In the absence of a quorum, any meeting of the membership may be adjourned by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted. (Corp. Code § 7512(d).) If a quorum cannot be obtained, the chair calls the meeting to order, announces the absence of a quorum, and entertains a motion to adjourn the meeting to a later date with appropriate notice. Members who mailed in their ballots need not be present. A simple majority of those members present in person or by proxy is sufficient to adjourn the meeting to a later date unless the bylaws state otherwise.
New Meeting Date. The time period for adjourning a meeting is normally found in the bylaws and will vary from association to association. Typical language will state "no less than 5 days and no more than 30 days." If a date was not selected and announced when the meeting adjourned to a later date, the board sets the date (which usually requires coordination with the Inspector of Elections) and gives notice to the membership. As long as the ballots were not opened, they remain valid and are brought to the adjourned meeting by the Inspector. Once quorum has been achieved, the ballots are opened and counted.
Number of Attempts. There is no required number of attempts to meet quorum. If it is clear the membership is not interested in participating, the board can stop soliciting ballots. For example, if an association has 100 units and only 9 members send in their ballots, it's pretty clear no one is interested, which means reaching a 50% or even 30% quorum may not be achievable. If quorum is within striking distance, directors should put in the effort to round up more votes. If quorum is not within reach, the board is not required to waste time, money, and energy trying to get members to participate.
Ballots Unopened. If quorum cannot be reached, ballots are left unopened if a petition is going to be filed with the court to lower the quorum requirement for the election of directors or to amend the governing documents. Otherwise, ballots could be opened at the discretion of the board of directors.
Court Petition to Reduce Quorum. If the failure to hold an annual meeting is due to a lack of quorum, the board or any member can file a petition with the court to lower the quorum requirement to the number of ballots cast. (Corp. Code § 7515.) The management company on its own has no legal authority to file a court petition. That right is reserved for an association board and members.
Industry Practice. Most associations forgo the legal expense of a court petition and leave the existing board in place. Such action is indirectly provided for in Robert's Rules of Order:
[I]f a quorum fails to appear at a regular or properly called meeting, the inability to transact business does not detract from the fact that the society's rules requiring the meeting to be held were complied with and the meeting was convened--even though it had to adjourn immediately. (Robert's Rules, 11th ed., p. 347.)
Directors Remain In Office. The Corporations Code allows that "Except as otherwise provided in the articles or bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, unless the director has been removed from office." (Corp. Code § 7220(b).)
Appoint New Directors. To place new directors on a board where apathy derails annual elections, directors can resign their seats so new directors can be appointed to the board. However the matter is handled, the board must publish its decision to the membership. If members are unhappy with the board's decision, they have the right to file their own petition with the court to reduce the quorum requirements. (Corp. Code § 7515(a).)
Holdover Impact on Staggered Terms. When directors are kept in place for another year because voter apathy derailed the election, the 1-year delay in the election cycle will impact boards with staggered terms--they get out of sync. Boards will need to adjust terms to reset the staggered sequence.
For example, if a 5-person board with 2-year staggered terms goes through an election cycle that fails to make quorum when two directors were up for election, the two directors carry over to the next election when the other three seats are up for election. Their seats would also be up for election, which means all five seats are on the ballot. To keep the staggered terms intact, three candidates receiving the highest number of votes would be elected to 2-year terms and the next two with the highest votes would be elected to 1-year terms. One year later, they would be up for re-election but this time to 2-year terms. This keeps the staggered election cycle intact.
Director Terms Following a Delayed Quorum. When quorum is not reached on the initial ballot and existing directors are held over for 30 or 60 days, when does the term start and end for the newly elected directors? Their service starts when directors are officially elected, just as with any election. When the term ends depends on the bylaws. If the bylaws require that annual meetings (and director elections) be held on or about the same date each year, then director terms end the following year with the election of new directors.
For example, assume the bylaws require a January 30 annual meeting and one-year terms for directors. If there were two attempts at making quorum that lasted 60 days, the newly elected directors start their term of office on March 30. They would then be up for reelection 10 months later at the next January 30 annual meeting. If the bylaws call for annual meetings to occur within 12 months of the last annual meeting, the next annual meeting would be in March and directors will have served a full 1-year term. Even so, the board could decide to voluntarily shorten their terms so as to keep the January election cycle.
Recommendation: Because of the problems associated with quorum requirements, associations should amend their bylaws to eliminate quorum requirements for the election of directors.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.