WHY IT IS NECESSARY TO AMEND THE BYLAWS
Submitted by Karen Wargo
February 4, 2016
From time to time, it is important for every organization to review and update their Bylaws if necessary. There are many reasons why updating or amending the Bylaws is a necessary and prudent course of action for Boards of Directors. Here are some of the reasons:
1. BYLAWS ARE A PRIMARY GOVERNING DOCUMENT
The bylaws are the primary governing document of any organization and the organization is bound to govern by their own documents, which should be up to date to provide appropriate guidance to the Board of Directors, enabling them to govern properly and consistently. At the time of any bylaw updating, all governing documents (Articles of Incorporation, Policies and Procedures Manuals, Member Handbooks and any other governing documents should be reviewed and amended if necessary to be consistent with the bylaws.
2. COMPLIANCE AND CONSISTENCY WITH STATE OR FEDERAL LAWS
Since State and Federal Laws are never static but rather are ever changing, it is important to keep governing documents up to date, not only to comply with changes in the law but also to opt out of laws, when possible, if a different undesired result is dictated by the law, which is often the default setting when the by-laws are silent on a particular issue or set of issues.
The By-laws should be consistent with the laws that affect the organization including but not limited to the Davis Stirling Act, the state's nonprofit Corporation laws, and any regulatory laws that may apply to the organization.
3. IMPORTANT MEMBERSHIP RIGHTS REGARDING MEETING VOTING AND ELECTION PROCEDURES
This is an area where bylaw provisions are often inconsistent with the governing state law. Organizations should closely review how members (if there are voting members) and directors are permitted to meet and vote under the relevant state law, whether it is Davis-Stirling or California non-profit law. Many state nonprofit corporation acts, including California, do not allow directors to vote by proxy, and instead require a director to attend the meeting in-person or via telephone to be counted as present at the meeting for purposes of quorum and voting.
Election procedures are particularly vital to any organization as it may affect the validity of future decisions by the Board. Under the revised Davis-Stirling Act, there have been many changes in this area, a detailed review of bylaws and the new requirements to determine if the election procedures are consistent with the new Act. If not, amending the bylaws may be required.
4. BYLAWS SHOULD NOT BE TOO DIFFICULT TO AMEND
Some bylaws may require that amendments be approved by a two-thirds vote of the membership (for organizations with voting members), or contain other super-majority or burdensome requirements for approval. Focus should be on creating a bylaw amendment provision and process that is not overly difficult to execute and that is appropriate for the history, culture, and politics of your organization.
Membership input in the process of amending the bylaws is crucial as the bylaws govern the organization and members rights. Members should approve the bylaws by a simple majority so it is not impossible for change without excessive approval majorities
In addition, the bylaw amendments that are required as a matter of changes in the law where there is no choice should be allowed to be approved by the Board of Directors based upon advice and counsel from an attorney.
5. CHANGES IN PRACTICES OR POLICIES OF THE ORGANIZATION
Any set of bylaws is drawn at a specific point in time. Over time, the actual practices and/or policies may change and become inconsistent with the bylaws. It is imperative that any organization actually follow its governing documents. If the practices and/or polices have been modernized, consistency between the actual practices and policies and the bylaws can be achieved by amending the bylaws. Although policies should not be detailed in the bylaws, the bylaws should not be inconsistent with accepted policies of the organization.
6. WHY ATCHISON VILLAGE NEEDS TO AMEND OUR BYLAWS
Literally since the turn of the century, our attorney has advised us to update our by-laws, which were primarily drafted in 1957. Although there have been a few amendments to the by-laws, there has never been a comprehensive updating of the by-laws or the totality of our governing documents.
I sincerely believe that we need to approach this process with an entirely open mind. Often in the village, there is substantial resistance to change. At times, we have a mindset that because we have been doing things in a particular way for the last fifty years that we should continue the same practices. Unfortunately, many things that we have done for fifty years are not currently advisable or appropriate. I would ask each member to set aside any bias in respect to any idea that is discussed and to clearly consider how it could be helpful and a benefit to the Village and the members prior to rejecting it out of hand.
We need to update our governing practices to keep pace with the 21st century. In addition, there are some issues we need to consider in this process to help member. There are some areas where we can change the documents to assist members with applying for tax breaks; to allow for members to hold their units in a living trust; and to make it possible for members to apply for financing at a reasonable interest rate