Board Member Elections at the Annual Meeting

[Guest FDD]

As a volunteer director of a nonprofit organization, I believe that nonprofit organization is improperly planning to elect board members at an upcoming regular board meeting in September 2019.

The nonprofit’s bylaws state:

“Article III, Section 3. Term of Office. ...Subsequent board members shall be elected at the annual meeting...” 

“Article III, Section 7. Regular Meetings. ...Regular meetings of the board shall be held at least two times a year, including the annual meeting which will be held in the month of March or April [emphasis added].”

As a custom, the nonprofit has been electing directors at its September (fiscal year end) meetings and I believe that this is improper.  (This is my first election as a board member.)

Please confirm that the nonprofit organization must elect its directors at its annual meeting in March or April.

Thank you.

 

 

 

 

 

 

 

 

 

[Richard Brown]

Who elects the board?

Does the board elect itself?

Does this organization have a general membership?

If so, how often does the membership meet and when is the annual membership meeting? You only referred to board meetings. It is necessary to distinguish between membership meetings and board meetings.

[Guest FDD]

To my knowledge, the board has historically elected itself and the nonprofit organization has never had separate member meetings. 

The nonprofit's articles of incorporation provides that it is organized on a directorship basis.  However, the bylaws contain inconsistent provisions as described below.

Article II , Section 1 of the bylaws assumes the organization is organized on a membership basis rather than a directorship basis.  It states: 

"ARTICLE II

Membership

Section 1.  Voting Members.  The voting members of this corporation shall be the elected or appointed board members."

With regard to annual meetings, Article III, Section 7 states:

"Section 7.  Regular Meetings.  A regular meeting of the board may be held either within or outside of the State of Michigan.  Except as provided by the Michigan Nonprofit Corporation Act, a regular meeting may be held without notice only if written notice of time, place and purpose of a meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally in a regularly published periodical, or by mail or fax transmittal to each member of record entitled to vote at the meeting.  If mailed, such notice shall be deemed to be given when deposited in the United States mail, postage prepaid, directed to the member at the address which appears on the records of the corporation.  If fax transmitted, such notice shall be deemed to be given by return fax or acknowledgement by the member on the same date as the fax was received.  Should there be no acknowledgement of receipt of fax transmittal, a notice will be mailed to the member as stipulated above.  Regular meetings of the board shall be held at least two times a year, including the annual meeting which will be held in the month of March or April.  [emphasis added] The board shall meet upon call of the president of the board at such times and places as he/she may designate.  The business to be transacted at, and the purpose of, a regular meeting need not be specified in the notice or waiver of notice of the meeting.  The first meeting of each newly elected board shall be held without notice immediately after, and at the same place as, the annual meeting of the board for the purpose of the organization of the board, the election of officers and the transaction of such other business as may properly come before the meeting."

Thank you.

[Atul Kapur]

1 hour ago, Guest FDD said:

Article II , Section 1 of the bylaws assumes the organization is organized on a membership basis rather than a directorship basis. 

As I read that article, it states that directors are the only members (assuming that this is all the bylaws say about membership). This is entirely consistent with the Articles.

And then, you appear to be telling us, it reserves all authority to the board.

This doesn't answer your original question, but provides context.

[Guest FDD]

Thank you for your expertise and the helpful context.  It is insightful and much appreciated.

[Josh Martin]

9 hours ago, Guest FDD said:

Please confirm that the nonprofit organization must elect its directors at its annual meeting in March or April.

Based on the facts provided, this appears to be correct.

Edited August 23, 2019 at 05:59 PM by Josh Martin

[Richard Brown]

18 hours ago, Guest FDD said:

Please confirm that the nonprofit organization must elect its directors at its annual meeting in March or April.

 

8 hours ago, Josh Martin said:

Based on the facts provided, this appears to be correct.

I agree, but with a caveat: the organization SHOULD elect uts directors at the annual meeting in March or April. The members don't necessarily have to do it then.

Here are a couple of scenarios: at an annual meeting being held in March or April, the elections can be postponed until a future meeting, generally an adjourned meeting, but postponement until a special meeting or the next regular is possible, depending on whether the next meeting is within a quarterly time interval.

If for some reason the annual meeting isn't held when it should be in March or April, but is held some time thereafter, say in May or June, the elections can be held then. The organization does not cease to exist or have to wait a year until the following March or April to hold the annual meeting and elections. It just holds them as soon as possible.

[Rob Elsman]

Just for the record, the tax status of a society does not affect the application of the rules in RONR.