Return

Businesses & Parliamentary Prodecure

Originally published as "Businesses Must Follow Parliamentary Procedure" in The Business Weekly of the Greensboro News & Record

"Parliamentary procedure" is a term many believe limited to student government associations and voluntary organizations. However, the recent shareholders' dispute at Jefferson-Pilot Insurance Company shows that business executives must also be knowledgeable about parliamentary procedure basics. Ignoring or incorrectly applying parliamentary law in the business world can lead to lawsuits, money damages, and embarrassment. For this reason, groups and businesses often hire outside parliamentarians to assist with meetings.

Parliamentary procedure, or parliamentary law, is the code of rules and ethics by which organizations make decisions. Businesses use parliamentary procedure in shareholders' meetings, corporate decision-making, and the election of officers and directors. Elected officials follow such procedures to establish laws and regulations. Government bodies, such as school boards, must use parliamentary procedure to take official action. In fact, courts have held that all groups must follow general parliamentary law whenever they meet to transact business.

Rather than being a recent development, parliamentary law can be traced back many centuries. Anglo-Saxon tribes in England were following basic rules similar to parliamentary procedure by the fifth century A.D. These rules were later improved by the early English Parliament. It is from the word "Parliament" that we get the term "parliamentary procedure."

Although originating in Britain, parliamentary law has seen its greatest development in America. In 1801 Thomas Jefferson compiled a manual of parliamentary practices. This handbook became the basis for the rules followed by the United States Congress. A later book by Luther Cushing of Massachusetts further spread the use of parliamentary procedure to voluntary organizations.

The use of parliamentary procedure did not become widespread in the United States until Henry Martyn Robert published his famous Rules of Order in 1876. Robert's Rules of Order established a systematic method for organizing and conducting meetings. This widely-used book has gone through nine editions since the first publication and has sold over four million copies.

Parliamentary procedure today takes many forms. Although Robert's Rules is most popular, a number of other well-known parliamentary guides exist. For example, dental societies often use Sturgis Standard Code of Parliamentary Procedure. Labor unions frequently use Demeter's Manual of Parliamentary Law and Procedure. Many governmental bodies such as the North Carolina General Assembly adopt their own rules of order. Most corporations and organizations supplement guides such as Robert's with the adoption of bylaws and other rules.

Although the many specific rules of parliamentary practice are too broad to examine in a single article, some general rules apply to businesses, governmental bodies, and voluntary societies alike. For example, no action is valid which violates national law, state law, or the adopted parliamentary practices of a business or organization. Some other general rules are as follows:

arrow Quorum. A quorum is the minimum number of members or shareholders who must be present at a meeting to legally transact business. This number is usually set by an organization's rules or bylaws. Any business transacted in the absence of a quorum is invalid.
arrow Notice. Members are entitled to notice of all meetings. Certain important actions require that additional notice be given to all members that the particular topic will be discussed. For example, to discipline or expel an officer requires advance notice. The lack of appropriate previous notice makes such actions invalid. Proper notice must also be given for meetings of shareholders and boards of directors, and the lack of such notice can invalidate the entire meeting and all votes.
arrow Vote. Official bodies, such as corporations, make decisions by voting. However, the vote required on a specific matter depends on the action to be taken. For example, some motions require a majority vote and some require a two-third's vote. An improper vote makes any action ineffectual and can lead to lawsuits.

Parliamentary procedure takes many forms and has many specific rules. Even so, business people and officers of organizations must be aware of the basics of parliamentary practice. Such knowledge can make the difference between official actions and illegal ones.

Articles are intended to provide general information and are not legal advice or a legal opinion. Specific questions should be directed to an attorney at Black, Slaughter & Black, PA., or to another lawyer.