Can a Corporation’s Suspended Members Hold a Special Meeting to Oust a President?

Published on: | by

In California, the ability of suspended members of a corporation to hold a special meeting to oust a president depends on several factors, including the corporation’s bylaws, type of corporation (e.g., nonprofit, for-profit), and reasons for the suspension.

  1. Corporate Bylaws: The bylaws of the corporation typically outline the procedures for calling and holding special meetings, as well as the rights and limitations of members, including suspended members. If the bylaws specifically state that suspended members cannot participate in meetings or vote, then those members would not be able to hold a special meeting or vote to oust the president.
  2. Type of Corporation:

   – Nonprofit Corporations: In California, nonprofit corporations are governed by the California Nonprofit Corporation Law (Corporations Code Sections 5000-10841). For nonprofit public benefit corporations, members’ rights, including voting rights, are often detailed in the bylaws. Suspended members usually lose their voting rights until reinstated.

   – For-Profit Corporations: For for-profit corporations, the California Corporations Code governs corporate actions. Typically, shareholders (members) have the right to vote unless restricted by the bylaws or other governing documents. Suspended members or shareholders who have lost their rights due to suspension would generally not be able to participate in corporate governance activities, including special meetings.

  1. Reasons for Suspension: The reasons behind the suspension could also affect the ability of members to participate in a special meeting. If the suspension is temporary and related to specific violations or non-compliance, the bylaws might have provisions for how and when those rights can be reinstated.

Steps to Consider

  1. Review the Bylaws: Examine the corporation’s bylaws to understand the specific provisions regarding member suspensions, voting rights, and the process for calling special meetings.
  2. Consult Legal Counsel: Given the complexities and potential legal implications, it is advisable to consult with an attorney who specializes in California corporate law. They can provide guidance based on the specific circumstances of the suspension and the corporation’s governing documents.
  3. Reinstatement Process: If the suspended members wish to participate in the meeting, they might need to follow the process for reinstatement outlined in the bylaws or other corporate documents.

In summary, while the default position under California law generally restricts suspended members from participating in corporate governance activities, the specific answer will depend on the corporation’s bylaws and the nature of suspension. Legal advice is crucial in navigating these situations.

What about non-profit corporations?

Now, in the context of a California nonprofit corporation, the ability of suspended members to hold a special meeting to oust the president is typically governed by the corporation’s bylaws and the California Nonprofit Corporation Law. Here’s a detailed breakdown:

  1. Review of Bylaws

The bylaws of the nonprofit corporation are the primary document that outlines the rights and responsibilities of members, including the procedures for calling special meetings and the effects of membership suspension. Generally, bylaws address:

– Member Voting Rights: Bylaws often specify whether suspended members retain any voting rights. Typically, suspension results in the loss of voting rights.

– Calling Special Meetings: The bylaws will detail who can call a special meeting, the notice requirements, and the quorum needed for such meetings.

  1. California Nonprofit Corporation Law

California’s Nonprofit Corporation Law (California Corporations Code Sections 5000-10841) provides the legal framework for the operation of nonprofit corporations, including the rights of members and the procedures for meetings:

– Membership Suspension: According to the law, suspended members usually lose their membership rights, which typically includes the right to vote.

– Calling Special Meetings (Sections 5510-5514): These sections provide that special meetings of members can generally be called by the board, chair of the board, president, or by members holding a specified percentage of voting power (usually 5% or more).

  1. Effect of Suspension

If members are suspended, they likely cannot:

– Vote in any meetings

– Call or participate in special meetings

– Exercise any other membership rights unless reinstated

  1. Legal Consultation

Given the specific legal and procedural nuances involved, it’s advisable to consult with an attorney who specializes in nonprofit corporation law in California. They can provide guidance based on: (1) the specific terms and conditions of the suspension; (2) the provisions in the corporation’s bylaws; and (3) applicable state laws and any precedents that may affect the situation.

Summary

The suspended members of a California nonprofit corporation typically cannot hold a special meeting to oust the president if the suspension revokes their voting and participation rights. This is usually specified in the corporation’s bylaws and supported by California Nonprofit Corporation Law.