I think one of the key takeaways from this affair is
that people should be careful about talking the law.
An apt observation
In context of the 'absolute right of (individual) directors to inspect
corporate books and records', did the community director actually ask
to access the Foundation records and was his request formally denied ?
Director's right, are subject to exceptions and can be denied where a
disgruntled director shows intention to violate his or her fiduciary
duties to the corporation (TRITEK TELECOM INC v. SUPERIOR COURT),
Toby
Luis Villa <luis@...> writes:
tl;dr: the board did not effectively perform one of their most important
roles (managing the ED); the board (and board candidates) should be
talking
about how they will fix that.
I think one of the key takeaways from this affair is that people should be
careful about talking the law. There are bright line rules
written in statute and then there are "duties" (duties of loyalty, duties of
care). In this case, it appears that the bright line rule of law (absolute
right of directors to inspect corporate books and records) was probably
violated while more tenuous legal rules were given heavier weight. I'm also
not sure that a few board members discussing something together unofficially
without the entire board is a "conspiracy" as Denny described it, although
I suppose that opens up a grey area about whether that's some sort of
official meeting and the rights of board members to know about
corporate business.
As far as I'm aware, there aren't too many bright line rules regarding
abstract
duties, although some statutes provide some good guidelines (e.g., Uniform
Prudent Investor Act). After spending several years as a fiduciary for a
couple different nonprofits and reviewing directors & officer's liability
insurance as a regulator, I've found that it's no joke that the business
judgment rule provides significant protection for board members from
liability.
Board members should be thinking more about right and wrong and what makes
sense rather than abstract legal notions.
Any good legal opinion should be written and cite specific statutes and case
law. And finding a case where a jury found someone, somewhere, in some
specific
situation was found to be liable for doing or not doing something is not
necessarily persuasive.
I winced a bit when I saw a while back that Anne/Risker responded to a
request
for more details on the Executive Director's performance by saying that such
information was basically sacrosant and something to the effect of how it
might
even be protected by some sort of UN human rights law. Maybe she knows
something
more than me, and certainly it is typical for these to be kept private, but
many, many Americans have their performance evaluations subject to public
scrutiny. See
[
http://www.splc.org/article/2015/04/accessing-personnel-records
Accessing personnel records: A balancing act between privacy, public’s
right
to know] (2015) for some examples. It is true that California is
aggressive about employee rights; when I was looking at actuarial analyses
for
employer's liability, California received a multiplicative factor of 3
versus
the rest of the country.
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