Tuesday, January 29, 2013

Voting "Present"


Every year, Boards of Directors face the issue of a director failing to appear at meetings, failing to read and prepare prior to meetings, and failing to contribute to the governance of the community.  A typical clause in the Bylaws gives the Board permission to relieve non-active members, but only if three meetings in a row are missed. 

Besides working to amend the documents to permit removal under other circumstances, non-active directors need to be advised about the personal liability they are exposing themselves to by not acting in their fiduciary capacity.  The U.S. Supreme Court chimed in on this issue in Bowerman v Hamner, when a director who did not attend meetings from 1905 to 1911, and failed to be involved in oversight.  The fact that he lived 200 miles away (prior to automobiles) was not an excuse in the eyes of the court, which held him personally responsible.

Although a community may struggle to attract leaders to serve on the Board, it is critically important that those who do volunteer recognize that their function is not window dressing, or a social club:  Their decisions have a very real-world impact on the values of the land and homes in the community, collectively worth millions of dollars.

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