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Action Without Meeting/Meeting Without Action – January/February 2013
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Minnesota Community Living Januaury/February 2013

Action Without Meeting/Meeting Without Action

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By Michael D. Klemm, Dougherty, Molenda, Solfest, Hills & Bauer P.A.

nder Minnesota Statutes Chapter 515B, the Minnesota Common Interest Ownership Act (MCIOA), association business generally should be conducted at board meetings open to unit owners who receive reasonable notice of the date, time and place of the meetings. This article addresses whether directors may take action without meeting or meet in private to discuss association matters without taking action.

Action Without Meeting

A. General Rule 
Most homeowners associations in Minnesota are nonprofit corporations governed by Minnesota Statutes Chapter 317A, the Minnesota Nonprofit Corporation Act. MCIOA provides that the law of corporations supplements the provisions of MCIOA, except to the extent that corporate law is inconsistent with MCIOA. Minnesota Statutes Section 317A.239 authorizes boards to take action without holding a meeting, and most association bylaws also authorize boards to take action without meeting. MCIOA does not prohibit action without meeting, so boards may use this tool in appropriate circumstances, unless prohibited by their governing documents.

B. Written Action By
All Directors Minnesota Statutes Section 317A.239 provides that "An action required or permitted to be taken at a board meeting may be taken by written action signed, or consented to by authenticated electronic communication, by all of the directors.” This statutory grant of authority is sufficient on its own; it is not necessary for the articles of incorporation, declaration or bylaws to contain a similar provision.

On the other hand, MCIOA and the association’s governing documents may require a board meeting for certain actions. For example, MCIOA requires notice and an opportunity to be heard by the board or a committee appointed by it before the board levies fines for violations of the governing documents or the rules and regulations.

A written action is a common corporate document that typically contains the following components:

  1. Caption ("Action in Writing by [name of corporation]”); 
  2. Introductory paragraph stating that the Action in Writing is made by all of the directors of [name of corporation] on [date] pursuant to Minnesota Statutes Section 317A.239; 
  3. Recitals stating the reasons for taking the action ("Whereas, …”); 
  4. A transition between the recitals and the list of actions ("Now, Therefore, Be It Resolved”);
  5. A list of actions;
  6. A closing sentence ("In witness whereof, the undersigned have executed this Action in Writing effective this ______ day of __________, 20__”); and 
  7. Signatures of all Directors.

C. Written Action by Majority of Directors
If the Articles of Incorporation so provide, an action of the board that does not require member approval may be taken by written action signed, or consented to by authenticated electronic communication, by the number of directors that would be required to take the same action at a meeting of the board at which all directors were present.

In many associations, approval by a simple majority of the board is sufficient to take action at a board meeting. In that case, the articles of incorporation may authorize a majority of directors to take written action without meeting, so long as member approval is not required.

Written action by a majority of directors is not valid if member approval is required. For example, if the declaration requires member approval of a special assessment, then a special assessment may not be authorized by fewer than all directors without a board meeting. When written action is permitted to be taken by fewer than all directors, the Minnesota Nonprofit Corporation Act provides that all directors must be notified immediately of its text and effective date. However, failure to provide the notice does not invalidate the written action.

A director who does not sign or consent to a written action is not liable for the action. Note that this is opposite from the general presumption that a director who attends a board meeting assents to action taken at the meeting.1

D. Authenticated Electronic Communication
A written action may be approved by authenticated electronic communication, which is defined in Minnesota Statutes Section 317A.011.

"Electronic communication” means "any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient of the communication, and that may be directly reproduced in paper form by the recipient through an automated process.”

"Authenticated” means that the electronic communication "is delivered to the principal place of business of the corporation, or to an officer or agent of the corporation authorized by the corporation to receive the communication, and that the communication sets forth information from which the corporation can reasonably conclude that the communication was sent by the purported sender.”

Examples of authenticated electronic communication may include electronic mail (e-mail) and facsimile transmission, if they satisfy the requirements under Minnesota Statutes Section 317A.011.

E. Effective Time
A written action is effective when signed, or consented to by authenticated electronic communication, by the required number of directors, unless it states a different effective time.

Caution: If the Articles of Incorporation authorize written action to be taken by fewer than all directors, then a written action may become effective before some directors receive notice of the issue or have an opportunity to share their opinion. In that case, the association will not have the benefit of their knowledge, experience and consideration of the matter. For this reason, associations may wish to take written action only by approval of all directors.

Meeting Without Action 
Directors may be inclined to meet informally, without notice to unit owners, to discuss association matters without taking action. This may feel natural, as association directors are neighbors volunteering their time and effort for the good of their community. However, the statutory requirements of notice to unit owners and open board meetings apply regardless whether action is taken at a meeting.

A. Notice Requirement 
MCIOA provides that "to the extent practicable, the board shall give reasonable notice to the unit owners of the date, time, and place of a board meeting.” Notice is not required if the date, time, and place of board meetings are stated in the declaration, articles or bylaws, announced at a previous board meeting, or posted in a designated location accessible to the unit owners, or in case of emergency.

B. Open Meeting Requirement 
Under MCIOA, meetings of the board of directors must be open to the unit owners, except Minnesota Statutes Section 515B.3-103(g) provides that board meetings may be closed to discuss the following:

  1. personnel matters; 
  2. pending or potential litigation, arbitration or other potentially adversarial proceedings, between unit owners, between the board or association and unit owners, or other matters in which any unit owner may have an adversarial interest, if the board determines that closing the meeting is necessary to discuss strategy or to otherwise protect the position of the board or association or the privacy of a unit owner or occupant of a unit; or 
  3. criminal activity arising within the common interest community if the board determines that closing the meeting is necessary to protect the privacy of the victim or that opening the meeting would jeopardize investigation of the activity.

The open meeting requirement applies even if the board merely discusses association business and does not take any action.

In general, the best practice is to discuss and decide association matters at board meetings for which owners are given reasonable notice. Written actions should be used sparingly to supplement rather than replace board meetings. Further, under MCIOA, a quorum of the board should not discuss association business in private meetings or without giving notice to unit owners, except in the limited circumstances allowed under MCIOA. The information in this article is general information based on laws in effect at the time of this writing and does not constitute legal advice regarding any particular case, which may vary depending on the facts, governing documents and applicable statutes.

1 Minn. Stat. Section 317A.231, Subd. 3, states "A director who is present at a meeting of the board when an action is approved by the board is presumed to have assented to the action approved, unless the director: (1) objects at the beginning of the meeting to the transaction of business because the meeting is not lawfully called or convened and does not participate in the meeting, in which case the director is not considered to be present at the meeting for purposes of this chapter; (2) votes against the action at the meeting; or (3) is prohibited from voting on the action by the articles or bylaws or as a result of a decision to approve, ratify, or authorize a transaction pursuant to section 317A.255 or a conflict of interest policy adopted by the board.”

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