Director Resignation
A director may resign at any time by submitting his/her resignation. Any time a vacancy is created on the board, whether through resignation, death, removal, or otherwise, the vacancy should be recorded in the minutes. Meeting minutes should always record any changes in the board's membership and its officers.
1. Email Resignation. An email satisfies the written notice requirement. As provided for in California's Uniform Electronic Transactions Act, an electronic document such as an email is an enforceable writing between parties. Emails are just as legal and enforceable as traditional letters signed in ink. Under the Act, a "digital signature" is defined as an electronic identifier created by a computer which is intended by the party to have the same force and effect as a manual signature. Accordingly, the director's email resignation is effective and cannot be withdrawn unless the board accepts the retraction.
2. Oral Resignation. Oral resignations are treated differently. Some directors resign orally and refuse to submit a written resignation. Oral resignations become irrevocable once the resignation has been accepted by the board. The board can document its acceptance by sending a confirming written communication (email or letter) to the director accepting the resignation or it can record the resignation in the minutes of a board meeting.
Corporations Code. The Corporations Code states that "Any director may resign effective upon giving written notice to the chairman of the board, the president, the secretary or the board of directors of the corporation..." (Corp. Code § 7224(c).) Because "may" is permissive (Corp. Code § 15), directors are allowed to resign by giving written notice. However, they don't need to do so. If the statute had intended that resignations were effective only when done in writing, the Corporations Code would have used the word “shall” instead of "may."
Case Law. There is no case law in California on this issue. Other states, however, have addressed it. While not binding, a Delaware case examined a similar statute: “Any director may resign at any time upon notice given in writing or by electronic transmission to the corporation.” The Delaware Supreme Court found the use of the term “may” to be permissive and not mandatory and held that directors could also resign by giving oral notice. (Biolase v. Oracle.)
3. Future Date Resignation. A resigning director controls the date and time of his/her departure from the board. Resigning directors may set the effective dates and times of their resignations. (Corp. Code § 7224(c).) Directors remain in office and continue to fully function as directors until their resignations become effective. They may also participate in the appointment of their replacement. Doing so helps avoid deadlocked boards. The resigning director may participate in the selection of his/her replacement, provided the selection takes place before the effective date of the resignation. (Mayo v. Interment Properties.)
Sample Resignation Letter
If a director wishes to resign from the board of directors, something similar to the following may be used:
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[Date]
Dear Board [or Dear Fellow Directors]:
Please accept my resignation from the Board of Directors and as an officer of the Association [if an office is held]. My resignation takes effect immediately.
OR
Please accept my resignation from the Board of Directors and as an officer of the Association [if an office is held]. My resignation will take effect upon the appointment of my successor. [This allows the resigning director to participate in the selection of his/her successor.]
- signature: _______________________
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Withdrawal of Resignation
Future Date Resignation. A resignation that takes effect at a future date may be withdrawn or postponed at any time before that date. The board cannot alter the date and time of another director's resignation by "accepting" the resignation before the effective date of the resignation.
Oral Resignation Withdrawn Before Acceptance. A director who resigns orally may withdraw the resignation if he/she does so before the resignation is accepted by the board.
Written Resignation Withdrawn Before Acceptance. A written resignation transmitted to the board can be withdrawn if done so before acceptance by the board. If, however, the board does not formally accept the resignation but informally does so by appointing a replacement director, the resignation cannot be withdrawn.
Resignation Accepted by the Board. Once a resignation has been accepted by the board, it cannot be withdrawn without the approval of the board.
Miscellaneous
Petition to Resign. Members can circulate a petition demanding that directors resign but the petition has no legal effect and directors are not obligated to step down. A petition demanding resignation is not the same as a recall petition. If members want to remove directors from the board, they need to circulate a proper petition.
Officer Resignations. A different letter should be used if the director intends to resign as an officer but not as a director.
Subsequent Elections. A resignation from the board does not disqualify the resigning director from being elected to future boards. As provided for in Civil Code § 5105(a)(3), qualified candidates may nominate themselves to serve on the board.
Filling Vacancies. See "Filling Vacant Seats."
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