In these difficult times (thanks to the COVID-19 virus) and local and statewide orders prohibiting gatherings to protect public health, it is likely impossible to physically gather all of the people required to hold your Association’s membership meeting. If your Association’s governing documents allow holding an electronic or telephonic meeting, then that is a great option. We have previously written regarding the best ways to hold electronic or telephonic meetings
However, even if your governing documents do not provide any authority to hold an electronic or telephonic membership meeting, you do not necessarily need to postpone your meetings. Your Association may be able to utilize the emergency bylaws provision of the North Carolina Non-Profit Act, which provides that —
(a) Unless the articles of incorporation provide otherwise, the board of directors of a corporation may adopt, amend, or repeal bylaws to be effective only in an emergency defined in subsection (d) of this section. The emergency bylaws, which are subject to amendment or repeal by the members, may make all provisions necessary for managing the corporation during the emergency, including:
(1) Procedures for calling a meeting of the board of directors;
(2) Quorum requirements for the meeting; and
(3) Designation of additional or substitute directors.
(b) All provisions of the regular bylaws consistent with the emergency bylaws remain effective during the emergency. The emergency bylaws are not effective after the emergency ends.
(c) Corporate action taken in good faith in accordance with the emergency bylaws binds the corporation, and the fact that the action was taken pursuant to emergency bylaws shall not be used to impose liability on a corporate director, officer, employee, or agent.
(d) An emergency exists for purposes of this section if a quorum of the corporation’s directors cannot readily be assembled because of some catastrophic event.
The key provision here is that the emergency bylaws enacted can “make all provisions necessary for managing the corporation during the emergency” and those bylaws supersede the regular bylaws for the duration of the emergency. This means that emergency bylaws could be put into place that explicitly authorizes telephonic or virtual membership meetings, as well as the procedures for those meetings, throughout the current COVID-19 virus. The ability to hold electronic or telephonic membership meetings is a necessary and important provision for managing your Association during this pandemic. Once the current crisis is over, then the emergency bylaws automatically become inoperative in favor of the regular bylaws.
Given the various emergency declarations, as well as local and statewide orders prohibiting gatherings of more than just a couple of people, and depending on the facts of your specific case it may be that an emergency exists for the purposes of the statute. A physical quorum of the directors cannot gather anywhere, and the risk posed to public health by the spread of the COVID-19 would seem to qualify as a catastrophic event.
Be sure to consult your association’s attorney if you want to try to invoke this provision of the Non-Profit Act, because Courts have not interpreted this provision in the context of the present crisis. In addition, your association’s articles of incorporation may provide that this provision does not apply to your association.
For additional articles on topics relating to your community and the Coronavirus, see our website containing a number of articles on this and other community association topics.
The attorneys at Law Firm Carolinas are available to assist by phone, video-conference or email with any issues related to your community association bylaws or meetings. Please contact any one of the attorneys in our Charlotte, Greensboro, Triangle or Coastal offices.