Although most decisions, by both boards and owners, are made during meetings (whether virtual or in-person), situations arise when doing so is not feasible. Luckily, Colorado law creates processes for both boards and owners to vote on measures and make decisions outside of meetings.
This article will discuss the two processes by which owners and boards may vote and make decisions without holding meetings.
Owner Decisions.
The Colorado Revised Nonprofit Corporations Act (“ Nonprofit Act”) allows associations to conduct an owner vote via “action by written ballot”. This process is more commonly referred to as action by mail ballot.
By way of example, action by written ballot is often used for voting on declaration amendments, which typically require approval from 67% of the total votes in a community. In most cases it is simply not feasible to get 67% of all owners to attend a meeting, let alone vote in favor of an amendment. Therefore, use of the mail ballot process is generally a better option.
One reason why using the mail ballot process is a better option, is because this process allows the voting period to stay open approximately 60 days, as opposed to a one or two-hour window at a meeting.
In order to take advantage of the mail ballot process, associations must comply with all requirements set forth in the Nonprofit Act. The Nonprofit Act requires associations to provide every member with enough information regarding the subject of the vote to make an informed decision on how to vote.
Additionally, written ballots must provide owners with the option of voting either for or against the proposed measure, though this requirement does not apply to elections of directors.
Further, the voting packet must contain: 1) a deadline that includes the date and time by which all ballots must be received by the association to be counted; 2) the number of approvals required for the vote to pass; and 3) the association’s quorum requirement, even if irrelevant to the vote. Any decisions made utilizing this process have the same effect as an action taken at a meeting of owners.
It is important to note, this process is used instead of holding a meeting, and therefore, does not allow for use of proxies.
Board Decisions.
This day and age, it is not always possible for a board to hold a meeting due to differing schedules and other commitments. Thus, when a meeting is simply not possible, i.e., a last minute, unplanned meeting, then action outside a meeting is a viable alternative.
If a board intends to utilize this option, the association’s governing documents must be reviewed. In most cases, the process is addressed in the bylaws, which may contain a specific process for the board to follow. If that is the case, the board must follow the requirements set forth in the bylaws.
Oftentimes, bylaws will contain language requiring written approval of all directors, in which case unanimous written approval must be obtained.
In the alternative, if the governing documents are silent on this topic or otherwise refer to the law, an association may rely on the Nonprofit Act, which allows boards to make decisions and vote outside meetings, subject to the following:
- Notice is transmitted in writing to each director
- The writing contains a deadline for response
- Each member of the board (by the deadline stated in the notice):
- votes in writing for such action;
- votes in writing against such action;
- abstains in writing from voting; or
- fails to respond or vote and fails to demand in writing that action not be taken without a meeting.
So long as the affirmative votes equal or exceed the required number of votes needed for the action to pass at a board meeting, a vote outside a meeting is valid.
For more information or if you have any questions concerning action outside of a meeting, please contact one of our attorneys at 303.432.9999 or at [email protected].