Conflict of Interest

[Guest Guest_57]

Person "X" is on a nine (9) person board of directors. The subject of terminating a contract is on the agenda of an upcoming regular Board meeting. However, X owns the company that is a party in the contract. The contract with X's company says that it can be terminated for any reason by Board Action.

The sole question I am looking at here is the issue about asking X to leave the room for discussion and vote about terminating the agreement with X's company. Can we do that? I have so far thought that if X just leaves and doesn't object, then fine. Or, do we compromise the integrity of the Board's discussion and action by asking X to leave.

The Bylaws say that at the Board meeting, we can go into "executive session" which is described in the Bylaws as being a confidential session, where nothing is to leave the room.

At the meeting the Board chair will suggest that X leave the meeting. X is expected to willingly get up and leave. Can X complain later?

[Josh Martin]

The sole question I am looking at here is the issue about asking X to leave the room for discussion and vote about terminating the agreement with X's company. Can we do that? I have so far thought that if X just leaves and doesn't object, then fine. Or, do we compromise the integrity of the Board's discussion and action by asking X to leave.

You can ask, but if he refuses, you cannot force him to leave. (RONR, 10th ed., pg. 255, lines 22-28)

The Bylaws say that at the Board meeting, we can go into "executive session" which is described in the Bylaws as being a confidential session, where nothing is to leave the room.

Under RONR, executive session only means that the business discussed will be kept within the assembly. Members are not prohibited from telling absent members what happened. Your rules apparently state otherwise.

At the meeting the Board chair will suggest that X leave the meeting. X is expected to willingly get up and leave. Can X complain later?

He can complain, but you are free to ignore his complaints. If he leaves willingly, no rule has been violated.

[Guest Guest 57]

Mr. Martin,

Thanks for your help and citation to the rules. It seems to me then that if he objects, the best solution would be to form a special committee to consider the issue of the contract and ensure that he is not one of the members on the committee.

[Gary c Tesser]

Mr. Martin,

Thanks for your help and citation to the rules. It seems to me then that if he objects, the best solution would be to form a special committee to consider the issue of the contract and ensure that he is not one of the members on the committee.

As far as Robert's Rules is concerned, if he leaves willingly, he has no grounds for complaint. Are you going to form a special committee every time someone makes a groundless complaint?

And note that if the bylaws require Board Action, no special committee will work.

[Josh Martin]

As far as Robert's Rules is concerned, if he leaves willingly, he has no grounds for complaint. Are you going to form a special committee every time someone makes a groundless complaint?

And note that if the bylaws require Board Action, no special committee will work.

Mr. Tesser, I think he meant to form a special committee if the member did not leave willingly. It is also good to point out that the special committee cannot make the final decision, however, discussing most of the "sensitive details" in the special committee could still help the situation.

[Guest Guest 57]

Mr. Tesser, I think he meant to form a special committee if the member did not leave willingly. It is also good to point out that the special committee cannot make the final decision, however, discussing most of the "sensitive details" in the special committee could still help the situation.

Mr. Marin,

You are right in what I was thinking, on all accounts. I reasoned that a special committee could have the uncomfortable discussion related to ceasing the contract, and the board of directors could convene and essentially defer to the opinion of the committee and vote accordingly. If the directors are really that concerned about it, then they could also have a vote by ballot so the director doesn't know specifically who voted against him. (RONR, 10th ed., pg. 398, line 15)

[Gary c Tesser]

Mr. Tesser, I think he meant to form a special committee if the member did not leave willingly. It is also good to point out that the special committee cannot make the final decision, however, discussing most of the "sensitive details" in the special committee could still help the situation.

Nice catch.