When Cumulative Voting Precludes Election Of Directors By Ballot
Tuesday, October 31, 2023

The California Nonprofit Mutual Benefit Corporation Law contemplates three different methods for members to take action: at a meeting, by ballot, and by unanimous written consent.  Cal. Corp. Code §§ 7512(a), 7513 & 7516.  Although the California General Corporation Law contemplates voting by ballot, Cal. Corp. Code § 708(e), that is in the context of voting at a meeting.  In contrast, the balloting procedure contemplated by the Nonprofit Mutual Benefit Corporation Law does not involve a meeting. Thus, Section 7513(a) provides:

 Subject to subdivision (e), and unless prohibited in the articles or bylaws, any action which may be taken at any regular or special meeting of members may be taken without a meeting if the corporation distributes a written ballot to every member entitled to vote on the matter. Unless otherwise provided by the articles or bylaws and if approved by the board of directors, that ballot and any related material may be sent by electronic transmission by the corporation (Section 20) and responses may be returned to the corporation by electronic transmission to the corporation (Section 21). That ballot shall set forth the proposed action, provide an opportunity to specify approval or disapproval of any proposal, and provide a reasonable time within which to return the ballot to the corporation.

Subdivision (e) provides that directors may be elected by written ballot under Section 7513, where authorized by the articles or bylaws, except that election by written ballot may not be authorized when the directors are elected by cumulative voting pursuant to Section 7615.  Incongruously, Section 7615 provides that elections for directors need not be by ballot unless a member demands election by ballot at the meeting.  Clearly, the drafters of these sections had two different types of ballots in mind - ballots when there is no meeting and ballots when there is a meeting.

 

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