Below is a brief analysis giving further exposition on the rationale for and effect of the changes in the California Corporations Code by AB 1233:
Quorum; One Director One Vote; No Proxy Voting by Directors
Nonprofit corporations may wish to ensure that certain board actions may not be taken without the presence, at the meeting where such action is taken, of certain directors or constituencies who are on or represented on the board. Sections 5211(a)(7), 7211(a)(7), 9211(a)(7), and 12351(a)(7) did not expressly provide that the requisite quorum may require inclusion of certain specified directors. This practice is relatively common and expressly permitted in some other states. The Corporations Code should state expressly that the articles or bylaws may specify that certain directors must be present for a quorum to exist as long as that does not prevent efficient decision-making for the corporation when those directors die or the person or persons authorized to appoint or elect them have died or ceased to exist.
In addition, Sections 5211(a)(7), 7211(a)(7), 9211(a)(7), and 12351(a)(7) referred to the authorized number of directors as stated in the articles or bylaws. In many cases, the bylaws provide for a range of directors (for example from three to nine), and the authorized number is set by the board in a resolution. AB 1233 added the language “or pursuant to” before the articles or bylaws to clarify that the authorized number may be the number authorized by resolution and not the highest end of a range in the articles or bylaws.
Constituents of nonprofit corporations sometimes wish to permit certain directors to possess more than one vote. However, that is inconsistent with the Corporations Code and a director’s fiduciary duties. While the existing provisions suggested that an action or decision taken by a board of directors is determined by a headcount of directors present rather than a vote cast by them, that subtlety was not always clearly recognized by volunteers trying to manage the affairs of a corporation. This was readily clarified. In addition, although the code did not expressly forbid a director from participating in a decision by proxy, this restriction was made clear as such volunteers may not recognize the risk of that being inconsistent with fiduciary duties. AB 1233 added a new subdivision (c) to Sections 5211, 7211, 9211, and 12351 to state that each director has only one vote and no director may vote by proxy.
