Annual Meetings in a Locked-Down World

Navigating the Stay at Home orders when you have a business to run is a difficult task.  Many Associations hold the annual meetings in the springtime.  We have been asked about whether to postpone the meetings, cancel meetings, or if the Association has the option to hold virtual meetings.  Those topics will be addressed in this article.

On May 7, 2020, Michigan’s Stay at Home Order was extended to May 28, 2020.[1]  The Order requires social distancing at least six (6) feet apart, prohibits “all public and private gatherings of any number of people occurring among persons not part of a single household,” and prohibits activities which are not “necessary to sustain or protect life.”

Governor Whitmer also enacted Executive Order 2020-75 (COVID-19), which made an exception to the Open Meetings Act[2] which allowed for remote participation in public meetings.  This allows attendees to utilize telephonic or video conferencing.  Unfortunately, the Open Meetings Act does not apply to association meetings, because they are private entities.  One must be a member of the association (an owner or sometimes a designated agent of and owner) to participate in meetings.  Association meetings, in contrast, are governed by the Michigan Nonprofit Corporation Act[3] and the association’s respective articles of incorporation and corporate bylaws.

The Nonprofit Corporation Act states:

Unless otherwise restricted by the articles of incorporation or bylaws, a shareholder, member, or proxy holder may participate in a meeting of shareholders or members by a conference telephone or other means of remote communication that permits all persons that participate in the meeting to communicate with all the other participants. All participants shall be advised of the means of remote communication.[4]

This Section interprets the association’s governing documents broadly to allow remote participation unless it is specifically prohibited.  A person attending remotely counts as present during the meeting, and can vote at the meeting, unless the documents prohibit it, and as long as the following conditions are met:

(a) The corporation implements reasonable measures to verify that each person that is considered present and permitted to vote at the meeting by means of remote communication is a shareholder, member, or proxy holder.

(b) The corporation implements reasonable measures to provide each shareholder, member, or proxy holder a reasonable opportunity to participate in the meeting and to vote on matters submitted to the shareholders or members, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with the proceedings.

(c) If any shareholder, member, or proxy holder votes or takes other action at the meeting by a means of remote communication, a record of the vote or other action is maintained by the corporation.[5]

The next step is to look at your association’s articles of incorporation, which can be found online if a copy is not readily available, through the Department of Licensing and Regulatory Affairs (“LARA”).[6]  You will want to search specifically for the words “mandatory” and “in-person” as they relate to meeting attendance and voting provisions.  Typically, votes are allowed electronically, which can be an email.  Voting may also be counted as in-person if the vote is clearly communicated and recorded for the association’s records.

Most associations have combined their corporate bylaws into their condominium bylaws.[7]  You will want to skim for articles mentioning “Meetings” and “Voting,” which can be combined into Article I, or may appear later on as Articles VIII or IX.

Another consideration from the articles of incorporation and the bylaws is the meeting date.  Some documents are overly-restrictive and mandate the annual meeting be held, for example, on “the fourth Tuesday of each April.”  If your documents are well-written, there will be a caveat “or as otherwise determined by the Board of Directors.”  This language would allow board to postpone the annual meeting until the Stay at Home Order is lifted.

If, however, there is no flexibility as to the date of an annual meeting, or the time is limited to, for example, the month of April, then the Board has two options:  the Board can hold the annual meeting remotely; or the Board can schedule the meeting at a later date and ask the membership at that later meeting to retroactively approve the date.  This would at least add a layer of protection to a challenge, if any, later on.

Boards also have practical considerations when making the decision to hold a remote meeting.  If the association has 100 members and is trying to hold a remote meeting, it may be too complicated to organize and keep track of participants.  Also, associations may want to consider the tech-savviness of its members.

As far as holding a video conference, the following are examples of services that can be utilized, mostly for free:

Zoom Meeting                    www.zoom.us

Cisco  Webex                     www.cisco.com

GoToMeeting                     www.gotomeeting.com

Cyberlink U Meeting          https://u.cyberlink.com

Google Hangouts               https://hangouts.google.com

If you have a large association, you may need to pay to hold your meeting as in some cases these platforms limit the number of attendees, and also impose time limits for meetings on unpaid accounts. Another practical concern is how an association can effectively control the voting procedure. Unless you have a very small association, this may be impossible.

So the big question is, what if you cannot feasibly hold an annual meeting in 2020 by any of the means discussed above? Check the condominium documents or HOA documents to see if they allow the members to take “action without a meeting.” If so, the association can perform all the actions it would at the annual meeting without actually having a meeting.[8] If none of these options are available to your association, there is always a risk that a member institute legal action against the association, but whether any court will order that an association have a meeting, despite the Stay at Home orders, remains to be seen.

If you or your association have questions about what is best for your association in this regard, please feel free to contact Tilchin & Hall, P.C. at (248) 349-6203.

Disclaimer: This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this Blog you understand that there is no attorney client relationship between you and lawyer, law firm, and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.

[1] Executive Order 2020-77 (COVID-19), May 7, 2020.

[2] 1976 PA 267, as amended, MCL 15.261 to 15.272.

[3] 1982 PA 162, as amended, MCL 450.2101 to 450.3192.

[4] MCL 450.2405(1).

[5] MCL 450.2405(4).

[6] https://cofs.lara.state.mi.us/SearchApi/Search/Search.

[7] If your association has not, we highly recommend doing so, and we would be happy to assist with the process.

[8] MCL 450.2408