Meetings in the Time of COVID-19
by: Kyle Shaughnessy
The COVID-19 outbreak (and the resulting CDC and government advice to limit the size of gatherings) hit Georgia while annual meeting season for community associations was still in full swing. Many communities had scheduled their annual meeting and sent out notices, and others were in the process of doing so. This has resulted in many questions from communities about whether to postpone their annual meeting until after the outbreak has been contained, and, if so, what legal issues that could raise. This article will address some of the major concerns and ways to address those concerns.
The first question is whether a community association can or should postpone its scheduled annual meeting. The answer to this question is yes, a community association should absolutely postpone its annual meeting until the outbreak has been contained and any restrictions or recommendations on public gatherings are no longer in effect. Not only is this consistent with the restrictions on public gatherings of more than 10 people that have been adopted by many counties and municipalities in response to guidelines from the CDC and federal government, it just makes sense. A meeting of an HOA or a condo association is not worth the chance of spreading the virus or risking anyone’s health.
The next question is whether postponing an annual meeting creates any legal liability or other issues. Although the Georgia Nonprofit Corporation Code and most association bylaws require an annual meeting to be held once a year, and some even specify a particular date, month, or time of year when the meeting “shall” be held, the Georgia Nonprofit Corporation Code takes into account that meetings might not always happen as they should. Section 14-3-701(f) of the Georgia Nonprofit Corporation Code states “failure to hold an annual or regular meeting at a time stated in or fixed in accordance with a corporation’s bylaws does not affect the validity of any corporate action.” Therefore, if the annual meeting is canceled, the association can continue to carry out business until the meeting can be held.
For most community associations, the only item of business that the members vote on at an annual meeting is the election of directors. Therefore, postponing the annual meeting could result in directors serving for longer than their designated terms. This is also addressed by statute. Section 14-3-805(d) of the Georgia Nonprofit Code provides “despite the expiration of a director’s term, the director continues to serve until the director’s successor is elected, designated, or appointed and qualifies.” Accordingly, any director who ends up serving more than their specified term because the association has not been able to hold an election can still hold their position and act as a director without affecting the validity of any corporate action.
That being said, it may also be possible for the association to hold an election by written ballot by mail or electronic transmission in lieu of a meeting. Section 14-3-708 of the Georgia Nonprofit Corporation Code states that unless the bylaws or articles of corporation prohibit or limit action without a meeting, any action that may be taken at any meeting of members may be taken without a meeting if the corporation delivers a ballot in writing or by electronic transmission to every member entitled to vote on the matter. Therefore, if an association wishes to go ahead and elect directors without a meeting or vote on another issue that was on the planned meeting agenda, like an amendment to the governing documents, it may be possible to do so by written ballot. Before moving forward with such a vote, however, you should reach out to the association’s attorney to make sure that all legal requirements in the association’s bylaws and/or Georgia law are satisfied.
While we all sincerely hope that the COVID-19 outbreak is contained and things return to normal as quickly as possible, no one knows how long that could take. Associations should not feel pressured to hold meetings during this time, as the health and safety of homeowners and their families is the most important consideration. If you have any specific legal questions or concerns regarding annual meetings or other issues that may be affected by the COVID-19 outbreak, the attorneys at Winter Capriola Zenner, LLC will be happy to advise and assist you.