Voting On Bylaws: Can Emails Be Used?

The use of email voting in organizations is a topic that has gained prominence in the digital age, with many geographically diverse and busy volunteers sitting on nonprofit boards. While email voting is convenient and fast, there are legal considerations and potential drawbacks that organizations should be aware of before implementing it. This includes complying with statutory and common law requirements, ensuring thoughtful discussion, and obtaining unanimous written consent from all participants. This paragraph introduces the topic of whether an organization can vote on bylaws by email, highlighting the benefits and challenges of this approach.

Unanimous written consent

To achieve unanimous written consent, all board members must provide their consent in writing or electronically, expressing their approval of the resolution. This can be done through signed documents, emails, or other approved electronic means, depending on the bylaws of the organization. The resolution being approved must be clearly outlined and documented, and any ambiguity could invalidate the resolution or lead to misunderstandings. The unanimous consent must also be documented in the board's official records, providing a legal record of the decision.

It is important to note that unanimous written consent requires the approval of all directors, and if even one director objects or abstains, a formal meeting is typically required to discuss and vote on the matter. This voting method is recognized in various states, such as Arizona, where board action may be taken without a meeting as long as the vote is unanimous and in writing.

Duty of Care

In the context of an organization's board voting on bylaws by email, Duty of Care refers to the legal obligation of board members to make informed decisions through thorough deliberation and consideration of their fellow members' opinions. This process ensures that all sides of an issue are heard and discussed before voting.

The Duty of Care is a critical aspect of an organization's governance, and it applies to both for-profit and nonprofit entities. It is essential for board members to understand their bylaws and the implications of their decisions. This includes being aware of the relevant state laws and the specific requirements for valid email voting.

To fulfil their Duty of Care, board members must engage in robust discussions and actively participate in decision-making processes. This means avoiding the temptation of quick email votes without proper deliberation. While email voting can be a convenient solution for geographically diverse and busy board members, it may not always comply with statutory and common law requirements for valid meetings. Therefore, it is crucial to strike a balance between risk and convenience.

To ensure compliance with the Duty of Care, organizations should consider the following steps:

• Educate board members about their fiduciary duties and the state laws pertaining to electronic voting.
• Encourage open discussions and the interchange of ideas during the decision-making process.
• Require unanimous written consent for email voting, with all members responding within a specified deadline.
• Record email votes in the organization's minutes, along with the written actions, to ensure transparency and accountability.
• Affirm email votes at the next meeting to ensure they are formally recognized and ratified.

By adhering to these guidelines, organizations can help ensure that their board members fulfil their Duty of Care when voting on bylaws by email.

Proxy voting

In the context of organizations, proxy voting refers to a ballot cast by a single person or firm on behalf of a shareholder who may not be able to attend a meeting or who may not wish to vote on a particular issue. Shareholders may receive proxy ballots by mail or email, along with an information booklet called a proxy statement that outlines the issues to be voted on. Proxy voting is commonly used in shareholder meetings to facilitate decision-making when investors are absent, and votes may concern board elections, mergers, acquisitions, and corporate social responsibility.

While email voting is convenient and commonly used among organizations, there are several considerations to keep in mind. Firstly, there is no guarantee that all recipients will receive, open, and respond to an email in a timely manner. Secondly, email voting may hinder robust discussions and influence board members' opinions, potentially leading to groupthink. Lastly, most states have special rules for email voting, requiring participants to "hear each other" or "communicate concurrently," which email exchanges may not satisfy.

Therefore, organizations should carefully evaluate the benefits and drawbacks of proxy and email voting to determine the most suitable method for their specific needs and circumstances.

Statutory and common law requirements

In the United States, there are specific rules that govern email voting in 44 states. Most of these require participants to "hear each other" or "communicate concurrently", which is not possible through email exchanges. This is to ensure that board members can properly deliberate matters and discuss the opinions of their fellow members before coming to an informed conclusion.

In Arizona, board action may be taken without a meeting as long as the vote is unanimous and in writing. Arizona law specifically states that unanimous consent may be obtained via electronic signature.

In California, email voting is legal if the organization's bylaws permit it or do not address the matter.

In Massachusetts, any board action, including filling a board vacancy, can be taken by email as long as it is unanimous with all board members voting.

In Hawaii, the nonprofit statute requires that all members of the board concur in writing, then sign a written consent that is filed with the board minutes.

It is important to note that while email is commonplace among organizations for its convenience, there are several reasons to consider other alternatives, such as conducting a meeting via conference call or video teleconference. Email voting may hinder thoughtful and robust discussion, potentially leading to a breach of fiduciary duty. Additionally, the order in which members respond to a call for a vote may improperly influence the outcome.

Bylaws and articles of incorporation

Articles of incorporation are a set of formal documents filed with the secretary of state or the proper state and federal authorities. These documents typically include the organization's name, its purpose, and the process by which a board of directors is elected. When articles of incorporation are filed, an organization becomes legally recognized as a corporation. Depending on the state, this document may also be called the articles of organization, articles of formation, or certificate of formation.

On the other hand, bylaws are internal documents that describe how a nonprofit organization will be run. They are like an operating manual, establishing the rules and regulations that the board of directors will follow. Bylaws cover areas such as quorum requirements, board member terms, and committee structures. They are necessary for obtaining tax-exempt status as a nonprofit and must be submitted with the 501(c)(3) application to the IRS. While bylaws can be filed before, after, or simultaneously with the articles of incorporation, the timing depends on the laws in the state of incorporation.

In terms of voting by email, there are special rules that pertain to this method of voting in many states. Most require participants to hear each other or communicate concurrently, which is not met by email exchanges. This is to ensure that board members properly deliberate and discuss matters before voting. While email voting may be tempting for quick decisions, it can hinder thorough discussion and potentially lead to a breach of fiduciary duty. However, in certain states like California, email voting is legal if the organization's bylaws permit it or do not address the matter. In Arizona, board action may be taken by email as long as the vote is unanimous and in writing.

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