BOARD QUORUM

Quorum Defined. A "quorum" of the board is the required minimum of number of directors who must be present before the board may conduct business. Unless the bylaws state otherwise, a majority of directors is a quorum. Corp. Code §7211(a)7. A vacancy on the board does not change the number of directors needed to make a quorum--the board needs a majority of the number authorized in the bylaws, not a majority of actual directors.

For example, if the bylaws call for a board of 5 directors, the quorum is 3. If 2 directors resign, the quorum requirement for the 3 remaining directors is still 3. If 3 out of 5 directors resign, the 2 remaining directors cannot conduct business because they do not constitute a quorum. They are allowed, however, to appoint up to 3 directors to fill the empty seats. There are 2 exceptions to the power of the remaining directors to appointment replacements:

1. The bylaws do not allow for appoints and require that all seats be filled by special election of the membership; or

2. The vacancies were caused by action of the membership (a recall), rather than by death or resignation of directors.

Loss of a Quorum. A meeting at which a quorum is initially present may continue to conduct business notwithstanding the withdrawal of directors provided that any action taken is approved by at least a majority of the required quorum for the meeting.

For example, 3 of 5 directors attend a meeting thereby achieving quorum. One of the directors subsequently leaves the meeting causing a loss of quorum. The remaining 2 directors may continue conducting business provided both directors approve each item of business. Corp. Code §7211(a)8

No Proxies. Boards cannot establish quorum by proxy.

Updated by ADAMS KESSLER 10/1/2008