Q: My first board meeting with an organization opened with a quorum (51%). One person left before the meeting ended, with an item for decision making still on the agenda. An official vote on that item was postponed because there was no longer a quorum. However, the members present took a straw vote so they could tell those who were not there the sentiments of those that were. All present voted in favor of the issue.
In my experience with other boards, votes taken in a similar situation were considered valid. Were the other boards correct, or is this one? Is it a matter of what’s in the organization’s bylaws? Of course, I’m aware that certain key decisions typically require a super-majority or full board vote. I’d like to know what’s required for an organization’s garden-variety decisions. Thanks for your wisdom!
A: My experience has been similar to yours, whereby votes taken by a board that had a quorum initially are valid, even if the quorum no longer existed at the actual time of the vote. However, what is “correct” is determined by what the corporation laws of your state say; or, if they are silent, what your organization’s bylaws say.
Corporation laws vary state to state, so I’d begin by checking out what your state has to say about this. Assuming it does speak to the issue and the dictate is not already in your bylaws, I would adopt the law’s language ASAP. If I were a betting woman, I’d bet that none of your directors go to the source in these situations to find the answer, and having it in your bylaws will ensure everyone is both on the same page and compliant.
If the state’s corporation law is silent, and your bylaws currently are as well, your board should establish a policy. This can be something simple… For instance, if the board wishes to consider voting under these circumstances to be valid, you might use a statement like: Directors present at a meeting that began with a quorum may continue to transact business until adjournment, even if the withdrawal of one or more directors results in representation less than that required for a quorum. You might also want to consider a qualifier. In your case the straw vote showed a consensus. But what if the vote was 51% to 49% and the departed director(s) could have tipped the balance? You might decide the statement should conclude with: as long as votes taken in such circumstances reflect more than a simple majority.
Your question leads me to raise a couple other thoughts, though. The first is the issue of the size of your quorum itself. As I’ve said in this column before, there is nothing sacred about 51%. It’s merely convention. To my mind, it’s too low. Subconsciously, directors think that they can miss half the meetings and there will always be enough other people to make the necessary decisions. Unfortunately, there are times when the majority of directors think that same thing at the same time, and the organization has trouble meeting or keeping its quorum. Counter intuitively, the higher the quorum, the easier it is to get people to come and stay because they know their presence is essential.
Second, you might rearrange your agendas so that the substantive discussions and their related votes are at the beginning of the meeting, when more people are typically present and attentive. My experience tells me that fewer people will leave when they are engaged from the get-go.
Third, I think a restatement of your comment about certain votes requiring a super majority or a full board vote is worthy of a column inch here. Some decisions require more voices because of the potential impact of the vote. These typically include decisions to merge or fold, decisions to remove another director or fire the chief administrative officer, or to make changes to the bylaws. I would definitely want to see these clarified in the bylaws if they are not already.