Complying with Notice Provisions under the District of Columbia s Nonprofit Corporation Act of 2010

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1 Complying with Notice Provisions under the District of Columbia s Nonprofit Corporation Act of 2010 In order to properly conduct its business, nonprofit organizations have board and membership meetings from time to time. To help ensure that everyone involved receives enough advanced notice of the meeting so they can attend, the D.C. Nonprofit Corporation Code ( Nonprofit Code ) contains specific requirements with respect to when and how the nonprofit must give notice of these meetings. This Legal Alert summarizes these requirements and discusses the steps that a nonprofit can take to provide effective notice. I. Meetings of Members Under the Nonprofit Code, a nonprofit may choose to be a member or non-member organization. Members support the organization in various ways and have the right to participate in the governance of the organization, chiefly by electing some or all of the Board of Directors. In a non-member 1 If someone is a member of a nonprofit organization but does not have the right to participate in the governance of the organization, then the organization is not a membership organization for purposes of the Nonprofit Code. For example, public television stations often have members who donate to the station. However, typically such members do not have the right to participate in the governance of the organization. Therefore, if such public television stations were nonprofits incorporated under the organization, the Board of Directors elects individuals to fill vacancies on the Board. 1 If a nonprofit has members who are entitled to vote for the election of directors, it is important that members be made aware of that right. Therefore, the Nonprofit Code requires that membership organizations conduct a meeting of the members each year at which the election of directors is held. In addition, a nonprofit may call special membership meetings to consider other business which requires a membership vote. For example, an organization s governing documents may provide members with the right to vote on any plan to merge with another nonprofit. Before a nonprofit may hold a membership meeting, it must send to each member notice of the date, time, and place of the meeting. The Nonprofit Code spells out in greater detail the rules for giving members proper notice of such meetings. 2 Nonprofit Code, these organizations would not be considered membership organizations. To determine if your organization has members, check your articles of incorporation. It will specify whether or not the nonprofit is a membership organization. 2 A nonprofit, in its bylaws, must select a day for reviewing its membership list and determining who the members are that are entitled to vote at an upcoming meeting. This day is known as the record 1

2 Under the Nonprofit Code, a nonprofit must give each member notice of an upcoming meeting at least 10 days but not more than 60 days before the date of the meeting. A nonprofit s bylaws may provide for a different date by which notice must be given (say 30 days prior to the meeting date), in which case the provision in the bylaws must be followed. Unless the articles of incorporation or bylaws specify otherwise, notice only has to be provided to those individuals entitled to vote at the meeting. The notice must be given to each such member individually. It is not sufficient to post the notice on a bulletin board or on the organization s Facebook page it must be delivered to every member entitled to vote. In the notice, the nonprofit must specify whether it is an annual or special meeting of the members. In the case of a special meeting, the notice must also include a description of the purpose of the meeting. The notice of the annual meeting does not have to spell out the purpose of the meeting. These rules work as follows: Suppose your membership organization wants to have an annual meeting on September 10. Under the Nonprofit Code, the organization must give notice of the meeting by August 31, or 10 days before the meeting date. In addition, the notice cannot be given before July 12, or 60 days before the meeting. However, your organization has the option to specify a different time for giving notice in its bylaws. date and functions to prevent potential disputes arising from individuals that may claim to have the rights of a member. Under the Nonprofit Code, the record date may be no more than 70 days before the meeting. If no day is selected, then the record date will be the day before the date on which notice of the meeting is first given. For example, the bylaws may provide that the organization give notice at least 30 days prior to the meeting. In such case, notice should be given August 11. If proper notice of the meeting is not given to all or some of the members, then the legality of the meeting may be challenged and anyone not given proper notice of the meeting may challenge the validity of the actions taken at the meeting. However, even though a member has not received proper notice of the meeting, the member may waive his or her right to receive notice. Either before the meeting or after, a member may submit a signed, written waiver to the nonprofit in which the member waives the right to notice. In addition, if a member who did not receive proper notice of a meeting in fact attends a meeting, the member waives the right to object, since the member actually knew about the meeting and was able to attend. However, a member can still object to holding the meeting without proper notice if the member announces the objection at the beginning of the meeting and does not participate in any way in the substance of the meeting. Suppose, in our example, that the organization sends out the notice only five days before the meeting, and not every member receives the notice. If the members actually know about the meeting, they may elect to come. 3 3 Unlike meetings of the board of directors, where proxy voting is not allowed, a member may give someone a proxy to attend a meeting and vote on his or her behalf unless the bylaws provide otherwise. If a member gives another person a proxy and that person participates in the meeting, for purposes of the notice rules the member has attended the meeting and cannot object to the meeting being held. 2

3 If they do so, they have a choice: they can object to the meeting being held, and by doing so preserve their right to claim that the meeting is improper, or the members can elect to participate in the meeting, in which case they will waive their right to object. 4 In addition, if a member cannot attend the meeting or hears about it after it is held, the member may still sign a statement indicating that he or she does not object to the meeting. This action waives the member s right to claim that the organization gave insufficient notice of the meeting. II. Meetings of Directors As with notice to members, a nonprofit must give directors notice of any meeting of the board of directors, including regular and special meetings of the board. Regular meetings are meetings held at regular intervals and scheduled in advance by the board, such as monthly or quarterly board meetings. Because regular board meetings are held at pre-set times, a nonprofit does not have to provide separate notice for every meeting. Instead, at the beginning of the year a nonprofit may provide a single notice with the date, time, and place, of all regularly scheduled board meetings for the year. However, if there is a special, non-scheduled meeting of the board, the members must be given advance notice of the meeting. Unless its bylaws provide for a shorter or longer period, a nonprofit must provide at least two (2) days notice before a special meeting. The notice does not have to explain the purpose of the meeting, unless an 4 In the case of a special meeting, if a member raises an agenda item which was not included in the notice of the special meeting, a member can object to the organization s articles of incorporation or bylaws require it. Like a member, a director can waive the notice requirements. Before or after a meeting, a director may submit a signed, written waiver. A director also waives the right to notice by appearing at a board meeting without promptly raising an objection to the lack of proper notice. Furthermore, even if a director objects to the lack of notice, if the director then participates in the meeting, by voting or otherwise taking part in the discussion, he or she has waived the right to object to the lack of notice. III. How a Nonprofit May Provide Effective Notice The Nonprofit Code generally provides that a nonprofit must provide notice in the form of a record that is, information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in a perceivable form. This means that the notice must have a certain level of formality in order to be effective. The ways in which a nonprofit can create a notice in the form of a record fall within two general categories: tangible methods and electronic methods. Tangible methods are those methods that create a physical document, such as a letter or a fax. The electronic method refers to various forms of electronic communications, provided they can be retrieved in a perceivable form. An would meet this test because it is transmitted through the internet and stored on a network or hard drive. matter being discussed, even if the member otherwise participated in the meeting. 3

4 Similarly, a text message would satisfy these requirements if the device receiving the text message stores a copy of the message that can be retrieved by the recipient. A voic message also is retrievable, and therefore is valid notice. However, neither a telephone conversation nor instant message would be acceptable, because they do not create a copy that the recipient can retrieve in order to view again. The articles of incorporation or bylaws may waive the requirement that the notice must be in the form of a record. If the governing documents do waive this requirement, then the nonprofit has considerable discretion to designate in its bylaws how exactly it will provide notice, provided the provisions are consistent with the Nonprofit Code. For example, the bylaws may authorize that oral notice of an upcoming board meeting is sufficient. However, a nonprofit cannot stipulate that it will provide notice in a manner that is inconsistent with the Nonprofit Code. For example, if the purpose of an upcoming membership meeting is to approve a major transaction, such as a merger of the nonprofit and another nonprofit, the nonprofit is required to give detailed notice of the subject matter of the meeting, including a summary of the plan of merger, and only a record notice would be sufficient. a. Delivering Notice to a Member in the Form of a Record A nonprofit may deliver notice to a member in the form of a record by sending it in the U.S. mail or with a commercial delivery service. In addition, a member may authorize other forms of communication such as an , fax, or similar electronic means. Notice to a member is effective once sent. If two consecutive notices through electronic communications bounce back as undeliverable, then a nonprofit must consider the member s authorization revoked. In such an event, a nonprofit must deliver notice through the mail or by some other method authorized by the member. If notices of two consecutive annual meetings are returned as undeliverable by the post office or other delivery method, or cannot be delivered, then a nonprofit does not have to attempt to notify the member of any future meetings. However, a member can be put back on the membership list by sending to the nonprofit a notice with the member s thencurrent address. b. Delivering Notice to a Director in the Form of a Record A nonprofit can deliver notice in the form of a record to a director in any way that it chooses and does not have to obtain authorization from a director beforehand. However, a nonprofit must deliver notice in a manner that will be considered effective. A notice to a director is considered effective on the earliest of: The moment the recipient actually receives the notice; The moment that the notice actually arrives at the recipient s residence or usual place of business; Five days after the notice is deposited in the U.S. mail or with a commercial delivery service; or The date shown on a return receipt, if sent by registered or certified mail, or by commercial delivery service. Accordingly, a nonprofit that mails notice of a special meeting to a director should deposit the notice in the mail at least seven days in advance of the meeting in order to satisfy the 4

5 rule for two days notice. Mailing the notice a week before the meeting will provide five days to ensure that the notice is effective at least two days before the meeting. Notices sent through electronic communications, such as , are considered received when sent, assuming that the nonprofit sends the notice to a mailbox that the recipient uses and from which the recipient can retrieve messages. The recipient does not have to actually read the message for it to be effective. A notice sent to the wrong address or attached to an on a corrupted file will not suffice as effective notice, even if the nonprofit successfully sent the . IV. Additional Resources You may refer to the following information to learn more about how recent revisions to the Nonprofit Code may affect your organization: D.C Bar Pro Bono Center, Summary of Some of the Critical of the D.C. Nonprofit Corporation Code (2017). 2012, 2015, 2017 D.C. Bar Pro Bono Center This communication is provided as a public service by the D.C. Bar Pro Bono Center solely for informational purposes, without any representation that it is accurate or complete. It does not constitute legal advice and should not be construed as such. It does not create an attorney-client relationship between the recipient and any other person, or an offer to create such a relationship. This communication contains information that is based, in whole or in part, on the laws of the District of Columbia and is current as of the date it is written. However, laws vary from state to state and may change from time to time. As a result, the information may not be appropriate for anyone operating outside the District of Columbia and may no longer be timely. Consult an attorney if you have questions regarding the contents of this communication. 5