Insights
Publications

Law Defining Nonprofit Directors’ Voting Rights to Take Effect in January

11/5/2014 Articles

The bylaws of many California nonprofit corporations refer to “ex officio” directors, typically by reference to the chief executive, the executive director, or sometimes a representative of another entity.  The term “ex officio” is not, however, defined in the California nonprofit corporation law.  New language signed into law by the Governor in September makes it easier to determine the voting rights of those persons who serve “by reason of occupying a specified position within the corporation or outside the corporation.”  Unless the Articles of Incorporation or Bylaws specifically limit the person’s right to vote as a member of the governing body, under the new rule the person so designated will be a director for all purposes.  The revised provision applies to public benefit, mutual benefit and religious corporations. 

The new language is helpful in that it provides a default rule for a term that has been ambiguous.  However, some organizations will need to amend their governing documents before the law becomes effective, on January 1, 2015.  Organizations that do not want such “ex officio” directors to be voting members of the governing body will need to revise their documents unless the Articles or Bylaws already specifically provide that the person does not have voting rights.

Here is the specific language of new Section 5047:

5047. Except where otherwise expressly provided, “directors” means natural persons, designated in the articles or bylaws or elected by the incorporators, and their successors and natural persons designated, elected or appointed by any other name or title to act as members of the governing body of the corporation. If the articles or bylaws designate that a natural person is a director or a member of the governing body of the corporation by reason of occupying a specified position within the corporation or outside the corporation, without limiting that person’s right to vote as a member of the governing body, that person shall be a director for all purposes and shall have the same rights and obligations, including voting rights, as the other directors. A person who does not have authority to vote as a member of the governing body of the corporation, is not a director as that term is used in this division regardless of title.

If your organization’s governing documents designate a person as an “ex officio” director, or designate a person by reason of a specified position within the entity or some other entity, take a look to be sure that the new law will not change your governance structure.  If you need help with determining the effect of the new law or amending your documents, feel free to contact any member of the Farella Braun + Martel Exempt Organizations practice.

Firm Highlights

Publication

Hsu Untied Interview With Dan Callaway

Dan Callaway, a partner specializing in intellectual property litigation, was a guest on Hsu Untied , an award-winning podcast hosted and produced by Richard Hsu featuring entrepreneurs, venture capitalists, best-selling authors, and more.  During...

Read More
Publication

Charitable Planning With Guest Stephanie Hood: Navigating Complex Rules and Traps for the Unwary

Welcome to  EO Radio Show - Your Nonprofit Legal Resource . This week, I am delighted to have Stephanie Hood return as my guest. Stephanie is my colleague at Farella Braun + Martel and...

Read More
Publication

Nonprofit Basics: Scholarship Grant Program IRS Approval Requirements

Welcome to  EO Radio Show - Your Nonprofit Legal Resource . Today’s episode focuses on IRC Section 4945(g), which provides an exception for grants to individuals so that the penalty taxes for such grants...

Read More
News

Scraping Battles: Meta Loses Legal Effort to Halt Harvesting of Personal Profiles

Alex Reese spoke to Matt Fleischer-Black of  Cybersecurity Law Report about the Meta v. Bright Data decision and its impact on U.S. scraping case law. Read the article here (paywall or trial).

Read More
News

Brookfield Forecloses on 2,150-Unit Veritas Portfolio With Uncontested $464M Bid

Restructuring, insolvency, and creditors rights partner Gary Kaplan provided expert commentary in The Real Deal  article, "Brookfield forecloses on 2,150-unit Veritas portfolio with uncontested $464M bid." Read the full article  here  (subscription may be...

Read More
News

Farella 2024 Partner Elevations: Cynthia Castillo and Greg LeSaint

Northern California legal powerhouse Farella Braun + Martel is pleased to announce the election of two lawyers to partnership effective Jan. 1: Cynthia Castillo and Greg LeSaint. “We are thrilled to elevate Cynthia and...

Read More
News

Winston Liaw Named a Leadership Council on Legal Diversity Fellow

Northern California legal powerhouse Farella Braun + Martel is proud to announce that Winston Liaw has been named a Leadership Council on Legal Diversity (LCLD) Fellow for 2024. Winston joins a select group of...

Read More
Publication

California Appeals Court Empowers Privacy Agency to Immediately Enforce CCPA Regulations

In  California Privacy Protection Agency et al. v. The Superior Court of Sacramento County  (case number C099130), the Third Appellate District of the California Court of Appeal returned authority to the California Privacy Protection...

Read More
Publication

Will the Supreme Court Limit Copyright Damages? Implications of Warner Chappell Music, Inc. et al. v. Sherman Nealy et al.

The U.S. Supreme Court heard oral arguments in Warner Chappell Music, Inc. et al. v. Sherman Nealy et al. (Case No. 22-1078) on February 21, 2024. On the surface, the case presents the opportunity...

Read More
News

Lawdragon Names 7 Farella Lawyers Among “Leaders in Environmental Law”

Northern California legal powerhouse Farella Braun + Martel is pleased to announce that seven lawyers were selected to The Lawdragon Green 500: 2024 Leaders in Environmental Law . Farella lawyers selected for inclusion: Sarah...

Read More