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Subject: Executive sessions
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Author Messages
DianeP3
(South Carolina)

Posts:8


06/16/2020 6:32 AM  
In our condo HOA, there is usually an exec session prior to a meeting in front of owners. Is it true there is a IRS rule that there needs to be minutes kept of the exec session and they can be supoened?
DouglasK1
(Florida)

Posts:1510


06/16/2020 6:53 AM  
Posted By DianeP3 on 06/16/2020 6:32 AM
In our condo HOA, there is usually an exec session prior to a meeting in front of owners. Is it true there is a IRS rule that there needs to be minutes kept of the exec session and they can be supoened?


I've never heard of the IRS having such a requirement. The association is a corporation, and laws regarding corporate governance are generally at the state level. I would say minutes should be kept for executive sessions because otherwise there is no record of what decisions are made. With no minutes, there is no proof that a decision was passed. If the decision wasn't unanimous, dissenting directors could even claim the decision wasn't made.

Note that minutes should not attempt to be a transcript of the meeting and everything that is said, they should be a record of actions taken. Example:
Joe moved to buy pencils for $5.00 from Staples.
Sue seconded.
Motion passed unanimously.


If desired, they could also be a brief mention of topics discussed such as:
Board discussed concerns with landscaping vendor and how to address

Any association records could be subpoenaed by a court.



Escaped former treasurer and director of a self managed association.
KerryL1
(California)

Posts:7333


06/16/2020 8:08 AM  
I believe Douglas is right. I suppose this might have something to do with SC corporation codes. Why would the Board not want to keep minutes?
DianeP3
(South Carolina)

Posts:8


06/16/2020 8:29 AM  
Hi, we were told that they were to be confidential ie. Hr issues for example. The problem is with no minutes, board members say something wasnt decided.
JohnC46
(South Carolina)

Posts:9577


06/16/2020 8:42 AM  
Diane

Executive sessions are for confidential/legal/personnel discussions and as such do not have to be made known to fellow owners thus minutes of such would be confidential. It seems you are saying/accusing that they make decisions in executive session that are not confidential.
DianeP3
(South Carolina)

Posts:8


06/16/2020 8:46 AM  
We are doing things correctly in exec session, but we have no minutes to refer back to. Just want to be sure keeping confidential minutes is appeopriate going forward. Sounds like it is.
AugustinD


Posts:3495


06/16/2020 8:56 AM  
Posted By DianeP3 on 06/16/2020 8:46 AM
Just want to be sure keeping confidential minutes is appropriate going forward. Sounds like it is.


Minutes are not merely "appropriate"; the South Carolina Nonprofit Corporation Act requires them:

"SECTION 33-31-1601. Corporate records.
(a) A corporation shall keep as permanent records minutes of all meetings of its members and board of directors..."

See https://www.scstatehouse.gov/code/t33c031.php
SheliaH
(Indiana)

Posts:3307


06/16/2020 9:00 AM  
That's possible. I did some Googling on the topic and one stated:

"Executive sessions are intended to protect the innocent and assure confidentiality about sensitive matters. The time spent in executive session is not for formal voting, rather time spent sorting things out privately. Board members don’t take any parliamentary action during an executive session."

This is why executive sessions should be RARE. Most HOAs do them when they're discussing sensitive issues like litigation by or against the association, homeowner delinquencies, or board member discipline. Generally, someone makes a motion to move the meeting into executive session during an OPEN meeting, another would second it, people vote and if the motion passes, everyone's sent home and the board has their discussion. If a session is to be held before a regular meeting (our board did that once or twice when I was on it), we'd make the motion and schedule the meeting date and time right there. Regular board meeting minutes could note the board went into executive session to discuss legal action against delinquent homeowners (no names), the time the session started and ended, and the length of time of the session. As to who said what, that's between the board members.

Another website stated HOAs should refer to their state statutes and guidelines regarding executive session minutes, so you need to run this past the association attorney. From there, I'd set a formal policy indicating under what circumstances they're to be held, how they're called, etc. That policy would also be adopted by a resolution during an OPEN meeting.

Personally, I think your board needs to reduce the number of executive sessions because it looks like too many decisions are made privately that should be discussed and voted upon during open meetings. This way everyone heard the thinking behind the decisions being made.
DianeP3
(South Carolina)

Posts:8


06/16/2020 9:10 AM  
Thanks everyone for your guidance!!!! Sounds like we are on the right path.
JohnC46
(South Carolina)

Posts:9577


06/16/2020 12:04 PM  
If no votes were taken, then the minutes should say when convened and when ended. Nothing else.
KerryL1
(California)

Posts:7333


06/16/2020 1:18 PM  
States vary on whether votes can be taken in ex. sess. We do vote in executive session, for example, on whether to fine an owner and if so, how much.
KerryL1
(California)

Posts:7333


06/16/2020 1:21 PM  
States vary on whether votes can be taken in ex. sess. We do vote in executive session, for example, on whether to fine an owner and if so, how much.

to disagree with JohnC a bit. I'm not certain about this--might be in Robert's Rules-- but I think it's best to list each agenda item in the minutes and what happened to it. If the Board took no action, the minutes might say: "The Board decided to take no action." This way everyone knows the item was on the agenda and not accidentally missed.
MarkW18


Posts:1195


06/16/2020 1:53 PM  
Posted By AugustinD on 06/16/2020 8:56 AM
Posted By DianeP3 on 06/16/2020 8:46 AM
Just want to be sure keeping confidential minutes is appropriate going forward. Sounds like it is.


Minutes are not merely "appropriate"; the South Carolina Nonprofit Corporation Act requires them:

"SECTION 33-31-1601. Corporate records.
(a) A corporation shall keep as permanent records minutes of all meetings of its members and board of directors..."

See https://www.scstatehouse.gov/code/t33c031.php



You misunderstand what the Code says. It says the corporation shall keep as permanent record minutes of all meetings. It doesn't say you have to take minutes of all meetings. In my opinion, if no minutes were taken, either written or a recording, any actions taken are null and non-enforceable.
AugustinD


Posts:3495


06/16/2020 2:05 PM  
Posted By MarkW18 on 06/16/2020 1:53 PM
You misunderstand what the Code says.
Nonsense.
MarkW18


Posts:1195


06/16/2020 2:18 PM  
Posted By AugustinD on 06/16/2020 2:05 PM
Posted By MarkW18 on 06/16/2020 1:53 PM
You misunderstand what the Code says.
Nonsense.



This is what I am looking for:

1. Board Meetings. Corporations must keep written minutes of the proceedings of their board meetings. (Corp. Code §8320(a)(2).) This includes:

Open Board meetings (including regular, special and emergency meetings)

Executive Session meetings
2. Membership Meetings. Associations must keep minutes of their annual and special membership meetings. (Corp. Code §8320(a)(2).)

3. Committee Meetings. Committees with decision-making authority must also maintain minutes. (Civ. Code §5210(a)(2).)

Executive Committee meetings

Architectural Committees. A written record must be kept of an architectural committee's recommendations and decisions. (Civ. Code §4765(a)(4).) That does not necessarily mean minutes. For a full discussion, see Architectural Minutes.

Other Committees. Committees with no decision-making authority do not need to keep minutes. This normally includes all ad hoc committees.

Not looking for record keeping, but the requirement that minutes must be taken.
BenA2
(Texas)

Posts:734


06/16/2020 2:20 PM  
Posted By MarkW18 on 06/16/2020 1:53 PM
Posted By AugustinD on 06/16/2020 8:56 AM
Posted By DianeP3 on 06/16/2020 8:46 AM
Just want to be sure keeping confidential minutes is appropriate going forward. Sounds like it is.


Minutes are not merely "appropriate"; the South Carolina Nonprofit Corporation Act requires them:

"SECTION 33-31-1601. Corporate records.
(a) A corporation shall keep as permanent records minutes of all meetings of its members and board of directors..."

See https://www.scstatehouse.gov/code/t33c031.php



You misunderstand what the Code says. It says the corporation shall keep as permanent record minutes of all meetings. It doesn't say you have to take minutes of all meetings. In my opinion, if no minutes were taken, either written or a recording, any actions taken are null and non-enforceable.



I agree with Mark. The code says you have to keep records (not discard them). That is different from saying you have to create a record.
FredS7
(Arizona)

Posts:926


06/16/2020 3:29 PM  
Since the minutes contain a record of board actions, I don't see how obtaining access to them helps anybody. We keep minutes, and I don't worry about it.
KerryL1
(California)

Posts:7333


06/16/2020 5:49 PM  
I think "keep" in the usage in MarkW's quote means write or take minutes. I do not think it means storing them. His citations, btw, seems to be from CA civil & corp. codes.

"Keep" in the SC code does seem a little ambiguous. Yet, a column by a CA HOA attorney recently said if it's not in the minutes it didn't happen. This suggest that minutes should be taken at every board meeting for, if nothin else, future reference.
MarkW18


Posts:1195


06/16/2020 8:53 PM  
Actually, minutes, in an approved state, provide documentation that actions were properly authorized. Otherwise, what proof would a corporation have to justified the actions of a governing body?
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