Director Confidentiality

[msmumr]

State legislature adopted a community association act that required by-laws of nonprofit HOA's to be amended so lot owners 

could attend open director meetings. Closed sessions are allowed by the Act for various sensitive matters, e.g, legal

advice protected by attorney/client privilege, bid negotiations with suppliers,, etc. The board had previously adopted a Director Duties Policy.

This stated the obligations of directors typically associated with an executive board, e.g. confidentiality of meetings, loyalty to

the purpose, no conflicts, good faith honest  performance, etc. Cursory Board minutes are posted on the HOA's web site as

 meeting are attended by only a few lot owners (less than 1%).So one member (not the secretary) has elected 

to discuss meetings on an HOA social network that reaches a far greater number,but still less than half of the total lot owners

entitled to vote at annual meeting. Some are arguing this breaches (1) confidentiality obligations as a director,,(2) that RONR 

(referenced as controlling in the by-laws) does not contemplate directors meetings being discussed, and (3) that the nonprofit

association act that is referenced by Act, only allows member meeting minutes upon written demand, not board minutes at all;

hence the board should stop posting minutes and censure the director that is conducting polls and starting arguments on- line

with lot owners who never saw the minutes or attended the meeting..

 

 

 

  

 

 

 

[Josh Martin]

15 hours ago, msmumr said:

State legislature adopted a community association act that required by-laws of nonprofit HOA's to be amended so lot owners 

could attend open director meetings. Closed sessions are allowed by the Act for various sensitive matters, e.g, legal

advice protected by attorney/client privilege, bid negotiations with suppliers,, etc. The board had previously adopted a Director Duties Policy.

This stated the obligations of directors typically associated with an executive board, e.g. confidentiality of meetings, loyalty to

the purpose, no conflicts, good faith honest  performance, etc. Cursory Board minutes are posted on the HOA's web site as

 meeting are attended by only a few lot owners (less than 1%).So one member (not the secretary) has elected 

to discuss meetings on an HOA social network that reaches a far greater number,but still less than half of the total lot owners

entitled to vote at annual meeting. Some are arguing this breaches (1) confidentiality obligations as a director,,(2) that RONR 

(referenced as controlling in the by-laws) does not contemplate directors meetings being discussed, and (3) that the nonprofit

association act that is referenced by Act, only allows member meeting minutes upon written demand, not board minutes at all;

hence the board should stop posting minutes and censure the director that is conducting polls and starting arguments on- line

with lot owners who never saw the minutes or attended the meeting..

RONR does not prohibit the discussion of board meetings, except for meetings held in executive session (and it appears that the meetings in question were not held in executive session).

The rest of this involves the board’s own rules and state law. It is up to the board to interpret the former and questions regarding the latter should be directed to an attorney. The board could also adopt additional rules to clarify these matters.

Finally, if the board does conclude that the member’s behavior is in violation of the board’s rules or applicable law, or is otherwise not in the best interest of the society, and the board wishes to take action against the member, see your own bylaws regarding discipline and removal or see FAQ #20 if your rules are silent.

Edited December 4, 2019 at 02:09 PM by Josh Martin

[msmumr]

The latter seems preferable (board adopt clarifications of its own rules) consistent with state laws.

Thanks

[Richard Brown]

I agree with Mr. Martin’s comments and will add that I see nothing improper about the activities that have been described. 

[Atul Kapur]

5 hours ago, msmumr said:

(3) that the nonprofit

association act that is referenced by Act, only allows member meeting minutes upon written demand, not board minutes at all;

hence the board should stop posting minutes

If the Act prohibits the board minutes from being distributed to the membership (which would surprise me), then that's that. However, if the Act just doesn't require it or is silent, then RONR says (p. 487, lines 14-20):

Quote

"[board] minutes are accessible only to the members of the board unless the board grants permission to a member of the society to inspect them, or unless the society by a two-thirds vote (or the vote of a majority of the total membership, or a majority vote if previous notice is given) orders the board's minutes to be produced and read to the society's assembly."

 

[msmumr]

Mr Kapur: You are correct. The Community Association Act, requiring open meetings of the board

is silent about the minutes being published. There is no board resolution that authorizes the minutes

being posted on the HOA's web site. Thank you for the RONA reference, it definitely applies since

the by-laws specifically reference RonA as authority. 

[Gary Novosielski]

4 hours ago, msmumr said:

the by-laws specifically reference RonA as authority. 

By which I presume you mean RONR:  Roberts' "Rules of Order Newly Revised"

[msmumr]

Yes, Gay - I meant RONR (eleventh edition, I believe. Sorry!

[msmumr]

Further to this, Gary, the minutes referred to in the nonprofit association act are the minutes of members 

meetings, not directors. These are not mentioned. The Community Association Act references the

nonprofit act on minutes, which are only the minutes member meetings, like the annual meeting.

Thanks again.

[Atul Kapur]

As a practical matter, the fact that you are required to allow lot owners (=general members) to attend your board meetings as observers destroys the effect of requring confidentiality. Even if the directors feel bound by it, any observer is not. So I don't see the point of withholding the minutes of the board meetings.

Of course, there is an expectation of confidentiality for matters that are discussed in Closed Session (called "executive session" in RONR). The minutes of items in closed sessions should be kept separate and approved in closed session. These minutes should be short as the minutes only record what has been done, not what is said.

[msmumr]

Thanks ,, Mr. Kaput, afraid you are correct again.The sate law opens a 'Pandora's Box.' With unlimited confidentiality elements for private purposes (journalists) could have a disgruntled member 'wired', or even with video recorder, or voice recorder transcribe  an entire meting enabling a newspaper to carry a story damaging the HOA's

reputation nationwide. Confidentiality now exists partially to the extent meetings are  sparsely attended (less than 1% of lot owners)

and the HOA's web site's posted minutes are cursory, very few visit to actually read them.

Question:  RONR says board minutes are only accessible to the board, unless the board grants permission to "...a member...to inspect them...."

 and the Act requiring meetings to be open does not address minutes of board meetings, only member meetings, could there be a path

through by having a designated single member attending a meeting can only inspect the minutes at the next meeting after they were  approved?

There is a big difference between inspecting and having a copy. No extracts or notes are permitted in only an "inspection permission" I would argue.

 

[Atul Kapur]

 I'm not quite sure that I understand your question. However, the minutes are not "the minutes" until they are approved at the next regular meeting. Before then, they are only draft minutes. General members have no right of access to the draft minutes of a board meeting.

1 hour ago, msmumr said:

RONR says board minutes are only accessible to the board, unless the board grants permission to "...a member...to inspect them...."

OR if the general meeting "orders the board's minutes to be produced and read to the society's assembly." (p. 487, lines 19-20)

[Josh Martin]

1 hour ago, msmumr said:

Question:  RONR says board minutes are only accessible to the board, unless the board grants permission to "...a member...to inspect them...." and the Act requiring meetings to be open does not address minutes of board meetings, only member meetings, could there be a path through by having a designated single member attending a meeting can only inspect the minutes at the next meeting after they were  approved?

If a member of the society is present, that person can recreate all the information that would be in the minutes (and more), so the question of if (and when) the minutes can be inspected is not really material.

1 hour ago, msmumr said:

There is a big difference between inspecting and having a copy. No extracts or notes are permitted in only an "inspection permission" I would argue.

I don’t know that I concur that permission to inspect prohibits the taking of notes, but as noted above, the member could recreate the same information (and more) from his own observations, so I am not sure it really matters.

As I understand the facts, it appears that the board is displeased with the law on this subject, and wishes to adopt rules to ensure that the board’s members comply only with the bare minimum required by the law. The board is free to do this if it wishes, although it should be noted that the membership may also adopt rules on this matter, and those rules would take precedence.

[msmumr]

Much obliged, Messrs Kapur and Martin, you have understood the main issue. HOA boards are caught in a transition going from the initial developer control period to the later HOA control period when the project is nearly built out. Enter the legislature, at this critical stage, it inserted the Community Association Act. Closed board meetings become open., except for categories of sensitive subjects. Contending factions, only small groups, try to seize control. Board members , catering to one constituency or the other become more loyal to it than the board, believing they are acting in the best interests of the community as a whole. This violates the board policy adopted before the Act requiring director confidentiality, loyalty to the purpose, honesty and integrity, ignored now by the directors who want to reach their constituency.  The community, most of whom know nothing about the Act, or other governance issues, just expect everything to run as smoothly and expertly as before under the developer control period.  RONR has no way to steer back into calm waters,  it seems, but thanks for your wise counsel. Let me know if there is any information you would like to have, that is not confidential, and I can supply..