Most disputes can be settled by applying:
- the bylaws themselves;
- the nonprofit corporation statute for the state in which the organization is incorporated;
- Robert’s Rules of Order; or
- case law.
UPDATING THE BYLAWSAs technology has modernized, board procedures also have changed. Organizations should ensure new practices are reflected in their bylaws. Discover 10 items that have been adopted widely in recent years as best practices and should be enumerated in the bylaws if your organization is using them. |
Here are some examples of this application:
Scenario:
An amendment is proposed and the vote is to take place at the next board meeting. Is notice in the board packet sufficient to validate the vote?
Action: Check the section of the bylaws that relates to amendments. There may be a special procedure for providing notice, such as a specified minimum number of days notice, how to present the proposed amendment, and perhaps a requirement that approval be larger than a majority vote (two-thirds or three-fourths approval is common).
Scenario:
A board director is always fighting with the board chair and tying up board meetings with hostile resolutions, pointless amendments, and endless arguments. The bylaws have no provision for removal of a director.
Action: Use the process provided in the state’s statute. State statutes are considered to be a default set of bylaws and can be applied if no bylaws speak to the issue at hand.
Scenario:
An election outcome is disputed. Votes were cast by mail. Mail-in ballots have been used for years, but the bylaws don’t describe the process, and the state statute is silent as well.
Action: Use Robert’s Rules of Order. Robert’s Rules are incredibly detailed and often provide guidance for even the simplest points of parliamentary procedure.
Scenario:
A director fails to disclose a conflict of interest when a contract is awarded by the board.
Action: Look to relevant state or federal cases that deal with a director’s fiduciary duty. Bylaws do not usually expressly state that a director has a fiduciary duty to the corporation. This is a common-law principle developed over time by the accumulation of cases that address the issue. Case law generally declares that such transactions are voidable by the corporation.
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