[Foundation-l] Are these "majority consent agreements" even valid?

[Anthony]

On 5/1/07, Ray Saintonge <saintonge at telus.net> wrote:
> Anthony wrote:
>
> >On 5/1/07, Anthony <wikilegal at inbox.org> wrote:
> >Looking at the Florida law, 617.0821  Action by directors without a meeting:
> >
> >"Unless the articles of incorporation or the bylaws provide otherwise,
> >action required or permitted by this act to be taken at a board of
> >directors' meeting or committee meeting may be taken without a meeting
> >if the action is taken by all members of the board or of the
> >committee. The action must be evidenced by one or more written
> >consents describing the action taken and signed by each director or
> >committee member."
> >
> >The way I interpret that, the bylaws can provide that such consent
> >agreements are not allowed, but it can't provide for consent
> >agreements by less than a unanimous vote.
> >
> I don't read that into it.  It seems that it outlines a default
> situation for a company that has not paid attention to this.

This is possible, I can't say for sure on that.

> When inly
> two of seven directors live in the jurisdiction and one of those two is
> frequently on the road travelling, your reading of the provision would
> lead to an absurdity where having proper meetings would be virtually
> impossible without great expense.  The travelling involves more than
> just travelling across the state line from Georgia.  Such expense would
> be even more rediculous if the rule were applied to committees.
>
Florida law explicitly allows for meetings to be held using "any means
of communication by which all directors participating may
simultaneously hear each other during the meeting".  Conference calls
are certainly not ruled out.  IRC could be contested, I suppose, but
the difference between IRC and a conference call is much less material
than the difference between a majority consent agreement and a
properly conducted board meeting.

Moreover, expense is not an excuse for not following the law.  If
Florida law required face-to-face meetings (which it doesn't), then
the WMF could either have directors who live closer to each other or
could incorporate in a different state.

> >So if you asked me for my not-a-lawyer opinion, this whole majority
> >consent stuff isn't proper.  A non-unanimous decision has to be made
> >at a meeting, with sufficient notice provided to all board members,
> >unless such notice is waived in writing.
> >
> "Proper" and "legal" are not synonymous.  I think it's sufficient to
> require that such a consent be a majority of all directors as distinct
> from a majority of only those present at a meeting.
>
Yes, I intentionally used the term "proper" and not "legal", because
I'm certainly not suggesting that the board engaged in illegal
activities.  On the other hand, if a board member who opposed one of
the resolutions wanted to raise a fuss, there would be an opening for
them to attack - to claim that the resolution was never properly
passed in the first place.  So long as everyone on the board stays
non-litigious, the foundation isn't required to initiate legal
proceedings, and the foundation isn't forced into bankruptcy,
everything could continue to be fine.

Overall the foundation seems to be run very casually for one with such
valuable intangible assets.  The non-standard governance of the
foundation is both one of its strong points and one of its weak
points.

Anthony