Legal Question in Business Law in California

I have an issue that you may be able to help me with. Reading an the article online, dated Nov 3, 2006 - 'Changes in California Corporate Law: Option for Majority Voting in Director Elections for Listed Corporations Which Have Eliminated Cumulative Voting' , according to California Corp law SB1207, a Board of Directors position may NOT be held over after his/her term is up, and until a newly elected person is seated.

Does this law apply to a CA non-profit 501 (c)3 company?

I am the President of a youth soccer league. We supposed received some bad advice from our District Chairman on the voting formula for this years AGM. Afterwards, the voting formula was challenged. He has since reversed himself, and said the AGM held is null and void, along with the elections. Now, the current board positions are up Dec. 31, and we will not have another AGM until February. He is stating now the current board is to be held over till the new AGM. I argue no, and that as president, I can appointed directors to temporarily fill the seats until the next AGM.

Who is right? Am I being strong-armed? Please see the email correspondence below...

Sincerely,

Don

After discussing the [league] AGM with _____ over the weekend here's what we believe should happen.

First this is a NEW AGM and as such your league will be starting with proper notice, posting of proposals (since these are new proposals changes can be made to the ones that were posted should the make so wish). The NEW date must be noticed to the ALL membership, all members of your league will be able to vote based on the voting rules that have been worked out (not just the members in attendance at the meeting held in November).

As to the current board members and their status, the current board is held over until you have had a new vote at the AGM at which time any newly elected board members would be seated at the end of the AGM. While neither [league] nor CYSA has rules in place for this situation it is controlled under California corporation law.

On Dec 4, 2009, at 1:36 PM, Don Coon wrote:

> 4) ANSWER - As we discussed previously, yes with proper notice given to the membership it would be late January before an AGM could be held. I would argue that your current board would stay in place until the AGM is held. I would be VERY concerned if it fell to you to handle everything going forward. And why it would it just be you as the ongoing board, I understand that only half of your board was up for reelection?

>

> Comment: The current boards term ends as of Dec 31. Due to circumstances, appointments and natural term limits, everyone on the board, except for myself was up for reelection. I have absolutely no desire to extend the current boards tenure, nor do I know of any precedence to do this. Once a term is up, its up. There is no aysl bylaw allowing for this. If the seat is empty, it empty till an appointment is made.

>

> Since the original agm is not officially being appealed, and this is being done in good faith, the agm board members would serve until the new board members are seated. Otherwise, if its just me as the sole board member, I will make appointments to the board positions to convene a fully functional board with full authority to accomplish league business. When the new agm is completed, then those members would rightfully take their seat.

> - Don

> RP wrote:

>> Don,

>>

>> My thoughts on your questions are at the >>>>>>> in your message, I'll let _____ weigh in as he sees fit. I'll see ____ on Sunday at the CYSA Board meeting so it might be Monday before you receive _____ comments.

>> On Dec 3, 2009, at 11:33 PM, Don wrote:

>>>_____:

If I am conceding the idea that the method of voting could call into question the validity and integrity of the results from our last AGM and having a new AGM.

There are a few factors that would require some input from you so the process retains credibility this time around.

1) Since we are just revoting, it seems only the people that attended and voted before should recast their ballots in the approved one person/one vote method. Otherwise they will be penalized for having taken the time out of their days and prepared themselves for the AGM only to see their diligence count for nothing. Therefore, it seems, we should just notify the voters that attended lat time for a special AGM to revote on the issues for which ballots were already cast.

>>>>>> It would be my understanding the first BOARD MEETING never happened so this would be a completely new event, as such all members of your league would be invited.

2) At the new AGM since it is only a revote it would appear that only the issues voted on as proposals, all of which were defeated, would then be before the reconstituted AGM for vote. Following that logic, if I withdrew all my proposals and since Tony already had withdrawn his at the AGM, then the only thing to revote on at the reconstituted AGM would be the election of new officers.

>>>>>> As stated above, this is the AGM for 2009 hence it would start from square one, with notice to ALL league members, proposals being submitted, candidates for office nominated etc. Proposals would be submitted and advertised to the membership.

3) As to the election of new officers, since the prior AGM only is suspect because of the voting procedure and not the nomination of officers, it would appear that the slate of nominations properly made and seconded would be the slate put before the league for revote and that there should not be a new open forum for that purpose; merely ballots printed with the previous slate presented for revote. Along those same lines, some of the nomination ran unopposed and no vote was taken, it would appear those elected in that fashion should be ratified as valid and not voted on a the reconstituted AGM.

>>>>>> As stated above, since we are treating the first AGM has never happening we would start from square one here also, with a slate of candidates being proposed and voted on.

4) Should you disagree with all of the above and think a completely new AGM is necessary then it would be probably at least late January, if not early February before that could be done since we would have to notify the entire membership of the developments, invite proposals with a lead time to allow for that, publishing of the proposals the requisite time ahead of the AGM, not to mention start spring registration, etc. That being the case all of the board offices up for election would expire and we would be running with a skeleton board pending the new AGM. That skeleton board would just be myself. Or would I presume that the board elected in at the last AGM would act as a temporary board with full authority to complete league business.

>>>>>> As we discussed previously, yes with proper notice given to the membership it would be late January before an AGM could be held. I would argue that your current board would stay in place until the AGM is held. I would be VERY concerned if it fell to you to handle everything going forward. And why it would it just be you as the ongoing board, I understand that only half of your board was up for reelection?

Hope the above comments help.

I sincerely thank you for all of your time and input in this matter and wish to resolve this the most expedient and equitable way for all concerned and look forward to your advice on the above issues.

- Don

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