Although we deal with terms like “directors” and “officers” quite often, many do not understand the difference between the two terms and qualifications to serve in such positions. This article will focus on explaining the difference between these two positions as well as explaining director and officer qualifications.
Directors
The word “director” is synonymous with “board member”. The Colorado Revised Nonprofit Corporations Act (“CRNCA”) defines a director as “a member of the board of directors”. Therefore, any individual who is elected or appointed to serve on the board, is deemed a director.
So, what does it take to be a director in your association? The answer lies in the community’s bylaws, which should provide criteria for serving on the board. However, if the bylaws (and other governing documents) are silent, the CRNCA sets forth only one criterion: the director shall be an “individual”.
Based on the above, there is no statutory requirement for directors to be owners or even residents of the pertinent association. The only time directors are required to be something other than individuals, is when the governing documents so require.
So, at your next annual meeting, make sure you are aware of the specific criteria for serving on the board to ensure that only qualified individuals are running for board positions.
Officers
“Officers” are a bit trickier to define; the plain dictionary definition is “one who holds an office of trust, authority, or command”. Additionally, CRNCA provides that unless the bylaws require something different, nonprofit corporations must have the following officers: president, secretary, and treasurer. In many cases, we see the office of vice president also being required by the governing documents.
Officers are elected/appointed by the board of directors (not by owners) and are elected/appointed for one-year terms. Officers may be removed at any time, with or without cause, by the board members (not by owners). Duties of officers are also typically set forth in the bylaws, but the CRNCA assigns the duty to take minutes to the secretary.
In short, officers are individuals who are also board members (in most cases, but not all cases), that take on additional duties. In most cases, the officer duties are set forth in the bylaws and the general division of duties is as follows:
- President—runs meetings, signs association documents
- Secretary—takes meeting minutes
- Treasurer—oversees association finances
Officer duties may be delegated to others, such as community managers, but the liability remains with the officers concerning their respective duties.
As with directors, CRNCA sets forth two distinct criteria for being an officer. Anyone holding an officer position must be: 1) and individual, and 2) over the age of 18. Any additional officer qualifications must be contained in the bylaws (or other governing documents). If the governing documents are silent concerning officer qualifications, a board may elect/appoint anyone it wants to serve in officer positions, regardless of whether such persons are owners, residents, or current board members.
In summary, there are differences between the terms “director” and “officer”, and not being aware of these differences could lead to liability exposure. For example, bylaws will routinely contain provisions discussing removal of officers by the board of directors; however, this provision is often misinterpreted to mean the board can unilaterally remove directors (which is contrary to Colorado law). As a result, a board may attempt to remove a director from the board of directors and end up violating Colorado law.
If you have questions regarding directors and officers, please contact an Altitude attorney at 303.432.9999 or at [email protected].