A Director is …

Robin Noah

Robin Noah

A few weeks ago I was presented with this question “Who can be called a Director in a nonprofit board? The question intrigued me and I decided to research the issues surrounding Nonprofit Board Directors.

I found that this is not an easy answer. There are many variations and suggested applications that could answer a challenging question regarding the composite of a nonprofit board.

The critical reference is found in the enacted California AB 1233 that amended several provisions in Nonprofit Corporation Law. The amendments included in AB1233 became effective January 1, 2010.

Many of the amendments apply to all types of California nonprofit corporations. This brief comment affects changes that affect public benefit corporations.

Case in point is that many nonprofit corporations give titles to advisors or major donors that suggest they are directors. For example: honorary directors, directors emeritus, advisory directors, etc. In Many cases these titles are contrary to the legal descriptions of the role of the Director as described in the California AB1233 amendments.

The word “director” has specific legal definition with associated rights and obligations.

Nonprofit corporations may not have non-voting directors. Many nonprofit corporations have non-voting directors that have the same rights and responsibilities as the other directors, except the power to vote.

AB 1233 clarifies that a director is a person who has been elected (or designated or appointed, as provided in the bylaws) to act as a member of the board and vote on actions or decisions taken by the board; Thus, a nonprofit corporation may not have non-voting members on its board of directors.

Knowing which persons are directors and the total number of directors is also relevant in dealing with a number of critical issues ranging from quorum requirements for a board meeting to the limit on interested persons who may serve on the board. A corporation that wishes to involve non-directors in its board meetings may treat these individuals as guests or appoint them to a separate advisory committee.

There is much more in AB1233, much, much more.

Please take time to become familiar with AB1233 as a one of the fiduciary duties of your board for maintaining operations compliant with California laws.

Author:  Robin Noah, Executive Coaches of Orange County, www.ECofOC.org