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While using e-mail to streamline governance - perhaps by sending agendas and background information in advance of board meetings - has become commonplace, other practical factors make e-mail board discussions (and related voting) undesirable. E-mail transmissions fail to incorporate an essential component of board meetings: simultaneous communication. Association members, however, act in their own best interest and have no need to deliberate. Therefore, members of nonprofit organizations are often permitted to vote and grant proxies by e-mail. Examples of state law in locations heavily populated by nonprofit organizations are presented.

A common governance question in nonprofit organizations is whether members or directors serving on the governing board can conduct business by e-mail. Often a vote is required to resolve routine matters for which additional debate seems unnecessary. An overwhelming amount of business communication occurs via e-mail, and some nonprofit corporation law has been amended to permit certain acts once required to be done in person or authorized by a handwritten signature to be done through e-mail. Voting is an example.

But while the current legal trend allows members of nonprofit corporations to vote and grant proxies by e-mail, the trend has not extended to directors or trustees who serve on an organization's governing board. The emphasis on communication and deliberation among directors is likely the reason for this. Although many states permit directors to hold meetings remotely via conference call or by any means of communication through which all participants can simultaneously hear one another, they are usually not permitted to vote by e-mail. In this column, Elizabeth Teira surveys laws relating to electronic voting in the several states that are home to large numbers of associations.

EDITED BY JERALD A. JACOBS

While using e-mail to streamline governanceperhaps by sending agendas and background information in advance of board meetings-has become commonplace, other practical factors make e-mail board discussions (and related voting) undesirable. E-mail transmissions fail to incorporate an essential component of board meetings: simultaneous communication. Board deliberation requires that each director is able to participate and hear the other directors simultaneously to conduct the thorough exploration of issues required for effective decision making. Association members, however, act in their own best interest and have no need to deliberate. Therefore, members of nonprofit organizations are often permitted to vote and grant proxies by e-mail.

Two manners of action

Generally, directors and members of nonprofit organizations may take action in one of two ways (the latter of which has implications for electronic activity): 1) action by voting at a meeting or 2) action by written consent. Action at a meeting may occur after the matter to be acted upon is thoroughly discussed and then put to a vote, which, in most cases, need not be in writing.

Most states permit directors and members to also take action by written consent, which is appropriate when the matter in question has already been explored and must be set forth in writing. Such writing is effective once executed by all required parties and can usually be conducted by electronic transmission. For example, most states require a board action by written consent to be unanimous. (The law is generally more flexible when it comes to actions by association members.)

Although it is likely that laws may gradually change to reflect changing times, association volunteer leaders and executives are well advised to check their organization's articles of incorporation, bylaws, and applicable state law when questions regarding board action arise.

Following are examples of state law in locations heavily populated by nonprofit organizations.

California

Although California law expressly permits notice of meetings to be given by e-mail, it does not authorize voting or action by written consent of directors or members by e-mail.

Delaware

Delaware permits boards of directors to act by unanimous written consent either in writing or via electronic transmission. Delaware law does not, however, permit substitution of e-mail voting for a board meeting or permit a board member who is not in attendance at the board meeting to vote via e-mail on any board business conducted at such a meeting.

Elections of directors must be conducted by written ballot unless the corporation's certificate of incorporation provides otherwise; and a member voting in that election may submit a vote by e-mail as long as the message demonstrates that it was authorized by the member or proxy holder.

Members of Delaware nonstock corporations are permitted to act without a meeting, if members having at least the minimum number of votes that would be necessary to take action at a meeting give their consent in writing, which may be done by e-mail. Consent provided by e-mail will be effective if the corporation can determine a) that it was transmitted by the member or by a person authorized to act for the member and b) the date on which the member or authorized person transmitted the e-mail. A member may also authorize a proxy holder to vote on the member's behalf by sending the designated person an e-mail to that effect.

District of Columbia

Directors of nonprofit corporations in Washington, D.C., are not permitted to vote by e-mail or act by written consent using e-mail.

Members of D.C. nonprofit corporations, however, may vote by mail, telephone, telegram, cablegram, e-mail, or any other means of electronic or telephonic transmission, as long as it can be determined that the method of voting chosen was authorized by the member. D.C. law also permits members to grant proxies via e-mail, but it does not expressly provide that members acting by written consent may consent by e-mail.

Illinois

Illinois nonprofit corporate law provides that as long as an act does not conflict with the articles of incorporation or the bylaws of a corporation, actions that are required to be written or that require written consent by or of members, directors, or committee members may be transmitted or received by electronic means. Members and directors, therefore, may act by written consent through e-mail, but may not substitute e-mail for voting at a meeting.

Members of Illinois nonprofit corporations are also permitted to vote for directors or officers by "mail," although the provision does not specify whether e-mail would be acceptable.

New York

Boards of directors of New York nonprofit corporations are not permitted to vote by e-mail. In fact, although directors may act by written consent if the consent is unanimous, New York law does not expressly authorize consent to be provided by e-mail.

New York nonprofit corporation members may authorize a vote by proxy via e-mail, as long as it can be determined that the e-mail was authorized by the member. New York law does not expressly authorize voting by e-mail or consent by e-mail with respect to action by written consent taken by members.

Virginia

Virginia law grants directors of nonstock corporations the option to use e-mail with respect to actions of the board only when the board is taking action by unanimous consent.

Members of Virginia nonstock corporations may vote for directors and officers by e-mail as long as it can be determined that the e-mail was authorized by the member or the member's proxy. Virginia law specifically grants this right only with respect to voting for directors and officers. Members may also authorize proxies by e-mail in Virginia.

The take away

E-mail voting by members of nonprofit corporations and obtaining written consent via e-mail from directors or trustees are permitted in some states. Association executives and chief elected officers are advised to consult the state law applicable to their nonprofit organization prior to taking action. Note also that even when the law permits voting or action by e-mail, to be valid and effective, this approach to voting or elections must not contradict the association's governing documents.