Purpose. Executive sessions of the board of directors are provided by statute so boards can address issues involving privileged information and matters of a private nature. As a result, members do not have a right to attend executive sessions. As provided for in Civil Code §4935, boards may go into executive session for the following matters:
1. Legal Issues. Boards may go into executive session to “consider litigation."
2. Formation of Contracts. Boards may consider matters relating to the formation of contracts with third parties.
3. Disciplinary Hearings. Boards should meet in executive session for all disciplinary hearings. The accused member is entitled to attend the executive session for that portion of the meeting dealing with member's hearing.
4. Personnel Issues. Personnel matters includes anything involving employees including, but not limited to, hiring, firing, raises, disciplinary matters, performance reviews, and adopting or amending employee policies.
5. Payment Plan. Board may meet with members in executive session to discuss requests by delinquent members for payment plans.
6. Foreclosure. The decision to initiate foreclosure shall be made only by the board of directors of the association and may not be delegated to an agent of the association. The board must approve the decision by a majority vote of the directors in executive session.
Form of Meeting. Executive session meetings can be held by any of the following methods:
In Person. Directors can meet in person at a physical location.
Email. Email meetings are prohibited except for emergency meetings.
Telephone-Video. Directors can meet via telephone or video conference. (Corp. Code §7211(a)(6).)
Unanimous Written Consent. A "unanimous written consent" may be used for emergency actions.
Who May Attend. As noted above, members do not have a right to attend executive session meetings. However, that does not mean the meetings are limited to directors only. Directors, managers, recording secretaries, the association's attorney, members subject to disciplinary action as well as witnesses (but only for that portion of the meeting involving the disciplinary hearing), and others invited by the board (such as vendors bidding on a project) may attend an executive session meeting.
Scheduling the Meeting. Unless otherwise provided in the articles or in the bylaws, executive board meetings may be called by the chairman or president or any vice president or the secretary or any two directors. (Corp. Code §7211(a)1.) An emergency meeting of the board may be called by the president or by any two members of the board other than the president. (Civ. Code §4923) Email discussion of director availability for the meeting as well as the date and time for the meeting is allowed. Scheduling discussions are not deemed "board meetings" and do not violate the Davis-Stirling Act.
Notice to Members. Starting January 1, 2012, members must be given notice of executive session meetings of the board. This is required regardless of anything to the contrary in an association's governing documents.
1. With an Open Meeting. If executive session is held with a scheduled open meeting of the board, it must be included in the open meeting's four-day notice and generally noted in the open meeting agenda.
2. Between Open Meetings. If a nonemergency meeting is to be held solely in executive session, members must be given notice of the time and place of the meeting at least two (2) days prior to the meeting. (Civ. Code §4920(b)(2).) If an association's governing documents require a longer notice, they must be followed. (Civ. Code §4920(b)(3).)
Notice must be posted in a prominent place or places in the common areas and by mail to any owner who had requested notice by mail (at the address requested by the owner). In addition, notice may be given by mail, by delivery of the notice to each unit in the development, by newsletter or similar means of communication, or, with the consent of the member, by electronic means. (See Notice of Meetings.)
Also see Notice of Adjourned Meetings.
Agenda. Notice of an executive session meeting must contain an agenda for the meeting. (Civ. Code §4920(d).) Because executive sessions are confidential and topics are only generally noted in open meeting minutes (Civ. Code §4935(e)), agenda descriptions should be brief and general in nature. See sample agenda.
Minutes. Boards must keep minutes of their executive session meetings and generally note their sessions in the minutes of the next open meeting of the board.
Violation of Confidentiality. Directors who violate the confidential nature of information gained in executive session are subject to censure, and personal liability for their behavior, i.e., they lose the protections of the Business Judgment Rule.
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