NO-SHOW DIRECTOR

QUESTION: We have a board member who never attends meetings. We asked him to stop running for election if he isn't willing to participate, but he has ignored this request and is guaranteed reelection because of the shortage of candidates. Can we remove him for non-attendance?

ANSWER: Your no-show is in breach of his fiduciary duties for refusing to attend meetings. Under Corp. Code §7231(a) "A director shall perform the duties of a director . . ." Under the Davis-Stirling Act, he has a further duty to monitor the association's finances (Civ. Code §1365.5). His failure to attend meetings means he is missing the treasurer's report, not reviewing financial records, and not asking questions about finances--a further breach of his fiduciary duties. A person who consents to being a director and then refuses to participate loses the protections of Civil Code §1365.7(a). As such, he may face personal liability if something happens.

Bylaw Amendment. To remove your problem director from the board you need to amend your bylaws. As provided for in Corp. Code §7151 the membership can prescribe qualifications for directors, including meeting attendance, and give your board the power to declare vacant the seat of any director who fails to meet those qualifications.

PROS AND CONS OF
CUMULATIVE VOTING

QUESTION: Our board is discussing whether or not cumulative voting should be removed from our governing documents. Although your website encourages the removal of cumulative voting, three board members disagree, saying it gives the minority a voice. In order to present accurate information to the membership, what are the pros and cons of cumulative voting?

ANSWER: For established associations, there are no true benefits to cumulative voting, i.e., if there are 5 open seats, you can cast all 5 votes for a single candidate. There is not a single municipal, county, state, or federal election that uses cumulative voting. This kind of voting was intended for stock corporations so small shareholders would have a voice. Otherwise, companies would be completely dominated by large shareholders. Cumulative voting is automatically included in new HOA bylaws to give owners a voice when the association is controlled by the developer. Once the developer is out of the picture, there is no need for cumulative voting.

Problems. The problems with cumulative voting far outweigh any theoretical benefit related to minority interests. Cumulative voting makes it easy for disruptive, fringe, and single-issue candidates to get on the board. Moreover, once a bad director has been elected, cumulative voting makes it almost impossible for the membership to remove that director from the board. With a conventional voting system, i.e., casting one vote for each candidate, candidates must seek a broader base of support thereby increasing the likelihood that more moderate, business-like candidates are elected.

Amendment. Because cumulative voting is optional under Corp. Code §7615(a), associations can amend their governing documents to remove it.

DYSFUNCTIONAL DIRECTOR

QUESTION: Our bylaws have cumulative voting but the board wants to stop using it because we have a dysfunctional owner who keeps getting elected by his friends. The rest of the board can't work with him and is threatening to resign. If that happens, I'm afraid we won't be able to recruit anyone to serve on the board. Can the board vote to eliminate cumulative voting?

ANSWER: If cumulative voting is in your bylaws, you are required to use it. As provided for in Civil Code 1363.03(b), "An association shall allow for cumulative voting . . . if cumulative voting is provided for in the governing documents." To get rid of it, the membership must vote to amend the bylaws. You should check your CC&Rs as well, they sometimes contain a cumulative voting provision.

RESTRICTED TO ONE-YEAR TERMS?

QUESTION: An attorney told me that cumulative voting can be used only with one-year terms for directors. I don’t see that anywhere in the Corporations Code.

ANSWER: I am not aware of anything that restricts cumulative voting to 1-year term elections. Many associations use cumulative voting for elections involving two-year and three-year terms.

FEEDBACK ON ROBERT'S RULES

Majority Defined. 50% + 1 is NOT the definition of a majority. A majority is the next highest whole number above 50%. If you have 10 members, 50% = 5 and 5+1 is 6, that works, BUT if you have 11 members 50% is 5.5, and 5.5 + 1 is 6.5, you have not solved the problem. Rather than rounding, just use the above definition and it will always be correct. (see Roberts page 387)

Chair's right to vote. The Chair may vote at any time, however to maintain an appearance of neutrality, the Chair normally only votes when it matters, such as to break, or make a tie, or a 2/3. However, there are special rules for small boards, 10 or less, found on page 470 of the 10th edition of Roberts which states in part that in small boards the chair is a fully participating member, makes motions, debates and votes as any other member. -James Stewart, Mister Parliamentarian

DUPLICATE BALLOTS

QUESTION: We are getting duplicate ballots from owners who want to change their vote. Some attorneys say the first ballot received counts and others say the two ballots cancel each other.

ANSWER: The first ballot counts. Although California's Election Code allows absentee voters to retrieve their ballot and cast a new one, no such provision was adopted in the Davis-Stirling Act. In fact, the opposite was adopted. The Act specifically provides that once ballots have been received by the Inspector of Elections, they are irrevocable. Civil Code 1363.03(f)

No Cancellation. Therefore, the second ballot does not cancel the first ballot. If the Inspector allows a second ballot to invalidate the first, then the first ballot has been "revoked" by the second contrary to statute. The Inspector of Elections should instead mark any subsequent ballots as "invalid" and put them in a separate pile where they remain unopened.

  Very truly yours,
 
   Adrian Adams, Esq.
   Adams Kessler PLC