Director Resignations

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 Accordingly, the director's email resignation is effective and cannot be withdrawn unless the board accepts the retraction.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:

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. There a split of opinion on whether a written resignation can be withdrawn.

Opinion #1. 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. 

Opinion #2. A director’s resignation is effective on giving written notice to the board and cannot be withdrawn without the board's permission.

Recommendation: Because there is a split of opinion on the issue, boards should seek legal counsel if confronted with the issue.  

It is not uncommon for a director to vacate his/her seat before the end of their term. A heavy workload at the office, family issues, health problems, or they sell their unit and cease to be qualified to serve on the board makes it difficult to remain on the board. If there is more than one vacancy such that the remaining directors are less than a quorum, the board cannot conduct any business except to appoint other directors to the board until they have enough to make quorum, . (Corp. Code § 7224(a).)

Filling Vacant Seats

Vacancy Created by a Recall

If a vacancy is due to the membership's removal of one or more directors via a recall election, the board cannot fill the vacancies--only the membership can fill the seat(s) using an election. (Corp. Code § 7224(a).) Directors so elected shall serve the remaining terms of the directors they replaced. 

Vacancy Created by Other Factors

Director Resignation. A director may resign at any time by submitting their resignation.

Declaring a Seat Vacant. Sometimes, a board can remove a director by declaring their seat vacated because the person is no longer qualified to hold the seat. For example, the person sold their unit. One of the requirements for holding office is to be an owner of a unit in the association. Another example is where the bylaws require a director to attend meetings. If the person misses a specified number of meetings, the board can remove the person from the board. 

Appoint a Replacement. Unless otherwise provided in the bylaws and except for a vacancy created by the removal of a director, vacancies on the board may be filled by the approval of a majority of the remaining directors on the board. (Corp. Code § 7224(a).) This general principle is also described in Robert's Rules of Order: "The power to appoint or elect persons to any office or board carries with it the power to accept their resignations, and also the power to fill any vacancy occurring in it, unless the bylaws expressly provide otherwise." RONR (12th ed.) 47:57. If the vacancy occurs close to an annual meeting, the board might decide to leave the seat empty and let the membership fill it.

Vote by Resigning Director. If done correctly, a resigning director can vote on the appointment of their replacement.

Failure to Appoint a Replacement. If the board fails or refuses to fill an empty position, the membership can petition the board for a special membership meeting to fill the vacant seat. (Corp. Code § 7224(b).)

Candidates and Term of Office

While interviewing candidates may be done privately, a director's appointment should be done in open session. Voting to fill a vacancy does not fall into any of the approved categories for executive session. The vote to fill an empty seat must be on the meeting's agenda.

Term of Office. The appointed director's term of office shall be as provided for in the bylaws. 

Shifting Directors. Unless the governing documents provide otherwise, boards can appoint an existing director to fill the longer term of a resigning director. For example, a person elected to a 2-year term on the board resigns three months into the term, and an existing director with less than a year remaining in their term is appointed to fill the seat, the appointed director remains in office for the remainder of the resigning director's 2-year term. The appointed director does not assume the office of the resigning director (president, secretary, treasurer), only the seat of the resigning director. For example, the resigning director is the president with a 2-year term. The person appointed to fill the director's seat is appointed only to the seat, not the office. If the board wants the appointed director to also assume the office of president, it must additionally appoint the director to that office.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with community association issues, subscribe to the Davis-Stirling Newsletter.