I am the Chairman of the Board of Directors for a non-profit Colorado corporation. The members of the Board do not live or work in the same area, and all have busy schedules. Sometimes we need to make decisions without waiting for a time when all of the directors can meet in person. Can we take action without physically attending a meeting?
Yes. Action can be taken in two ways: directors can attend via telephone or the Board can adopt a resolution in lieu of a meeting.
Action via telephone
Pursuant to Colorado Revised Statute § 7-128-201, unless otherwise stated in the non-profit corporation’s bylaws, any director may participate in a meeting through the use of any “means of communication by which all directors participating may hear each other during the meeting.” This means that a conference call with all directors dialed-in would meet the requirements of having a meeting. If some directors attend the meeting in person, the directors who attend via telephone must be on speaker phone so that each director can hear every other director.
Because the telephone call would constitute a meeting of the Board of Directors, notice requirements must be followed. (These notice requirements should be described in the non-profit corporation’s bylaws. If they are not, Colorado Revised Statute § 7-128-203 provides that no notice is required for regular meetings of the Board and at least two days’ notice is required for special meetings of the Board.) Minutes must be taken during the telephone call, in the same manner as they would be taken if the Board were meeting in person.
The telephonic meeting is an effective alternative to an in-person meeting when the Board needs to discuss an issue or choose one of several options. It is also the best alternative to an in-person meeting when the Board determines that having minutes of the meeting in the non-profit corporation’s records is necessary.
Written resolution in lieu of a meeting
Pursuant to Colorado Revised Statute § 7-128-202, unless otherwise stated in the non-profit corporation’s bylaws, any action required or permitted to be taken at a Board meeting may be taken without a meeting if all directors sign a written resolution.
If any director votes against the action in the resolution or abstains from voting, that director has the right to demand that a meeting be convened in order to vote on the matter. Consequently, before a resolution in lieu of a meeting can be valid when there is an abstaining and/or dissenting director, such director(s) must waive the right to demand a meeting to discuss the matter. If all directors vote in favor of the action, no waiver is required.
The affirmative vote must equal or exceed the minimum number of votes that would be necessary to take such action at a meeting of the Board. In most cases, this means that at least a majority of the directors must vote for the action. An action taken in this manner has the same effect as action taken at a meeting of directors.
The vote becomes effective as soon as the last director has transmitted his or her signature to the non-profit corporation. All directors, including the dissenting and/or abstaining directors, must sign the resolution in order for the resolution to be binding.
Signatures may be conveyed via any electronic format where a signature is included. If a director has an electronic signature (in graphic form), that signature may be attached to the resolution and emailed to the corporation. A graphic signature must accompany the resolution. Transmitting the resolution via facsimile is also allowed.
The written resolution may contain a waiver of notice so notice requirements are not required to be followed. However, the resolution and all appropriate signatures must be filed with the corporation’s minutes. This format is most effective when the Board must vote on a routine issue where all, or almost all, of the directors agree. In other words, this format is only good for simple yes or no votes which have already been discussed by the Board.
A formal Board of Directors meeting is always the best choice, but a telephone conference or resolution in lieu of a meeting can be used when a meeting is not possible or practical.