Expert: John Varghese - 12/27/2009

Question
Hi John,

I'm helping a small business right now and have a question about the board of directors. 15 years ago they started a California non-profit corporation with 3 people on the Board of Directors. 10 years ago the organization became inactive and the state put the corporation into suspended status. There were no more meetings for the election of directors, which the bylaws state are to take place annually.

Recently, the former Secretary of the Corporation (not on the Board) filed the paperwork and put the Corporation back into active status. My question is, are the original 3 directors on the Board still considered active? We're not sure if we can simply start over with 3 new directors, or if we need to find the former directors and ask them to appoint new directors then resign, since they are no longer involved with the organization.

Thanks for your time!
David

Answer
Dear David,

While it all depends on what paperwork has been submitted as well as the Memorandum of Association of the Company, generally the company revives to its earliest form when the suspension is revoked and all those who had been Directors will continue to be directors in the new company as well. So you can follow either of the following courses:
1) As you mentioned, if you can find the old directors ask them to appoint new directors and then resign.
2)Convene a meeting of shareholders,(General Meeting) and elect new directors in the place of retiring directors(considering the old directors as retiring). Since the shareholders are the masters of the company, they can decide who would handle the affairs as their representatives.

Hope this clarifies. Happy New Year.

Regards

John Varghese