Setting the Date. The board on its own authority without the need for a petition from the membership can set a date for a special meeting to recall a fellow director. If so, there are no deadlines for setting a date and the board can pick a convenient election date following a normal election timeline. If the recall is pursuant to a recall petition submitted by the membership, deadlines are imposed. The date for the special meeting may not be less than 35 nor more than 150 days from receipt of the request. (Corp. Code § 7511(c).) For stock cooperatives the meeting date must be not less than 35 nor more than 60 days from receipt of the petition. (Corp. Code § 601(c).) The following factors should be considered:
A. Recall Entire Board or a Single Director: If the entire board is being recalled, or just a single director, the number of seats that need to be filled is known in advance. All seats will be open if the entire board is recalled, or only one seat if a single director is recalled. This is important for those associations that still use cumulative voting. Under these scenarios, the recall of existing directors and election of replacement directors can take place on one ballot. The inspector of elections first tallies the recall votes. If the recall is not successful, the election is over. If the recall is successful, the inspector then tallies the votes for replacement director(s) to determine who is elected to the vacated seat(s).
B. Recall More Than One But Less Than All Directors: This is more complicated because, for example, in a five-member board where three directors are to be recalled, the number of open positions after a successful recall cannot be known in advance. It is possible that two are recalled and one is not (or two, or all, or none are recalled). For that reason, you cannot know how many positions to put on the ballot for the replacement director election for purposes of cumulative voting. Here are three options:
1. Sequential Elections. Complete the entire recall election first. If the recall fails, a second election is unnecessary. If one or more directors are recalled, a replacement election is needed. At this point, the correct number of directors in known beforehand. This option ensures complete statutory compliance, compatibility with cumulative voting, and voter certainty at the replacement election. However, if a director replacement election is needed, (a) the time to complete the process is doubled and (b) if the recall leaves a sub-quorum board, recalled directors should continue to serve until replaced to allow continued association operations. Appointment of recalled directors is prohibited by Corporations Code § 7224(a).
2. Single Ballot Election. This provides the fastest resolution with no hold-over of recalled directors. However, members will not know how many positions will need to be filled until after casting their ballot. This knowledge can be important for members (a) when deciding whether to run in response to the call for candidates, (b) when deciding for whom to vote on the ballot, and (c) deciding whether to campaign or not, since it can't be known whether the election will be contested until after the ballots are cast. An option for elections without cumulative voting is for the ballot to reflect the maximum number of possible positions to be filled if everyone is recalled and allow a single vote for each position. Then count all votes for all candidates, but award only as many positions as were recalled. Single ballot elections cannot work with cumulative voting since the number of votes a member is entitled to cast must be “equal to the number of directors to be elected” which number would be unknown at the time the ballots are delivered. (Corporations Code § 7615.)
3. Parallel Elections. This hybrid option can be completed in the same time as single ballot elections, but also accommodates cumulative voting. Ballots can be mailed to the membership for the recall and the election completed in 65-75 days. The parallel director replacement election (with separate ballots) can be conducted at the same time following a longer 110-120 day timeline. As such, the recall can be completed before the separate election ballots for director replacements are mailed to the membership. If the fasttrack recall fails, the second set of ballots for the director election need not be sent. If the recall succeeds, the ballots can accurately state the number of open positions, thereby eliminating voter uncertainty and permitting cumulative voting.
Giving Notice to the Membership. The board has 20 days from receipt of the petition to set the date and give notice of the meeting date selected by the board. If the board does not meet this deadline, the persons calling the meeting may set the date and give notice. (Corp. Code § 7511(c).) If the board fails to give notice, the petitioners may give notice which is not less than 35 nor more than 150 days before the date of the meeting, provided the notice is by first-class, registered, or certified mail. (Corp. Code § 7511(a).)
NOTE: The 10-day minimum notice requirement has been superseded by the requirement to send out ballots 30 days in advance of the meeting. (Civ. Code § 5115.)
Notice of Purpose. Notice of the meeting must specify the purpose of the meeting. (Civ. Code § 5000.) Business at the meeting is limited to noticed items only; no other business may be transacted. (Corp. Code § 7511(a).)
Proxy Requirements. Anything to the contrary notwithstanding, any proxy for the removal of a director is not valid unless it sets forth the general nature of the matter to be voted on. (Corp. Code § 7613(g).) In addition, any proxy distributed to 10 or more members of a corporation with 100 or more members must specify a choice between approval and disapproval of the removal of the director. (Corp. Code § 7514(a).)
New Director Term of Office. If the recall is successful and new directors are elected, the term in office for new directors will be same as the directors they replace.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.