CORPORATE TRANSPARENCY
DEADLINE
 As a reminder, boards of directors are required to comply with filing requirements of the Corporate Transparency Act.
Laurie Poole and Natalie Stewart will guide directors and managers through their legal obligations. The webinar will be held Tuesday, August 27, 2024 from 12:00 to 1:00 p.m.
Laurie and Natalie will discuss (i) who must file a report (board members, managers, both?), (ii) what must be reported, (iii) how to file a report, (iv) penalties for noncompliance, and (v) third-party help for boards who want assistance with their filings.
SUSPENDED ASSOCIATION
ANNUAL MEETING
QUESTION: The Franchise Tax Board suspended our association's business license. Can our annual election of directors proceed as scheduled, or must it be delayed until the FTB reinstates our business license? –Sharon W.
ANSWER: Even though suspended, your association should continue to hold board meetings, maintain the common areas, pay bills, and hold annual meetings while you go through the process of reviving your corporation.
Suspension. Boards often have no idea that their corporate status has been suspended. Reasons for suspension include failure to file tax returns and pay taxes, and failure to file statements of information with the Secretary of State.
Consequences. The consequences of suspension include possible loss of the association's name, loss of the ability to initiate lawsuits or defend against them, loss of the right to enforce contracts, and possible involuntary dissolution of the corporation.
When our firm is retained to represent an association, we routinely check with the Secretary of State to make sure it is in good standing. One association we took on had been suspended. When I met with the board, I informed them of their suspension and the consequences, including the potential loss of their name.
Disgruntled Wife. One of the board members left the meeting and told his wife. His wife held a grudge against the board because it rejected her plan to decorate the clubhouse. She immediately contacted the Secretary of State and took possession of the association's name. She notified the board that she would hold it hostage until they agreed to her decorating demands.
Threatened Litigation. The board was understandably upset with their fellow board member and his wife, and threatened to sue. I met with the board in executive session, minus the director who breached his duty of confidentiality, and informed them they could not sue because they were suspended. Even if they could sue, they would lose--she had the right to take their name. They had two choices, concede to the disgruntled wife's demands or rename their association. They chose a new name (and informed the membership the reasons why).
RECOMMENDATION: Boards should check their association's status with the Secretary of State. For more information on suspensions and the revival process, see "Suspended Corporations." If your association needs assistance with the revival process, contact us.
ELECTION
NOMINATING COMMITTEES
QUESTION: If a nominating committees rejects a self-nominated candidate and refuses to put the person on the ballot, is the board required to give a reason for the rejection? –Sue S.
ANSWER: Although older bylaws require nominating committees to select persons they thought were best to serve on the board, such committees were made moot by self-nomination under the Davis-Stirling Act. (Civ. Code § 5105(a)(3).) Nominating committees can still solicit candidates but they can no longer reject qualified candidates.
CRIME INSURANCE
LIMITS
QUESTION:  Is there a cap on the Crime-Fidelity limits similar to ERISA requirements? Or does the limit just continue to increase as the association’s reserve balance and dues increase? -Shelly C.
ANSWER: Some insurance carriers have a maximum limit, while others do not. Those without a cap allow their coverage to increase as assessments and reserves increase. If you have a policy with a cap, you may need to seek another policy or tiered policies in order to meet statutory requirements. (Civ. Code § 5806.) Ones without a cap are best. You should check with your insurance broker to find out which one you have.
Thank you to Terri Guest, CIRMS, CMCA of the Berg and LaBarre Oksnee Insurance Agency for her assistance with this question.
SEEKING
SENIOR ATTORNEYS
 We are looking for senior-level attorneys for our offices in Los Angeles and Northern California.
If you are interested, or know someone who may be a good candidate, you can contact me confidentially by email or by phone at (800) 464-2817. -Adrian Adams
I thank you for your time in getting back to me so quickly. The information is informative and very helpful. I so appreciate all that Davis-Stirling provides for countless people. It is a wonderful resource for questions about various issues concerning condo regulations. Again, thanks for answering my question. You helped me understand board voting. -Nancy W.
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DISCLAIMER. Our newsletter provides commentary, not legal advice. Boards need to retain an attorney to review all the facts and give a legal opinion on the issues they face. We serve as corporate counsel to California associations only. Request a proposal to represent your association.
PAST NEWSLETTERS. Readers can find current and prior year newsletters posted here. Older newsletters are not posted since the information they contain can change over time with new statutes and case law. The website, however, is kept updated with current information which can be found via the "Index" or through our website's internal "Google Search" feature.
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