Money & Business

Good Counsel: How to Remove a Leader

By / Oct 1, 2015 (AndreyPopov/ThinkStock)

Process is critical when removing an elected volunteer leader.

Unfortunately, associations are occasionally confronted with an ineffective or disruptive officer or director whom others believe should be removed from the position. If your association is considering removal of an elected volunteer leader, you need to carefully review three governing authorities:

State incorporation law Statutes governing incorporation vary substantially from state to state, but for the most part they require that a removal of an officer or director must occur by the vote of those who put the person in office.

Articles of incorporation Review your articles to see if they include anything that would restrict or otherwise dictate the removal process.

Bylaws Often, bylaws and state law conflict with each other. In some situations, the bylaws allow the board to remove a director, while state law provides that only those who elected a director may remove him or her. When there is such a conflict, state law prevails. However, in some cases the bylaws may set a more stringent requirement for removal, such as a two-thirds vote, than what state law establishes as a minimum. Generally, this is acceptable.

The next question is whether “cause” is required. Again, state laws vary, but most nonprofit corporation acts are silent regarding cause, and so no cause need be stated. In practice, however, you will likely need to state why removal is required for the benefit of the organization, especially if the question must be decided by the voting members.

Often, a vote is not actually needed. In many cases, when an officer or director is confronted with a proposal to remove and is given an opportunity to resign, he or she will do so.

In drastic situations, the state itself, through its attorney general or court action, may have the authority to remove an officer for violations of the not-for-profit-corporation or charitable-trust laws or other misconduct.

Anytime you are considering removal of an officer or director, before that fuse is lit, consult with legal counsel to be sure you are acting in accordance with the law and your articles, bylaws, and other policies of your association.

Jonathan T. Howe

Jonathan T. Howe is president of the law firm of Howe & Hutton, Ltd., in Chicago and Washington, DC. More »

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