Noncumulative Voting
If an association has fewer than 50 members, removal is approved by the affirmative vote of a majority of all members entitled to vote. (Corp. Code § 7222(a)) If the association has 50 or more members, removal is approved by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present, with the affirmative votes also constituting a majority of the required quorum. (Corp. Code § 7222(a)) The inspector of elections tallies the votes and announces the results.
Cumulative Voting
If an association’s governing documents allow cumulative voting, the Davis-Stirling Act requires it for director elections. (Civ. Code § 5115(e)) Cumulative voting makes it easier for a minority of owners to elect a director. It also complicates removing a director.
- Removing the Entire Board. Cumulative voting is not used when voting to remove the entire board. The number needed for removal is described above in "No Cumulative Voting."
- Removing Less than the Entire Board. Removing fewer than all the directors is more complicated because a minority of voters can block the recall of a director even if a majority of voters approve the removal. The Corporations Code provides that no director may be removed when the votes cast against removal would be sufficient to elect the director if cumulatively voted at an election in which all members entitled to vote were voted. (Corp. Code § 7222(b)) This provision is confusing, and authorities disagree on how it works. It calls for a calculation involving cumulative voting, but applying it produces a supermajority to block a recall rather than a minority.
The problem is that non-cumulative voting is used to approve the recall (a simple "Yes" or "No" vote to remove a director), while the statute references cumulative voting to block the recall. The two don’t mix as described in Example #1 below.
EXAMPLE #1 (Wrong Formula). Assume an association with a 5-member board and 100 members. To keep the numbers simple, assume every member casts a ballot. In that scenario, at least 51 "Yes" votes are needed to remove a director. If members can use cumulative votes to elect directors, a minority of "No" votes is sufficient to block the removal of a director. If the cumulative voting formula is used to elect directors, it improperly yields a supermajority needed to block a recall as follows.
| B = |
V x D |
+ 1 |
(Truncate if the result is fractional, i.e., do not
round up or down--simply eliminate the fraction.)
|
|
B = number of votes needed to block removal
V = number of votes cast
D = number of directors authorized in the bylaws |
| D + 1 |
| B = |
100 x 5 |
+ 1 = 84.3 |
When truncated, the number of votes needed to block removal is 84. |
| 5 + 1 |
This is not the result intended by the Corporations Code, since the number needed to block removal can never be achieved. If 51 members vote to remove a director, only 49 votes remain, which can never reach the 84 calculated by the formula. The statute is poorly drafted and fails to spell out how to achieve its goal of preserving minority representation. A possible reconciliation is to weight the recall Yes/No votes by multiplying them by five so that cumulative voting is on both sides of the equation. That way, they cancel out, and we can simplify the formula as shown in Example #2.
EXAMPLE #2 (Correct Formula). If cumulative voting is used, the following formula produces the correct result:
| B = |
V |
+ 1 |
(Truncate if the result is fractional, i.e., do not
round up or down--simply eliminate the fraction.)
|
|
B = number of votes needed to block removal
V = number of votes cast
D = number of directors authorized in the bylaws |
| D + 1 |
| B = |
100 |
+ 1 = 17.7 truncated = 17 |
This equals the number of votes needed to block a director's recall, assuming 100 votes are cast. |
5 + 1
|
| B = |
40 |
+ 1 = 7.7 truncated = 7 |
This equals the number of votes needed to block a director's recall, assuming 40 of 100 votes are cast. |
| 5 + 1 |
Those Not Voting. Some argue that members who do not vote count as “no” votes. Under this interpretation, recalling an individual director is virtually impossible because of voter apathy in most associations. The argument for counting non-votes as no votes relies on their interpretation of language in the Corporations Code that "no director may be removed...when the votes cast against removal, or not consenting in writing to the removal, would be sufficient to elect the director if voted cumulatively..." (Corp. Code § 7222(b)) We disagree with this interpretation. Two arguments oppose the practice.
- Written Consent. First, there are two methods for approval. One method is voting by ballot; the other is approval by written consent. In “written consent,” one or more documents are circulated to the membership, allowing members to sign to consent to a director's removal or not sign if they oppose it. If a sufficient number of members do not consent to removal (i.e., oppose removal), the removal fails. California eliminated approval by written consent when it changed voting procedures for homeowner associations to secret ballots for the removal of directors.
- Ballots Only. Since written consent no longer applies to the removal of HOA directors, only actual ballots against removal may be counted: “No director may be removed...when the votes cast against removal...would be sufficient to elect the director if voted cumulatively..." (Corp. Code § 7222(b))
No Super-Majority. The law sets the voting requirement for removing directors, and an association's governing documents cannot raise it to a supermajority. The Corporations Code specifically overrides any conflicting bylaw provisions. As provided for in Corporations Code § 7222(d), "Except as provided for in this section . . . a director may not be removed before the expiration of the director’s term of office.” If you follow the links in Sections 5033 and 5034, you will see that the approval requirements for removing a director cannot be increased. Section 5034 defines "approved by the members" as the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present. This same section allows bylaws to set a higher voting threshold EXCEPT for the removal of directors (see Corp. Code § 7151(e)). This is reinforced by Corp. Code § 7151(c)(2), which states that an association’s bylaws may not contain any provision that conflicts with the law. The legislative notes on director removal state that the subdivision specifies the exclusive procedure for removing directors without cause because governing documents that require a "super-majority" improperly limit shareholders’ rights to change the board's composition between annual meetings.
No Reduced Quorum. The Davis-Stirling Act provides for a reduced quorum for the election of directors but not for recall elections. (Civ. Code § 5115(d)(2))
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