Legal Question in Business Law in California
I am a volunteer for a very small tax-exempt, nonprofit corporation. Does California Corporate Law allow corporate officers to also fill corporate director positions. Also, as this is a small, shoe-string nonprofit, is there an exemption for having three directors to maybe having only two?
2 Answers from Attorneys
You are asking a question that is a lot more complicated than you think. The rules are different for non-profits than regular corporations. It gets even more complex if you want 501(c)(3) status so that people can make tax-deductible contributions to your org. The main thing is that there must be a certain minimum ratio of disinterested directors to "interested" directors. Whether officers are interested or disinterested requires analysis of the specifics of the relationships of the officers to the organization and the terms of their relationship. You really need to find a local attorney who supports your mission who will be willing to give you some direct pro bono assistance.
See Corporations Code section 5227 for the definition of "interested persons" in the context of a nonprofit public benefit corporation. Not more than 49% of directors may have been employed by the nonprofit within 12 months, nor be a relative of a past or present employee. I don't think uncompensated officers are barred from being directors. The minimum number of directors might be specified in the corporation's articles of incorporation or bylaws.
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