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Ask GWarren For Business & Nonprofits...
GWarren For Business & Nonprofits
GWarren For Business & Nonprofits, Attorney
Category: Business Law
Satisfied Customers: 355
Experience:  30 yrs Counsel, AVP Corp Governance Fortune 100 finance/ins, Nonprofit Bds, law firm. OH NJ license
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You may remember my questions from last month. I very much

Customer Question

You may remember my questions from last month. I very much appreciate your expertise. I am back again. Our group got a decision from the Virginia State Corporation Commission per the dissolution of our non-stock corporation. They said that the board can vote on dissolution since the members do not have specific voting rights. However the SCC said it does not have the authority to determine whether a conflict of interest exists involving the board's vote to dissolve the non-stock corporation. They did not cite any statute for not having the authority to consider the conflict of interest. They affirmed the dissolution and refused the petition to challenge it. Can you find any rationale for them saying they do not have the authority? To challenge the dissolution, member (us) offered evidence of a conflict of interest on the part of the majority of the board. Does relief for the conflict belong in the circuit court or is it something to appeal or both?
Submitted: 6 years ago.
Category: Business Law
Expert:  GWarren For Business & Nonprofits replied 6 years ago.
Thank you for your follow-up request. I am pleased to research the conflict of interests and issue of the Commission's authority, however, given the holiday weekend may need additional time to develop a proper answer. I am posting as an info request to ensure that timing approach is acceptable; otherwise I will open the question for other experts, Respectfully -
Customer: replied 6 years ago.
Please enjoy your holiday weekend and I thank you for helping. We have a member meeting on Monday evening, so if we can get an answer before then that would be wonderful. If the conflict argument "belongs" in the circuit court that is OK since we have included in already in our circuit court petition for relief. We just need some case law or statutory support for getting the circuit court to act on the conflict of interest per the vote on dissolution since at an injunctive hearing prior to the final SCC order, the circuit court would not enjoin the SCC (which is allowed but only under narrow circumstances like fraud). But now that the SCC has said they do not have the authority per the conflict of interest in the vote on dissolution and if we have some argruments to support that the circuit court does have the authority, then perhaps we can get this resolved in the circuit court without an appeal to the VA Supreme Court. We are pro se, by the way. Happy Easter.
Expert:  GWarren For Business & Nonprofits replied 6 years ago.
Thank you for enabling time to research and respond.

Since the SCC has the authority under the Constitution and Virginia Code to prescribe its own rules of practice and procedure (please see the below public domain link) and the SCC is a traditional regulatory rather than enforcement agency, I could not locate authority that would compel the SCC as a finder of fact to determine conflicts of interest related to the matter.

Although it would appear reasonable that the SCC would need to determine conflicts of interest as part of its fact finding role, their rules of practice and procedure do not appear to compel that that determination.

Your recourse would appear to be through the courts with concurrent jurisdiction or through the Supreme Court on direct appeal under the Constitution.

A 1960 case involving Gould, while not on point, may offer some support on voting rights as expected property rights (in that case they were barred due to laches due to failure to assert those rights in a timely manner). I am providing a direct link for your reference:

I apologize that I was unable to provide on point information as the complexity of the issues may require many hours of proper research. I hope the above is still helpful information. If it is not responsive, please do not feel obligated to Accept.

A public domain website that may be helpful to your independent research and perhaps blog opportunities on the issue is the following:

You may find the engaging a local attorney or paralegal simply to conduct extensive research on the issues may be worthwhile.

Best wishes