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November 2, 2005
SB 61 - Association Elections - Can it Be Fixed?
If you do not know it, SB 61 was signed into law on October 4 and will become the law of the land (California land anyway) next July. I have identified some problems with it in trying to explain it to Boards, homeowners and others. The question that keeps coming up - at least with regard to election of directors - what does it do to proxy and cumulative voting, and what about quorum requirements? Right now, as I see it, it does not override either, it just complicates them. I have been speaking with a representative of the author's office about the difficulty I am having explaining how it might work within a system that also allows for proxies and cumulative voting, and nominations from the floor in Association elections. The real question is how much explanation of the two systems needs to be addressed at the time the Board sends notice to Owners of an upcoming annual meeting and election (for directors). It obviously needs to include the ballot and double envelope system that allows for secret voting from your home, or hand carrying the ballot to the meeting. Does it need to also explain that you may use a proxy instead? Most Boards have been sending out proxies with the meeting notice for years because that was the way many people exercised their right to vote (through a proxy holder) and that was the only way to reasonably expect and achieve a quorum. If a Board refrains from sending out proxies, does that mean they can refuse to count them if an owner brings some to the meeting. Not as currently written. Does it mean that no one can cumulate their votes at a meeting. Not as currently written. So the dilemma for the Board is how much to explain in the meeting notice - that owners can vote through the "absentee" system or bring the ballot to the meeting, or that they can give a proxy to another to take to the meeting, or that someone may want to cumulate their votes and if that happens, that the owner may be at a disadvantage if he or she sends in the absentee ballot and then others that attend the meeting are able to cumulate their votes? Or does the Association try to conduct an election via cumulative voting through the absentee voting system. That is the dilemma. Does this newly proposed system, that is really intended to simplify association elections and guarantee secrecy work within the corporate voting process, allowing for cumulative voting, proxy gathering, and quorum requirements?
I think the answer is that it creates more problems than it resolves, unless proxy use and cumulative voting are eliminated. So that idea has been floated and I would like feedback from readers. What if the author of the bill cleaned it up to override provisions in governing documents that allowed for cumulative voting and proxy use in elections that are subject to the secret voting requirements (board member elections, special assessments, governing document amendments and transfer of common area for exclusive use).
I think that all I have said about the complicated nature of elections under the bill (as it resides within the corporate structure) would be simplified if the bill stated that the absentee ballot system (which by the way also allows for ballots to be taken to the meeting or given to another to be taken to a meeting and filled out there) controls and overrides use of proxies and cumulative voting. Now I know that there are opinions on these subjects and I would like to hear them. Is simpler better? Should the new law be amended to eliminate proxy voting and cumulative voting for these specific elections? Should the bill be amended to eliminate quorum requirements for the election of directors? (The public system has no quorum requirements and this system was structured with it in mind.)
I would like to hear from you, either with comments through the blog or emails through my condoguru website. My goal - to get to a place where I can help associations set up a proper election where no one will be at a disadvantage by using one system or another, and to get the cleanup necessary with this new law to eliminate the probable complications, and simplify the job of election inspectors. If their role is based on determining eligibility to vote and vote counting and matters related to that, and not resolving complicated legal issues and the heirarchy between the Corporations Code, the Davis Stirling Act, and the Rules of the Association, boards can go within the development and appoint unbiased association members to do the job, without having to pay an outsider with legal expertise.
I would like to hear from you.
Posted by Beth Grimm at November 2, 2005 10:55 AM