by Tim Hughes, Managing Shareholder, Bean, Kinney & Korman
Effective July 1, 2016, it will get a little bit easier for
nonprofit boards to do their work without the need for formal meetings of the
full board. The General Assembly passed HB 234
which will allow non-profit boards to act without having a formal meeting if
they comply with the new statute.
Having served on a lot of nonprofit boards, I am acutely
aware that we are all struggling for time. Organizing a board meeting, even
using the currently available means of telephone attendance, can be a real
struggle. As a result, I see non-profits conduct a lot of decision-making via email.
The problem is that email is not permitted for formal board action. Many boards
are undisciplined about documenting ratification of email decisions at the next
The current provisions of the Code of Virginia allow for
action without a board meeting, but they require written agreement from each
and every board member. One unengaged board member, or one person upset about a
course of action, could stymie a non-profit and block prompt action.
My colleague at Bean, Kinney & Korman, PC, Delegate Rip
Sullivan, introduced HB 234
to allow board action without a meeting. The code changes will be effective
July 1, 2016 and provide as follows:
- The non-stock corporation needs to expressly
adopt the power to act under this statute in its Articles of Incorporation;
- The greater of the majority of the board, or a
quorum of the board if greater, must agree to action without the meeting;
- The voting for any action must comply with the
entity’s applicable voting rules for action during board meetings, such as
quorum and majority/supermajority voting;
- Notice of action without a meeting must be
expressly given to each director; and
- Any director is allowed to object to acting
without a formal meeting thereby forcing the action towards a more formal
meeting for decision.
Based on my experience, I would hazard a guess that most
smaller nonprofits are not even aware that their board’s ability to act through
email as opposed to in person meeting was so limited in Virginia. I am a big
fan of flexibility and options, so I would counsel all Virginia non-stock
corporations to amend their Articles of Incorporation to add this option to
their available governance practices.
Timothy R. Hughes is the
Managing Shareholder of the law firm of Bean, Kinney & Korman, PC,
in Arlington, Virginia. He represents
clients in construction and commercial litigation, and corporate, contracts,
and general business matters. He can be reached by email at email@example.com
and by phone at 703-525-4000.