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June 17, 2019

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The Vote Was 21 to 20; So Why Didn't This Motion Pass?

San Francisco's Chinese Consolidated Benevolent Association (CCBA) was formed during California's Gold Rush.  At the time, China was ruled by an emperor.  After the abdication of the Emperor Pu Yi in 1912, China became the Republic of China.  In 1949, the leadership of the Republic of China retreated to the island of Taiwan and the Communists, led by Mao Zedong, assumed control of the mainland as the People's Republic of China.  The relationship between Republic of China and the People's Republic of China remains tense.

In 2013, the Board of Directors voted on a motion that only the flags of the United States, California and CCBA would be displayed "within CCBA and its jurisdiction".  Until this vote, the CCBA had displayed the flag of the Republic of China.  The vote was 21 For and 20 Against with one Abstention.  The CCBA's president declared the motion had passed and the losers sued.  

After a five day bench trial, the trial court found that the CCBA's bylaws required a vote of more than 50% of the board members in attendance to pass a motion.  Because 42 members were present, 22, not 21, affirmative votes were required.  Additionally, the Court found that by any definition the flag motion was an "important matter" and that under the Bylaws "important" matters require the affirmative vote of two-thirds of the directors in attendance. 

The decision was appealed and the Court of Appeal affirmed in an unpublished opinion.  Chow v. Wong, Cal. Ct. of Appeal Case Nos. A149449, A149536, A146563 (Feb. 21, 2019).  (For restrictions on the use and citation of unpublished decisions, see California Rules of Court, rule 8.1115.)

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm
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Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...

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