Amendment of Articles of Incorporation

Hello from Pardise in Florida,

This subject is about what my board of director's came up with as an insentive to encourage new volunteers to serve on the board, and to keep from hiring a management company. The President has used such a scare tactic for the past three years via September's newsletter, which is the month before our Annual Meeting in October.

My Board of Director's filed our amended articles of incorporation last April 12, 2004 within our local courts.

They amended the word dividends to read gifts. They board also raised our yearly dues to cover their yearly gifts.

Our bylaws say that, the board should have submitted in writing this amendment at a regular meeting. The bylaws meaning of regular meeting is our annual meeting, which is every October. This did not occur. Instead, it was announced as "just an idea only" in our monthly newsletter in December 2003. The President was to recieve yearly gifts of $1,000 and the VP $900 so on so forth.

At the board meeting in January 2004, which should not have taken place, was a motion that passed to form a committee to check into compensating the members of the board and their committee's. Only to have that committee go door-to-door for signatures in April. Majority of the homeowner's thought this was the committe who was going to check into find out how many homeowner's would be interested in compensating the board, and not signature votes. Our bylaws say, "when the motion was submitted in writing at the previous regual meeting, the next regual meeting October 2004, if a quroum of homeowner's exist, vote on the amendment motion. Then, that motion goes into effect at our annual meeting in October 2005.

"Amendment to Article XII: Dividends to Board Members
By order of majority vote this Article here by replaces the Current Article XII.
Changes to replace XII wil go into effect with the next Board 2004-2005 and gifts would be given at the end of the term at the annual meeting.

Article XII reads: There shall be no dividends paid to any of the members, nor shall any part of the income of the corporation be distributed to its Board of Directors or officers. .."

NOW, THEREFORE, said Articles of Incorporation are here by amended to read as follows:

Article XII

(1) President to recieve a gift of $550.00 per term: ..."

There is a Florida statue that says this in the title, "Payment of dividends and distribution of income to members prohibited..."

(1) A dividend may not be paid, and any part of the income or profit of a corporation my not be distributed, to it's members, directors, or officers. ..."
********************
Article XII BEFORE amendment reads: There shall be no "dividends" paid to any of the members, nor shall any part of the income of the corporation be distributed to its Board of Directors or officers. .."

Article XII AFTER amendment should read: "There shall be no "gifts"
paid, and any part of the income or profit of a corporation my not be distributed, to it's members, directors, or officers. ..."

$7,500 was distributed at our Annual Meeting. I got a $100.00 check.
I wrote "VOID" on the check. I do not beleive, board member's and their committee members who volunteer can be legally compensated.

Bottom Line: What my board of director's has done, they legalized gifts from the members of the Association by way of our annual dues to themselves, which were increased to cover their gifts. The amount for gifts which is income and profit for our Assocaition are now pre allocated for their legalized yearly gifts.

I have asked our Association's Attorney for answers. The President did not allow him to answer me. The letter with my check I received at the annual meeting says, "On April 7th 2004 (filed April 12, 2004), the homeowner's voted tochange the articles of incorporation to allow a gift program for the homeowners. This was an incentive for homeowner's to get involved to do all of the work that is needed to keep the daily running of our homeowner's association in the hands of the homeowner's and not a management corporation. ..."

My questions are, in your opinion, what are your thoughts about this amendment? What can I do at this point, to get this amendment revoked and get the money back to the Association where it belongs?

I appreciate your time, and thank in advance for your answer.

Audrey

Hi Janet,

In Florida, NO homeowner's association is allowed to compensate their volunteer's. When you compensate, they are no longer considered volunteers.

There is a statute 617.0505 that says in short, no dividends, income or profit to be distrubted to board members and officers prohibited. Then, a few sentences later within that same statute, talks about when the corporation is dissolving, and has money left over, the Board can compensate themselves for services rendered.

Then, there is another statute, that says the Board can set compensation amounts. How can this statute contradict the other statute, or does it go within that other statute that speaks about as the Association is dissolving?
Very confusing.

My Association's problem:

1) Our Bylaws for amendments says, "The Bylaws may be amended at any regular meeting (2003), of the Association by a two-thrids (2/3) vote, PROVIDED that the amendment has been submitted in writing at the PREVIOUS regular meeting "(2004).

Bylaws says Regular Meeting: a meeting that is held annually.

The procedure for amendments was totally ignored.

2) The votes from homeowner's were taken by door-to-door, not at an annual meeting.

3) No quroum was formed for 2/3 votes.

4) Too many homeowner's thought the Board going door-to-door was doing a survey.

5) Our documents were not amended to read "compensation" if they are legally allowed to be. They were instead amended to read "gifts".

6) The Board did not advised that they were going to increase our dues to cover these "gifts" None of the homeowner's know that the board can come back for their votes to increase their yearly set amounts for gifts, and if approved, our dues increase again.

Can you imagine how we will be treated if we vote not to increase their yearly set gift amounts?

7) The Florida Statute 617.0505 says in short, a portion of income or profit can be distributed to members, board members or officers is PROHIBITED.

8) The same Articles within our Articles of Incorporation say about the same thing as the statute 617.0505

Since this amendment was not submitted in writing at a previous regluar meeting, for votes and the next regular meeing, this amendment is not ilegal, and it should not have gone as far as it has.

Since there is a statute of law that says there shall be no distributions of income or profit for the corporation, and within the amended article, those same words are there within the statute of law, then by no means is this amendment legal.

example: before amending
"There shall be no dividends paid to any of the members, nor shall any part of the income of the corporation be distributed to its Board of Director's or it's officers."

CODING: Word being AMENDED word gifts being added

"There shall be no DIVIDENDS gifts paid to any of the members..."

"There shall be no gifts paid to any of the members, nor shall any part of the income (rasing of dues to cover their gifts) of the corporation be distributed to its Board of Director's or it's officers."

When you do an amendment, you read what is in front of the word you are amending, and what the rest of the sentence says. Not only did this board ignore what the entire sentence said, they skipped over the entire paragraph, keeping it in tact (untouched)!

LIKE THIS:
"Article XII: There shall be no dividends paid to any of the members, nor shall any part of the income of the corporation be distributed to its Board of Director's or it's officers."

NOW, THEREFORE, said Articles of Incorporation are amended to read as follows:

Article XII:
1)President to recieve a gift of $550.00 per term:"

Does this amendment sound as well as look legal?
Does your President recieve $550.00 per term?
Does $7,500 leave your Association per year for compenstating your people by your yearly dues?

Now, can you really understand my frustration, Janet? AHHHH!
LOL

Audrey