In these first few weeks of 2021, we’ve heard from a number of associations who never got around to holding their 2020 annual membership meeting. That’s understandable given how difficult 2020 was. COVID-19 made large in-person gatherings extremely difficult and sometimes impossible. Various state Executive Orders have at times restricted attendance at meetings from only 25 to fewer. (10 is currently the number of members who can be present at an indoor association meeting.)
As a result, many associations decided to wait to hold the annual meeting until things improved. But here we are, one year after the first US case of coronavirus, and large in-person association meetings are still impractical. (There are perhaps a few too clever ways to hold an in-person meeting using an events center, but why would an association take the risks, given State and CDC warnings not to gather?)
There are several legal and political aspects to not holding an annual meeting. Generally, the NC Nonprofit Corporation Act provides that the failure to hold an annual meeting as required in the bylaws does not affect the validity of association actions. And a different nonprofit corporation statute provides that if a director’s term has expired, the director continues to serve until a successor is “elected, designated, or appointed and qualifies.” So claims that an association “has no board” or that all board actions are invalid are usually not correct.
However, there are important and legitimate reasons to hold an annual member meeting. For one, the NC Planned Community Act (47F), the NC Condominium Act (47C), and the NC Nonprofit Corporation Act (55A) all provide that a membership meeting shall be “held at least once each year.” And there are some essential actions that are better to do WITH a meeting than by written ballot without a meeting, such as nominations and election for board seats, ratification of the budget (if required), etc. Finally, we know many directors and officers who after the last year are ready for a break, while others are interested in serving. Technology options and experiences with virtual meetings have also greatly expanded over the past several months.
Given that the pandemic will restrict our actions a bit longer, we have had many requests over the past few weeks about finally holding the virtual annual membership meeting. Certain steps must be taken to provide notice and to hold an online annual meeting and to vote by written ballot, especially where issues of elections or budget ratification are involved. At times specific statutory language must be in the notice. As of today, the latest Executive Order allows virtual membership meetings to be held through March 1, 2021. (NOTE: Under the Executive Order, the decision to hold or not hold an electronic meeting rests solely with the directors of the association. There is no statutory process by which members can notice and hold a virtual meeting without the involvement of the Board.)
Over the past year, our firm has posted numerous articles on noticing and holding online annual meetings:
- The Coronavirus, Flu, and HOA/Condo Association Meetings
- New NC Executive Order Again Allows Electronic Nonprofit Membership Meetings
- New NC Executive Order Extends Virtual Membership Meetings Through December 29
- Lessons Learned from Large Virtual Conventions, Representative Assemblies, and Houses of Delegates
- New NC Executive Order Extends Ability to Hold Electronic Membership Meetings
By following these recommendations, an association should have an idea of how to plan and host a virtual annual meeting on its own. Our firm has also now assisted with hundreds of annual meetings all over the state, often by hosting the meetings on our firm platform with one of our community association attorneys acting as “virtual emcee” to help run the meeting and answer questions about procedure. Such involvement has been particularly useful when the membership meeting has had to discuss especially controversial issues, such as a difficult budget, disputes or litigation involving owners, or a heated election or director removal.
Content provided by Jim Slaughter of Law Firm Carolinas. Original article can be found here.