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FILLING VACANT SEATS - APPOINTING DIRECTORS

It is not uncommon for a director to vacate his/her seat prior to the end of their term. A heavy workload at the office, family issues, health problems, etc. make 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).)

Vacancies Filled by Appointment. Unless otherwise provided in the articles or bylaws and except for a vacancy created by the removal of a director, vacancies on the board may be filled by 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. (Robert's Rules, 11th ed., p. 467.)

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 properly, a resigning director can vote on the appointment of his/her replacement.

Interview Candidates. While interviewing candidates may be done privately, the appointment of a director 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 needs to be on the meeting's agenda.

Term of Office. The appointed director's term of office shall be as provided for in the bylaws. Appointing a new director does not affect existing officer terms of office. (See "Director-Officer Distinctions")

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 his/her term is appointed to fill the seat, the appointed directors 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.

Failure to Appoint. 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).)

Vacancy by Recall. If the vacancy occurred because the membership called a special meeting and removed one or more directors, the board cannot fill the vacancies. Despite anything to the contrary in their governing documents, only the membership can fill a seat created by a recall

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Adams Stirling PLC