Director Felony
Adams Stirling PLC
Menu

FELONS ON BOARDS

Unless an association's governing documents state otherwise, convicted felons are not automatically precluded from serving on boards.

Corporations Code. Corporations Code §7221(a) allows a board of directors to declare vacant the seat of a director who is convicted of a felony. Although the statute does not address the issue of when the felony conviction occurred, some legal authorities believe boards can vacate a director's seat only if the felony conviction occurred during the director's term of office. If that occurs, the director can be removed from office by a majority vote of the board.

Prior Conviction. Since removal under the statute is questionable for a felony conviction that occurred prior to serving on the board, associations should consider amending their bylaws to avoid this situation. Associations can exclude felons altogether from serving on their boards by amending their director qualifications. This can be done by an amendment approved by the membership or a change in the election rules approved by the board of directors. When amending the bylaws and/or election rules, associations may wish to consider the nature and recency of felony convictions. For example, a director convicted of felony auto theft 30 years ago, at the age of 17, should not cause concern. However, a director recently released from prison for felony embezzlement is different.

Fidelity Insurance. If a director has a prior conviction for embezzlement, theft, fraud or other crimes of deception or misrepresentation, the association may have a problem with their fidelity bond if the person were to serve in any capacity that involved access to the association's funds. Many crime policies have an exclusion that precludes coverage in such situations.

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

Adams Stirling PLC