Q: Our board recently took a vote on refinancing our building. Refinancing would allow us to obtain a lower interest rate. We had seven board members in attendance, which is a quorum for us. Four board members abstained, two voted against the motion and one board member voted for it. Since only three board members actually voted and the rest abstained, does the vote count? Our bylaws, which are based on Robert’s Rules of Order, indicate that votes pass or fail based on majority rule, not on a percentage such as 2/3 of those in attendance. But, the majority didn’t vote for or against the motion. I should note that none of the board members would personally benefit from refinancing, so that had nothing to do with the abstentions.
A: Let’s start with whether the vote was valid. According to Robert’s Rules of Order, it was. With majority rule votes, the decision rests on the majority of the votes cast. As long as a quorum was present, there is no requirement that the majority of those there vote for or against the motion. While it is a director’s duty to vote, and you surely would prefer to have everyone register his or her feelings about the motion by voting, you cannot force someone to do so. Abstentions are counted on the winning side. So, in your case, you technically had six votes against the motion and only one for.
Now the answer to the question about whether this was a smart vote may be a different story. Clearly, I can’t say with certainty. I wasn’t there. However, it concerns me when I hear that four out of seven people abstained. Why did they do so?
- Did they feel unprepared to make a decision with significant financial implications? If so, why was that the case? Would sending out the numbers and the pros and cons of this deal prior to the meeting have solved this problem?
- Was it getting late? Did someone call the question before the board had a chance to thoroughly discuss it so that everyone could go home? Would placing this earlier on the agenda have helped?
- In the discussion period did no one get a sense that there was such little commitment to a plan that would save the organization money? Would tabling this discussion have allowed the directors to get the information they felt they needed to take a side? Or, is this a situation where you need to rethink the makeup of your board to ensure the organization has a board that cares?
You need to answer these and other questions in order to determine why you had such a high rate of abstentions. And please, spend the time to do so. You don’t want this to become a precedent. That could be disastrous for your organization.
Moving forward, if the board decides that the upside of refinancing carries more weight than any perceived downside, the original decision is not irrevocable. A board may always revisit a decision it made previously. But it should come fully prepared to do so. Start by making a motion to rescind or annul the no vote. You can also make a motion to amend something that was previously adopted, whereby you seek merely to tweak the previous motion. In either case, however, you must meet a higher bar than you did originally, unless you provide notice to everyone ahead of time that they will be asked to re-vote on this measure. If you fail to provide notice to everyone prior to the meeting, you will have to achieve either a 2/3 majority of those casting ballots, or a majority of the entire membership in order to arrive at a new decision.
One other consideration… If your board had voted to refinance and the organization had already signed a contract by the time the board decided to revisit its vote, I would involve an attorney prior to taking the second vote. Getting sound legal advice is always a wise move when contracts are at the heart of an issue.
I hope this helps.