Many clubs are required to hold their annual member meetings this Spring when health experts are asking everyone to avoid gatherings of more than 10 people. In some areas, state and local governments are banning such gatherings or anything other than essential activities. Boards are faced with the dilemma of complying with bylaws requirements or complying with governmental restrictions and also protecting the health of their members.
If a state or local governmental order prohibits having an in-person meeting, the Board’s decision on whether to have the meeting is easy: The club may not have it, notwithstanding that the bylaws require it, because the club cannot violate the law. The Board may then determine whether it can have a remote or “virtual” meeting, exclusively electronically and/or by mail. If the club cannot have a virtual meeting under law or its bylaws, the Board should discuss with counsel whether the government order gives the Board a legal basis to hold the meeting on a virtual or near basis anyway, and if not, to reschedule the meeting to a later date.
If there is no state or local prohibition on having an in-person meeting, the Board may still evaluate whether it can have a virtual meeting, and may wish to consider holding the meeting on a virtual basis. If the Board determines to hold an in-person meeting, the Board may wish to provide for proxy voting by mail, assuming permitted by the bylaws, and encourage members to proxy vote and not attend the meeting. Pursuant to CDC guidelines, the Club should observe social distancing and cleansing and sanitizing protocols for those members who choose to attend.
Boards may consider the following steps in their determination of whether a virtual meeting can be held:
- First, legal counsel should review applicable state statutes, which may require in-person meetings, permit virtual meetings, or defer to the club governing documents. The state statute would govern if the bylaws directly conflict with it.
- Second, legal counsel should review the state and local government COVID-19 related orders, which may impact the analysis. For example, the governor of Connecticut issued an Executive Order on March 21, 2020, giving corporations the ability to conduct annual and other shareholder meetings by remote means.
- If the state statute does not prohibit virtual meetings, the club’s bylaws should be reviewed to determine whether virtual meetings are permitted. If the bylaws do not permit virtual meetings, the Board should review bylaws provisions governing bylaws amendments and Board powers to determine whether the Board can amend the bylaws to permit virtual meetings either generally or during epidemics or other emergency circumstances, especially if holding an in-person meeting is prohibited by law.
The holding of an annual meeting is just one of many challenges that club boards are facing during this difficult time. In addressing this challenge, they should work with legal counsel to ensure compliance with legal requirements and compliance with governing documents, while promoting the health and safety of its members.