use something to remove a director, such as an Ethics By-law, but I see a Conflict of Interest By-law to be more clear cut.  Either the person is wrong or they are innocent. 

What if there is disagreement over whether a particular situation constitutes a conflict of interest?

Additionally, unlike the rule in RONR, your proposed rule does not say “not in common with other members.” What if a situation arises where a majority of the board members, or even all of the board members, have a conflict of interest?

 

 

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1 hour ago, Rev Ed said:

But I don't see how there's an issue with telling a director what a conflict of interest is. 

No offense but do you read the questions we get on this board?  Here is one I remember off the top of my head with no searching: the OP was concerned that having a husband and wife on the same Board was a conflict of interest.  What about the recent one where an attorney's father was on the Board.  You are putting a member's rights in the hands of people that don't know what conflict of interest means.

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11 minutes ago, SaintCad said:

No offense but do you read the questions we get on this board?  Here is one I remember off the top of my head with no searching: the OP was concerned that having a husband and wife on the same Board was a conflict of interest.  What about the recent one where an attorney's father was on the Board.  You are putting a member's rights in the hands of people that don't know what conflict of interest means.

Worse yet, this decision seems to only be made after the fact, if a member fails to report a conflict of interest, and the potential penalty is removal from the board. If a member reports a conflict of interest, he must recuse himself. There is no mechanism for a member to report something which he thinks might be a conflict of interest (or which he thinks is not a conflict of interest, but realizes that other board members might disagree). If a board member thinks something is not (or may not be) a conflict of interest, his only recourse is to say nothing and hope he doesn’t get kicked off the board later.

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1 hour ago, Rev Ed said:

I guess I don't see it that way - to me "majority vote of the entire Board" means that if there are 10 directors, 6 must agree.  But, I will agree it could be written differently.

1

Rev. Ed, the term "majority vote" is defined in RONR as the majority of those present and voting.  If you say a "majority vote of the entire board" is required to adopt something, that is ambiguous because "majority vote" means "more than half of the votes cast".  So, with that language, your rule could easily be construed as meaning you are requiring a "majority of the votes cast of the entire board".   That is not the same thing as requiring the vote of a majority of the entire board.

On the other hand, the term "a vote of the majority of the entire board" clearly means that more than half of the members of the board must vote yes.  That is the language used consistently by RONR when describing a situation where the affirmative vote of a majority of the entire body (whether the membership, the board or a committee) is required.   I strongly suggest that if your intent with a rule is that a majority of the entire voting body must vote yes in order to adopt a motion that you use the wording that RONR consistently uses:  "a vote of a majority of the entire (membership, board, or whatever)".   It removes the ambiguity.

 

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Dang.

Looks like this won't be quite as easy as one might hope. 

It was actually a discipline situation (the member and their spouse broke one of the organization's rules, and after being assured by the board member in question for three months that they would fix the issue, we voted to send them an official letter about it, requiring that the situation be fixed).

It would have been much easier to have a frank conversation about it without that person being present.

I see the potential for abuse, although in our organization's situation, we *could* make the conflict of interest situations in question very specific. But I see we would have to be extremely careful with the wording.

Thank you for all of the feedback. We'll need to ponder this some more.

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On 9/24/2017 at 3:27 PM, Richard Brown said:

On the other hand, the term "a vote of the majority of the entire board" clearly means that more than half of the members of the board must vote yes.  That is the language used consistently by RONR when describing a situation where the affirmative vote of a majority of the entire body (whether the membership, the board or a committee) is required.   I strongly suggest that if your intent with a rule is that a majority of the entire voting body must vote yes in order to adopt a motion that you use the wording that RONR consistently uses:  "a vote of a majority of the entire (membership, board, or whatever)".   It removes the ambiguity.

 

Yes, thanks for that.  It is was my intent to say that the majority of the entire Board must be in agreement.  If there are 10 members on the Board then 6 must approve.

On 9/25/2017 at 11:02 AM, Guest Inquirer said:

Dang.

Looks like this won't be quite as easy as one might hope. 

It was actually a discipline situation (the member and their spouse broke one of the organization's rules, and after being assured by the board member in question for three months that they would fix the issue, we voted to send them an official letter about it, requiring that the situation be fixed).

It would have been much easier to have a frank conversation about it without that person being present.

I see the potential for abuse, although in our organization's situation, we *could* make the conflict of interest situations in question very specific. But I see we would have to be extremely careful with the wording.

Thank you for all of the feedback. We'll need to ponder this some more.

Yes, I agree with the potential for abuse when the person in question is involved in any decision made.  But it it ultimately up to the organization to decide things.

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None of this was necessary. The Board just needs to appoint a special committee to discuss subject so-and-so, the members to be appointed shall consist of Messrs. ... (except the individual with the potential conflict of interest). Simple solution to a complex problem. Give credit to Mr. H for having first suggested this.

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On 9/25/2017 at 9:02 AM, Guest Inquirer said:

It was actually a discipline situation (the member and their spouse broke one of the organization's rules, and after being assured by the board member in question for three months that they would fix the issue, we voted to send them an official letter about it, requiring that the situation be fixed).

It would have been much easier to have a frank conversation about it without that person being present.
 

If done during a meeting then there would be a motion leading to this debate and any motion about discipline without the accused being allowed to be present sounds like a Star Chamber or being assumed guilty before the trial (because you're taking away the member's rights that can only be done through the full discipline process).

Discuss it outside the meeting.

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On 9/30/2017 at 11:03 AM, SaintCad said:

If done during a meeting then there would be a motion leading to this debate and any motion about discipline without the accused being allowed to be present sounds like a Star Chamber or being assumed guilty before the trial (because you're taking away the member's rights that can only be done through the full discipline process).

Discuss it outside the meeting.

Oh, I assure you it had been discussed outside the meeting. And inside two previous meetings (although no motion was made at those ones).

What I'm hearing is that we may have (inadvertently) handled this as easily as we could have, by finally making a motion at a meeting to address the situation?

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Guest Who's Coming to Dinner

Delicate situations are best handled by hewing to the rules and adopting a measure of formality in your deliberation. When you maintain a casual atmosphere, you run into the awkward situation you described in the OP. The more that feelings are at stake, the more formal your process should become.

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