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socrateaser
socrateaser, Attorney
Category: Business Law
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Experience:  Retired (mostly)
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our organization wants to use the Executive Sec. as a Board

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our organization wants to use the Executive Sec. as a Board of Trustees secretary. We have contracts with the city and will sign with the county soon. Will the conflict of interest clause in the contract accept the ex. secretary in the contract?

I need a lot more facts. You will have to explain the relationships of the various parties and the type of organization.

 

 

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Customer: replied 7 years ago.
This is a nonprofit organization in which our bylaws state that all members of executive board must be members of the board of trustees. We contract with the city and county for funds to continue all of our programs that we offer to the clients that we serve. I understand that many counties , cities and other organizations will not fund us if we use employees on the board.
Customer: replied 7 years ago.
We are a neighborhood center that provides food, counseling for abuse, drug use, gangs, provides after school care and tutoring for children up to the age of 17. We have instrument instruction classes, arts and crafts, a weight room, gym, game room and a thrift store. The Ex. Secretary is for the President of the organization. We have a Chairman of the Board of Trustees and Vice Chair., Finance Officer and Secretary. We have not been able to place a person in the Secretariel position as yet My question is if we place the Ex. Secretary, a paid employee, as Assistant Secretary to the Board of Trustees for the purpose of providing minutes of the meetings, will it be in conflict of interest to the contracts we are receiving from other entities.

After reviewing the Public Contracts Code and the Corporations Code, I cannot find any specific law that would prohibit the arrangement that you describe in your facts.

 

The only issues that appear to have an effect on a government entity's ability to contract are: (1) organizations with boardmembers who have been convicted of certain crimes (Pub. Contracts Code Secs. 10285-10285.5), and (2) boardmembers of the organization who are also employees or boardmembers of the public agency contracting for the goods and/or services (Pub. Contracts Code Secs. 10410-10412).

 

There may be internal conflict issues related to your organization's articles and bylaws, but these wouldn't disqualify the organization from contracting with a public agency.

Customer: replied 7 years ago.
The conflict of interest I have a quetion is "No members of the Board of Directors may be employed by the Contractor if this Contractor is a corporation". Our bylaws state "The Corporation may also have, at the discretion of the Board of Trustees, an Assistant Treasurer and such other officers as may be appointed by the Board of Trustees. Said officers SHALL BE REQUIRED TO BE MEMBERS OF THE BOARD OF TRUSTEES." Does this mean the Ex. Secretary cannot be a paid employee of the Corporation? How then does this effect the contract? The Chairman wishes to use the Ex. Secretary to take minutes of the board meetings. If we can find one, the Board Secretary would be used only to sign all legal papers. All of this was not a request but an order from the Chairman to make this happen.Can this be done legally and what repurcussions may result from this?

I'm having some trouble following the players here. It seems as though you are describing three different entities. In order to analyze a potential conflict, I need to know the various organizations involved and who works for or represents which organization.

 

Thanks in advance.

Customer: replied 7 years ago.

The three different entities here are:

1. The potential contracts with city/county

2. The Chairman of the Board wanting to use the Ex. Secretary of the corporation as Assistant Secretary to the board. Bylaws state must be a board member.

3. Ex. Secretary is a paid employee of the corporation which I understand may be a conflict of interest with city/county contracts.

 

I do not have any legal background, as you can well tell, but as a board member I want to do what is best and legal for the organization.

 

Don't worry about your understanding. We will sort this out together.

 

Where is the statement, "No members of the Board of Directors may be employed by the Contractor if this Contractor is a corporation" found? In the contract with the city?

 

And which entity is defined as the "contractor?" I'm thinking that the contractor is the city, and that this may be confusing you.

Customer: replied 7 years ago.

The statement is found within the contract with the county or city within Conflict of Interest clause.

 

The contractor is the organization signing the contract with the county or city.

 

Then the executive secretary cannot be the Secretary for the Board of Trustees, because the secretary is an employee of the corporation.

 

In other words, the city wants the Board to be absolutely independent of the corporation's employees and officers.

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