San Francisco, CA asked in Business Formation, Business Law and Public Benefits for California

Q: Can a CA Nonprofit Public Bene Corp use proxies to meet a quorum & to actions? & use unanimous consents in lieu of mtgs?

CA Corp Code 5510 + seem to allow proxies to achieve a quorum and to take actions "if allowed"

5516 allows for unanimous consent "if allowed"

Does this mean if the by-laws permit, both can be so used? Thx

2 Lawyer Answers
James L. Arrasmith
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  • Sacramento, CA
  • Licensed in California

A: Yes, a California nonprofit public benefit corporation can use proxies to meet a quorum and to take actions if it's allowed in the corporation's bylaws. Similarly, the use of unanimous consent is also allowed if it's permitted by the bylaws.

According to California Corporations Code Section 5510, "unless the articles or bylaws provide otherwise, a quorum is a majority of the voting power represented at the meeting in person or by proxy." This means that a nonprofit public benefit corporation can allow its members to use proxies to achieve a quorum.

Furthermore, according to California Corporations Code Section 5516, "any action required or permitted to be taken by the board may be taken without a meeting if all members of the board individually or collectively consent in writing to that action." This provision allows for the use of unanimous consent in lieu of meetings if it's allowed in the bylaws.

So, if the nonprofit public benefit corporation's bylaws allow for the use of proxies and unanimous consent, then these methods can be used to meet a quorum and to take actions.

A: The general rule for public benefit corporations is that "Any member may authorize another person or persons to act by proxy with respect to such membership." Corp Code Sec 5613(a). However, that section says that "this right may be limited or withdrawn by the articles or bylaws, subject to subdivision (e)." The limitation in subdivision (e) requires that "no amendment of the articles or bylaws repealing, restricting, creating or expanding proxy rights may be adopted without approval by the members."

Note, also, that Section 5613 lists a number of types of votes where "any proxy covering" those matters "is not valid as to such matters unless it sets forth the general nature of the matter to be voted on." So, as one example, if the members are going to vote on filling a vacancy on the board of directors (Corp Code Sec 5224), a proxy being used for that purpose has to say that it can be used for that purpose -- it can't just be a generic proxy. There are other types of votes listed in 5613.

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