Our Guest Blogger, Leah Cohen Chatinover, is of counsel at Stanger & Arnold, LLP in West Hartford, Connecticut.  She represents nonprofit organizations of all types and can be reached at lchatinover@stangerlaw.com or through her website ct-nonprofitlaw.com. This article is not a substitute for legal advice, and you should contact your attorney with specific questions.

Part Two of Two. Read Part One here.

Statutory Alternatives

In our example (see previous post), Playball’s attorney tired to implement the statutory exceptions to the requirement that directors meet in person. These exceptions can be easily adapted as modern technology progresses and should be incorporated into an organization’s bylaws.

Statutes typically allow meetings to be conducted by any means of communication as long as everyone may simultaneously hear each other.

Statutes typically also permit a board to act by unanimous written consent, if each director signs a consent describing the action to be taken. A director may compel a meeting to discuss an issue simply by withholding consent.

Combining the formality of a unanimous written consent with the simplicity of e-mail, an organization may circulate the proposed resolution as a formal consent attached to an e-mail. The organization must then collect all of the directors’ signatures. In many states, the consent may be signed electronically – \\John H. Smith\\ – for example, and delivered electronically – as a PDF attached to an e-mail.

The distinction between a formal consent attached to an e-mail, and an e-mailed poll of the board may seem inconsequential. But, note three important differences: (1) all directors must vote unanimously (2) the directors must receive a complete description of the proposed resolution and (3) they must “sign” the consent.

Other Alternatives

E-mail voting is risky because it is not secure, and most boards use e-mail to circulate a proposal and collect responses, but they skip the discussion. Electronic voting through third-party software, including online voting, should be less problematic, if a robust discussion precedes the vote. In theory, the electronic ballot simply replaces the paper, hand or voice ballot, but not the board discussion. Password-protected, third-party software may also prevent tampering and offer a higher level of security. This technology is new, and the law frequently lags behind technology. Over time, state statutes may clarify the electronic voting process.

E-mail is also a useful tool for taking the pulse of a board. An organization may informally poll its directors and then ratify the decision with a formal meeting or unanimous written consent. The risk that an informal e-mail vote will prove problematic is small if the decision is unanimous, no one litigates or no opinion of counsel is required. Nonetheless, directors should protect the integrity of their decisions by adhering to statutory procedures and participating in active and meaningful discussion. Finally, keep in mind that members of an organization, as opposed to directors, may vote by proxy in some circumstances. Therefore, this article does not address the issue of member voting.

© 2011 Leah Cohen Chatinover