Actions without Meeting

Started by BillB17 • 67 replies • 2501 views

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BillB17 (South Carolina)
Posts: 92

Posted:

My question is regarding actions taken by a BOD without a meeting, specifically by email vote. Our state law states:

"Unless the articles or bylaws provide otherwise, action required or permitted by this chapter to be taken at a board of directors' meeting may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and included in the minutes filed with the corporate records reflecting the action taken."

Our documents provide for similar documentation stating that "Directors shall have the right to take any action in the absence of a meeting which they could take at a meeting by obtaining the written approval of all Directors".

Question - Does the individual email approval of the action taken satisfy the "written consent or approval" requirement of the law or our documents - or is a separate document stating the action taken signed by each member of the BOD required?

TimB4 (Tennessee)
Posts: 21,062

Posted:

Short answer: Yes.

Keep in mind that this is a vote by email for all Directors, not a vote method for an absent director.
All Directors must vote in favor of the issue to have it adopted (unanimous).
The issue should be noted in the minutes of the following meeting and the emails (showing each directors vote) attached to the minutes as proof of unanimous consent.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Bill

I can only tell you how we do it. My BOD rarely meets. At the most, once a quarter. We conduct the majority our business via Email and phone. Once we settle on the final wording, regardless of how we did it, we Email the final version to each director and ask they approve and return it via Email.

We might discuss something but once we settle an "official" Email goes out with the final recommendation. The below is a recent real life example:

The BOD has authorized a $25.00 per month against Mr. B and also Mrs. J until they re-sod their lawns as requested in two prior letters to them.

Each BOD Member is asked to reply I AGREE or I DISAGREE to the above.

If need be, we could be more official in the final Email such as having showing the Motion, the Second, and the vote tally.

We did have a dues increase go into effect Jan 1st. That discussion had been ongoing for over a year as we looked at it hard and long. Once we agreed how much and how to do it, the BOD met, motioned, seconded, discussed, and unanimously voted for it. For something this earth shaking we wanted it in BOD Minutes. We announced our decision with a USPS mailing to each owner which included a lengthy letter explaining the need for our action and how we would be implementing it. We closed the letter by saying the decision was both painful and unanimous.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By TimB4 on 01/27/2019 11:23 AM
Short answer: Yes.

Keep in mind that this is a vote by email for all Directors, not a vote method for an absent director.
All Directors must vote in favor of the issue to have it adopted (unanimous).
The issue should be noted in the minutes of the following meeting and the emails (showing each directors vote) attached to the minutes as proof of unanimous consent.

Our Email voting does not have to be unanimous for agreement. All most vote, but the majority rules.

KerryL1 (California)
Posts: 14,550

Posted:

You Worte that elsewhere, too, JohnC. but how can your board override SC statute which states the action's legit, "if the action is taken by all members of the board." That seems to say that if a director votes "no" he is NOT "taking action?" He is declining to take action.

RoyalP
Posts: 1,104

Posted:

Quote:

Posted By BillB17 on 01/27/2019 9:08 AM
My question is regarding actions taken by a BOD without a meeting, specifically by email vote. Our state law states:

"Unless the articles or bylaws provide otherwise, action required or permitted by this chapter to be taken at a board of directors' meeting may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and included in the minutes filed with the corporate records reflecting the action taken."

Our documents provide for similar documentation stating that "Directors shall have the right to take any action in the absence of a meeting which they could take at a meeting by obtaining the written approval of all Directors".

Question - Does the individual email approval of the action taken satisfy the "written consent or approval" requirement of the law or our documents - or is a separate document stating the action taken signed by each member of the BOD required?

A signed resolution is required.
Unanimous by ALL directors.

Whether email would suffice is still a grey area unresolved by the SC courts.

RoyalP
Posts: 1,104

Posted:

... suffice as a signature ...

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Perhaps there is a subtlety here ...

Action without a meeting is one circumstance, another might be that the BoD is simply voting normally - by email.

Florida doesn’t allow this, but other states may.

MarkM19 (Texas)
Posts: 1,459

Posted:

Bill
As others have mentioned each State varies how this can or can't be done. In Ca. they changed our rules a few years ago where we could not use email for communicating outside of board meetings. Only if it was an emergency could a "Action Without Meeting" be done. It had to be signed by all members in a unanimous vote and done on paper. We all had to sign the document. No email was allowed. I liked the change as it forced us to use this very rarely in emergencies. We had monthly meetings which also helped.

I am curious how Texas handles this since now I am a new board member of a Texas HOA? We only meet quarterly so far and much is done the via email. It appears like many decisions are done this way and unanimous votes are not required here.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By JohnC46 on 01/27/2019 11:39 AM

Our Email voting does not have to be unanimous for agreement. All most vote, but the majority rules.

John,

Do your Bylaws allow action without meeting without unanimous consent?
Otherwise, wouldn't that be a violation of statute [emphasis added]:?

SECTION 33-8-210. Action without meeting.

(a) Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by Chapters 1 through 20 of this Title to be taken at a board of directors' meeting may be taken without a meeting if the action is assented to by all members of the board.

Assented (per US Legal): Assent means agreement, approval or permission. It can refer to any verbal or non verbal conduct which can be reasonably interpreted as willingness.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Tim

Our docs do not use the word EMail, but there is verbiage about "electronic voting" which we believe was intended for FAXing and the word unanimous is not used. Our attorney advised us that the electronic voting verbiage should cover us for Email voting. He also advised us that as long as each BOD Member voted, regardless of how they voted, we were OK.

Fortunately we have never had any legal issues, or for that matter any complaints, over how we operate but I would be the first to admit that we do not always dot the i's and cross the t's.

SC corporate laws are riddled with the expression "Unless Your Bylaws Say Other". This gives corporations a pretty free hand to run their businesses as they see fit.

KerryL1 (California)
Posts: 14,550

Posted:

John, please share the wording about "electronic voting."

Of course no one complains in your HOA. Your board does everything in secret.

KerryL1 (California)
Posts: 14,550

Posted:

John, please share the wording about "electronic voting."

Of course no one complains in your HOA. Your board does everything in secret.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

I would tend to believe the term "electronic voting" probably includes just about any method the future might hold - perhaps the term was used to future proof the process?

RoyalP
Posts: 1,104

Posted:

Quote:

Posted By JohnC46 on 01/28/2019 6:31 AM
Tim

Our docs do not use the word EMail, but there is verbiage about "electronic voting" which we believe was intended for FAXing and the word unanimous is not used. Our attorney advised us that the electronic voting verbiage should cover us for Email voting. He also advised us that as long as each BOD Member voted, regardless of how they voted, we were OK.

Fortunately we have never had any legal issues, or for that matter any complaints, over how we operate but I would be the first to admit that we do not always dot the i's and cross the t's.

SC corporate laws are riddled with the expression "Unless Your Bylaws Say Other". This gives corporations a pretty free hand to run their businesses as they see fit.

I doubt that your bylaws authorize the BOD to take routine action(s) outside actual meetings (whether open or closed).

A 'resolution w/o meeting' universally (almost) requires unanimity and proof of such by signature, electronic may be permitted.

RoyalP
Posts: 1,104

Posted:

From SC corporate law:

SECTION 33 31 821. Action without meeting.

(a) Unless the articles or bylaws provide otherwise, action required or permitted by this chapter to be taken at a board of directors’ meeting may be taken without a meeting if the action is taken by all members of the board. The action must be evidenced by one or more written consents describing the action taken, signed by each director, and included in the minutes filed with the corporate records reflecting the action taken.
(b) Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date.
(c) A consent signed under this section has the effect of a meeting vote and may be described as such in any document.

John,

Please quote where your bylaws specify that no meetings are necessary to enact routine business

SueW6 (Michigan)
Posts: 814

Posted:

This “action without a meeting” is reserved for emergencies or other agreed upon situations. and is not for replacing a regular board meeting. Actions are ratified at the next regularly scheduled board meeting.

GeorgeS21 (Florida)
Posts: 3,808

Posted:

Back to my point -

Are we in an era where the concept of "Action without a Meeting" is a bit dated?

Perhaps the concept of instantaneous email voting means a "meeting" actually can occur whenever there is an agreement to consider an agenda with voting by email?

MarkM19 (Texas)
Posts: 1,459

Posted:

I really dislike the way my current board uses email and I hope to change it soon as I can. The problem with email discussions or decisions is the lack of detail and the back and forth of ideas. Most email users summarize so that things don't get to verbose. Some people will be in a hurry and vote quickly without hearing all sides just to be done.

I have always taken my job as a board member very seriously and when others don't it drives me crazy. We are not deciding things based on how each of the 5 of the members feel at the time. We are deciding what is best for the community after all the information is discussed and questions answered.

Action without meeting are for emergencies IMO.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Mark

Quite often hours of discussion go on before an item is motioned, seconded, and voted on and unless you can gather the BOD together, Email can be an efficient way of discussion. More and more Electronic Signature methodologies are being accepted as a way of doing business.

If done properly done/preserved, it can be a better record of discussions short of actual voice/video recording of meetings.

One of our best BOD Members is a contract worker often off 3 month assignments. Without Email we would lose this persons great input.

Do not be so quick is dismissing it.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By KerryL1 on 01/28/2019 8:55 AM
John, please share the wording about "electronic voting."

Of course no one complains in your HOA. Your board does everything in secret.

Sorry if I confused anybody. Electronic voting is not in our docs but is in SC Corporate Rules. This is what I believe our attorney was referring to.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Yep, appears your governing docs address the issue.
Since the statute defers control to the Bylaws, it sounds like you are in good shape.

I would think that this would be the exception vs. the rule but haven't seen enough bylaws from SC to be sure one way or the other.

Thanks for sharing.

KerryL1 (California)
Posts: 14,550

Posted:

JohnC, will you provide us the "electronic voting" verbiage? Or, if not, why not? Your last post is your own opinion and doesn't seem to be based on SC law or your bylaws.

In an HOA like yours, which I think you've written only has landscaping to deal with, why in the world would your board need "hours" of discussion?

As the board in my HOA has retreated further into secrecy over the past couple of year, the same argument is used "efficiency," but it's really to keep owners from knowing HOW board decisions are made. This is a against the law in CA.

If a director is unable to meet with the board in person or by phone, he should not serve on the board no matter how able. There's no reason why he couldn't be consulted with if not on the board.

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By KerryL1 on 01/28/2019 3:23 PM
JohnC, will you provide us the "electronic voting" verbiage? Or, if not, why not? Your last post is your own opinion and doesn't seem to be based on SC law or your bylaws.

Kerry,

John did specify that the info provided was the Associations attorneys opinion.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Along these lines. In my most recent long distance home sale, my "experienced" real estate agent wanted my signature witnessed on a document (I forget which document) by a Notary Public. I stopped into the local office of the same realty company (a nationwide company) to find out if they had a Notary Public. An "experienced" agent in that office "assured" me that a Notary Public witness was not needed for that document.

I replied, would you like to compare length and girth with my agent or can I just get this damn thing notarized? He huffeed but had someone notarize it.

On some things our attorney advises us, I hear opposing opinions within the same state/jurisdiction. This Action Without a Meeting is a classic example. Some say all must concur on the issue. Others say all must vote but the majority rules. I choose to go with our attorney. All must vote, but the majority rules.

Royal and I might be disagreeing on a fine issued and not paid can be considered as an non paid assessment and as such, can be grounds for a foreclosure. When once questioned about this, our attorney replied he felt this would go nowhere in the SC courts and he would not attempt to do so.

Not to sound defensive, but our attorney has one of the largest HOA specialized practices in SC. I will roll with him until proven wrong. That said, I am not being cavalier. If I saw a serious legal issue arising, I would seek additional written legal opinions versus put my HOA in jeopardy.

KerryL1 (California)
Posts: 14,550

Posted:

Right, tim, but many of us like to read the wording ourselves and JohnC won't provide it. Having been on this Forum for a very long time, I have never seen an action without a meeting be OK without unanimous so consent. This is across many states.

In CA, we may each send our consent is writing by email to our PM--would be board sec'y if no PM, I presume. The action must be recorded in the next open meeting's minutes. I cannot remember out last action w/o a meeting--maybe 5 years ago? But the board does n meet every month.

The reason I'm harping on this is b/c there might be directors/readers who're looking for ways to sneak around the Owners in their HOA as was the case in mine several year ago. JohnC'sd incomplete info could give them an excuse.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Kerry

We are not attorneys as much as some like to play one and even among attorney's, wording is often open to interpretation.

You like to say my BOD operates in the dark and I grant you it might be easier to do so in SC than in some of the more "enlightened/overly regulated" states but regardless of rules/laws, cheaters will find a way of cheating if they want to.

I have always said SC comes down on the side of corporations/businesses, and in the case of associations on the side of the BOD versus the owners. We operate well within the laws of SC and as a matter of fact, we are way more open than we have to be.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Section 16. Action Without a Formal Meeting

Any action to be taken at a meeting of the directors or any action that may be taken at a meeting of the directors may be taken without a meeting if a consent in writing, setting forth the action to be taken, shall be signed by all of the directors.

The interpretation by our attorney was that as long as all directors agreed in writing to vote on the issue we could act according to the vote.

All have to vote or it die. Thus we must have an unanimous vote.

RoyalP
Posts: 1,104

Posted:

NO

You must have unanimous CONSENT to the 'matter at hand'.

NOT merely a unanimous VOTE.

BobF10 (Florida)
Posts: 2

Posted:

In Florida state statutes require votes on anything must be done in meetings only in front of membership. They strictly prohibit any voting by emails. Since members are only directors at meetings, how could anyone know "who" is voting through emails which are easily hacked. And association business should always be done at meetings to show trust.

KerryL1 (California)
Posts: 14,550

Posted:

I completely agree with RP, JohnC and think your HOA needs an attorney with better reading comprehension skills. It's very clear that all directors must consent to the action.

I also don't think that "unanimous vote" means all voted.

TimB4 (Tennessee)
Posts: 21,062

Posted:

John,

Bottom line is, if it works and everyone is fine with it, then there is no problem.
If someone has an issue with the process and the inkling to challenge the process in court then a ruling will be determined if the attorney's opinion was correct or not. The Board and Directors are likely protected because they sought, obtained and are following the legal opinion provided. Doesn't mean the opinion is right or wrong. Simply means the voluntary board is likely protected.

RoyalP
Posts: 1,104

Posted:

Quote:

Posted By TimB4 on 01/29/2019 2:52 PM
John,

Bottom line is, if it works and everyone is fine with it, then there is no problem.
If someone has an issue with the process and the inkling to challenge the process in court then a ruling will be determined if the attorney's opinion was correct or not. The Board and Directors are likely protected because they sought, obtained and are following the legal opinion provided. Doesn't mean the opinion is right or wrong. Simply means the voluntary board is likely protected.

correct, unfortunately

the BOD performed due diligence

unless

they shopped around and hired the ONLY attorney who 'saw it their way'

KerryL1 (California)
Posts: 14,550

Posted:

I would hope that if someone has a problem with board decisions made outside of duly noticed meetings, they'd simply ask the board to comply with SC law and the board would without the need to go to court.

It really doesn't take a legal scholar to read this statute.

BillB17 (South Carolina)
Posts: 92

Posted:

First - Many thanks for all the input.

John C
Regarding your post referencing your association docs: Most Association Declarations contain language referring to the hierarchy of authority of documents. Most list state statutes trumping the Association Documents.

Therefore, wouldn't your group be required to follow the SC statute stated in my original post, i.e., the action would have to be unanimous and one or more written consents signed by all members of the board would have to be reflected in the next meeting minutes?

RoyalP
Posts: 1,104

Posted:

..... Most list state statutes trumping the Association Documents. .....

matters not at all what "most list".

state statutes ABSOLUTELY trump Association Documents

the actual LAW trumps a private contract

RoyalP
Posts: 1,104

Posted:

Quote:

Posted By BillB17 on 01/30/2019 8:33 AM
First - Many thanks for all the input.

John C
Regarding your post referencing your association docs: Most Association Declarations contain language referring to the hierarchy of authority of documents. Most list state statutes trumping the Association Documents.

Therefore, wouldn't your group be required to follow the SC statute stated in my original post, i.e., the action would have to be unanimous and one or more written consents signed by all members of the board would have to be reflected in the next meeting minutes?

CORRECT

ps. @JohnC ? wanna bet some cash ? i will cover up to $10,000 and give 3:1 odds

pps. @BillB 'my' HOA has been there and done that - expensive error, VERY expensive, as the contract in question was deemed NOT to have been cancelled by the improper 'action w/o meeting' resulting in BOTH the 'old' and the 'new' contractor requiring payment for 6+ months

RoyalP
Posts: 1,104

Posted:

ppps. JohnC, we can meet in Vegas to codify the wager ... awaiting your reply ...

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By RoyalP on 01/30/2019 9:04 AM

..... Most list state statutes trumping the Association Documents. .....

matters not at all what "most list".

state statutes ABSOLUTELY trump Association Documents

Not entirely correct.

How about simply saying:

State statutes have precedence over Association documents unless the statute defers control to an Association document.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

SC's Corporate Rules, Regulations, etc. are riddled with...unless your Bylaws say otherwise.....meaning they are chucking it back to the corporation (such as an HOA) to run itself. Fairly common in a "right to work" meaning a non-union state. SC tosses it back to management. NAs a former business owner and a BOD Director, I like this. As a left leaning liberal, I do not like it for protecting workers. Maybe I cannot have my cake and eat it also.

Is the glass 1/2 full of 1/2 empty? Well the answer depends on if my job was to fill it or empty it.

I am a slut. Pay me and I will probably do as you want.......LOL

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By TimB4 on 01/30/2019 2:59 PM

Posted By RoyalP on 01/30/2019 9:04 AM

..... Most list state statutes trumping the Association Documents. .....

matters not at all what "most list".

state statutes ABSOLUTELY trump Association Documents

Not entirely correct.

How about simply saying:

State statutes have precedence over Association documents unless the statute defers control to an Association document.

That is how is see and interpret it.

KerryL1 (California)
Posts: 14,550

Posted:

But the statute in question here does not include that caveat! JohnC just doesn't want to admit it or take RP's wager. JohnC still does note cite his Bylaws about "electronic voting" that he mentioned earlier.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By KerryL1 on 01/30/2019 3:58 PM
But the statute in question here does not include that caveat! JohnC just doesn't want to admit it or take RP's wager. JohnC still does note cite his Bylaws about "electronic voting" that he mentioned earlier.

Kerry

I said I was in error in that docs do not reference electronic voting. I was getting confused with SC docs.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

It is difficult to discuss/compare things with folks from overly regulated states to those from states with few to no regulations.Those from overly regulated states cannot believe how loosey goosey the unregulated states are. Those from unregulated states shutter at what those from regulated states have to do.

As an example. In SC if the guy is 19 or older (even 70) he can have sex with a 16 year old girl but he cannot buy her cigarettes or take naked pics of her until she is 18. Actually if the guy is under the age of 19, the age of consent for her is 14 (often called the Romeo Law) but still no cigarettes nor naked pics.

As to the bet from Royal, one thing I know is most lawyers are scumbags but until proven otherwise in a court of law, my scumbag is right and your scumbag is wrong but they are both still scumbags. That said, if as a Member of the BOD I ever saw a real legal issue arising, versus someone blowing smoke and threatening legal action, I would advise our attorney get involved.

Recently had an issue concerning the HOA asking an owner to re-sod her lawn. She went on and on in Emails back and forth with the BOD. In her last one she threatened legal action. Her next Email asked why we had not responded? We responded and said we felt legally threatened by her and as such, we had turned the issue over to out attorney. Man oh man, she went out of her way apologising. Begging us not to. Bottom line is she backed down and re-sodded her lawn. All this over $300.00. I have been known to spill that much at a bar......LOL

TimB4 (Tennessee)
Posts: 21,062

Posted:

Quote:

Posted By KerryL1 on 01/30/2019 3:58 PM
But the statute in question here does not include that caveat!

yes it does.

Reread the statute I cited earlier.

TimB4 (Tennessee)
Posts: 21,062

Posted:

SECTION 33-8-210. Action without meeting.

(a) Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by Chapters 1 through 20 of this Title to be taken at a board of directors' meeting may be taken without a meeting if the action is assented to by all members of the board.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By TimB4 on 01/30/2019 4:52 PM
SECTION 33-8-210. Action without meeting.

(a) Unless the articles of incorporation or bylaws provide otherwise, action required or permitted by Chapters 1 through 20 of this Title to be taken at a board of directors' meeting may be taken without a meeting if the action is assented to by all members of the board.

Tim highlighted (emboldened) the important part.

Sorry but I repeat. SC rules, Regulations, and Laws are riddled with Unless the articles of incorporation or bylaws provide otherwise thus allowing an association much freedom as long as, theie articles of incorporation or bylaws say such.

RoyalP
Posts: 1,104

Posted:

please quote directly the section of your bylaws permitting:

action w/o a meeting WITHOUT unanimous assent to said action

"action" means a particular item or issue NOT the action of meeting w/o meeting

or

? are you stating your bylaws permit board meetings w/o actually meeting as a 'matter of routine' ?

John, you are like the theory of phlogiston, twisting and turning with a new explanation/rationalization at every turn of events.

Boards may take action / vote / make a decision w/o actually meeting if, and only if, said action / vote / decision is, of itself, UNANIMOUS - not merely a unanimous vote but a unanimous AFFIRMATIVE vote.

eg. 7 directors - vote w/o meeting = 5 aye, 2 nay - vote FAILS and no action may be taken UNTIL said vote is repeated at an actual meeting

DONE

TimB4 (Tennessee)
Posts: 21,062

Posted:

John (aka Pita),

John did provide the wording.
The wording used in the citation John provided allows the passage to be open for interpretation.
John shared the Associations attorneys opinion on the wording used.

It doesn't really matter if anyone outside of John's HOA agrees or disagrees with said legal opinion.

As stated earlier, until said decision is challenged by someone within John's HOA and a court makes a ruling about the opinion, that opinion stands.

Personally, I think this tangent from the OP's question has run it's course (at least for me).

RoyalP
Posts: 1,104

Posted:

Quote:

Posted By TimB4 on 01/30/2019 7:38 PM
John (aka Pita),

John did provide the wording.
The wording used in the citation John provided allows the passage to be open for interpretation.
John shared the Associations attorneys opinion on the wording used.

It doesn't really matter if anyone outside of John's HOA agrees or disagrees with said legal opinion.

As stated earlier, until said decision is challenged by someone within John's HOA and a court makes a ruling about the opinion, that opinion stands.

Personally, I think this tangent from the OP's question has run it's course (at least for me).

Tim,

The statute in question defers the 'issue' to (John's) bylaws, if 'covered' therein.

I merely doubt that John's bylaws permit routine BOD actions via 'action w/o meeting' by 'mere' majority vote of all directors.

John declines to quote said bylaws.

Of course his BOD's actions will stand unless legally challenged.

I referenced what could happen if challenged.

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