Jenifer S. Schembri, Esq., Florida Board Certified in Tax Law
Electronic communication has become a vital aspect of our everyday lives. We are able to communicate faster, cheaper, and with more people simultaneously than ever before. There are many benefits that come with today’s electronic communication, but it is important for an organization’s board to be aware of when electronic communication is appropriate, and when it’s not. While email voting is enticingly simple and fast, in many jurisdictions a board that relies on email voting fails to comply with statutory and common law requirements for a valid meeting.
In Florida, the statutes provide that board action may be taken either at a meeting (including a meeting by electronic communication) or by unanimous written consent. In most states, Florida included, the directors of a nonprofit organization may not vote by email or by proxy. An email vote, which is a proposal circulated and responded by email, is essentially a proxy vote delivered electronically. The idea behind these restrictions is that a board is a deliberative body in which debate and various viewpoints are to be considered in fulfilling each director’s fiduciary duty to the corporation.
Florida Statutes allow for meetings to be conducted “through the use of, any means of communication by which all directors participating may simultaneously hear each other during the meeting,” unless the articles of incorporation or bylaws provide otherwise. FLA. STAT. § 607.0820(4); FLA. STAT. § 617.0820(4). These provisions potentially allow for teleconferences and web-based conferencing that combines both voice and video communication. Therefore, although meetings and voting may not take place over email, they make take place over other forms of electronic communication that meets the specification mentioned above.
Additionally, the board of directors for an organization may also act by unanimous written consent, an approach easily adapted to email. “Unless the articles of incorporation or the bylaws provide otherwise, action required or permitted by this chapter to be taken at a board of directors’ meeting or committee meeting may be taken without a meeting if the action is taken by all members of the board or of the committee. The action must be evidenced by one or more written consents describing the action taken and signed by each director or committee member.” FLA. STAT. § 607.0821; FLA. STAT. § 617.0821. Thus, unanimous written consent provides an opportunity through which an organization can take advantage of the convenience of email, but still comply with state statutory requirements. The difficulty is on finding the appropriate balance between risk and convenience.
When attempting to gain formal written consent over email, the most cautious and careful way to circulate that consent is by an attachment to an email. The organization’s leaders must then gather all of the director’s signatures for the consent to be valid. Some potential issues for written consent via email can include: the time it may take to gather consent from all directors and double check that no director was missed or skipped, the ambiguity that can be accompanied by informal means of communication like email, and confusion over content. Thus, it is important for the persons advising an organization to insist on the discipline of a formal resolution describing in detail what action the board is approving, even if that resolution is communicated by email.
Nevertheless, email is undoubtedly a useful tool that can be used in many different aspects, but it is important for directors to understand when and how it should be used. An organization may informally poll its directors using email, and then approve or ratify the decision at an in-person or electronic meeting, or by unanimous written consent.
For more information, please call business and corporate attorney Jenifer Schembri at 941.748.0100 or email jschembri@blalockwalters.com.
