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Nonprofit Law/Illinois non-for-profit election law

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QUESTION: In 2010, you answered questions called "Nonprofit Law/IL Non Profit Elections - Majority or Plurality?" at the following link:

http://en.allexperts.com/q/Nonprofit-Law-2266/2010/6/IL-Non-Profit-Elections.htm

Apparently the Illinois law was changed the same year you answered the questions above, so I have much the same questions but regarding the current law.

§§107.10(a) and 107.60 of Article 7 of the Illinois General Not For Profit Corporation Act of 1986, at the following link now refer to a "majority":

http://ilga.gov/legislation/ilcs/ilcs3.asp?ChapterID=65&ActID=2280

§108.10(d) implies that the Act requires directors to be elected at a meeting of members or directors, which is one of the conditions in §107.10(a) that requires a majority in an election by mail, e-mail or other electronic means.

Question #1:  Is a majority now required for elections to the board of directors (of a not-for-profit corporation organized in Illinois) by mail, e-mail or other electronic means?

Question #2:  Is a majority now required for other elections to the board of directors (of a not-for-profit corporation organized in Illinois)?

Question #3:  If a candidate earns more votes than every other candidate but not more than half of the total number of votes and knows the text of the statute above and goes on to hold himself out as duly elected to the board (instead of following the procedure in the bylaws for filling vacancies) is it fraud?  Is it criminal fraud?

You said, “’Policy’ is not binding on a 501(c)(3) organization. I suggest that the organization clarify by amending the bylaws.”

Question #4:  What is the status of rules that the bylaws say you must obey?  For example, if the bylaws (which require membership approval to change) permit the board to adopt policies and say the members must obey the policies, must members obey the policies (assuming they are reasonable)?  Similarly, if the board publishes a set of rules (which the board can amend) and then the bylaws are amended to say members must obey this set of rules, must members obey it (assuming it is a reasonable set of rules)?

ANSWER: http://goo.gl/4hvkt has the Illinois General Not For Profit Corporation Act, revised up
to 2012.

Specifically §108.10(c) provides, "c) The terms of all directors expire at the next meeting for the election of directors".  Therefore, the election is at a meeting and you are correct in citing to §§107.10(a) and 107.60 that require a "majority" for any action to be effective (unless there is something otherwise in the Articles of Incorporation or Bylaws and you wrote that there is nothing there otherwise).

Therefore, the answers to your questions #1 and #2 is "Yes."

#3 Corporation governance issues as to internal election procedures mandated by law are not subjects of the States' Penal Law and, therefore, there could be no "criminal fraud".  If there were such provisions for criminal charges, then you would see it in the Illinois law near the sections you cited.  It may be fraud, but then, the remedy is, as any other deviation as to the internal procedures, that a voting member seek redress within the corporation and if that is not satisfactory, he or more than one voting member may petition the local court to order the corporation to comply with the law as to its voting procedures.

#4. Unless Yes. Yes. (Both "yes" answers assume that the members do not have any membership agreements that provide them with rights that the Board is attempting to change.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.    








---------- FOLLOW-UP ----------

QUESTION: Question #5:  Suppose for the sake of argument that no candidate for the board of directors won a majority of the votes and in every case the candidate with the greatest number of votes in an election by electronic means is holding himself out as duly elected to the board of directors.  Suppose in true lawyerly fashion the bylaws say whoever wins the greatest number of votes is elected (in one section of the bylaws) and also copy the portion of the Act that says for purposes of an election by electronic means a majority constitutes "an act of the membership" (in another section of the bylaws).  Are the candidates who claim to be elected the board?  If not, who is?  The ones who used to be on the board before the law was changed (who apparently must linger on the board indefinitely until replaced)?

Answer
The issue is not who holds himself out as a director, but who the corporation acknowledges as the new directors. Until the corporation confirms the result of an election, the previous directors are still in office.

As the Illinois law has recently been amended I suspect that soon there will be court cases that interpret the new law (as to majority). I would be willing to work on your matter further, but I would need to spend a substantial amount of time in checking the recent case law and that would be beyond the scope of my offer of free services.  If you want to inquire about hiring me for such work, please contact me directly to the email address below.

I will add, though, that as of 2006 the State of Illinois was only one of two states that had adopted the majority voting in reference to business corporations elections of directors (and that explains the amendment as to the nonprofit corporations. "Missouri and Illinois appear to be the only two states that mandate the use of majority voting.  See MO.  ANN. STAT. § 351.365(2) (2006); 805 ILL.  COMP.  STAT.  ANN.  5/7.60 (West 2006)" http://lawreview.wustl.edu/inprint/85/5/Mourning.pdf (footnote 121 in page 18).

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic

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I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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