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MShore Law
MShore Law, Attorney
Category: Business Law
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Experience:  Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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I work for a not for profit organization and we are having

Customer Question

I work for a not for profit organization and we are having serious problems with our Board Members, they have surpassed their authority and the chairperson has turned it into a dictatorship. We have read through the bylaws and it is also structured so that no one has an authority except the chairperson. There are many conflicts of interest on the board itself because the chairperson recruited all the members and there is no diversity. They haven't contributed anything to the organization, not even annual dues. What can be done to overthrow the board? How can we get rid of them? What legal action can be taken against them?
Submitted: 1 year ago.
Category: Business Law
Expert:  MShore Law replied 1 year ago.
Thank you for the post, I am happy to assist you by answering your questions. Has the board violated the bylaws or acted in a manner inconsistent with the purpose of the nonprofit?
Customer: replied 1 year ago.

They have acted in a manner inconsistent with the purpose of the nonprofit and they do not follow the 3 duties of a nonprofit. They have no loyalty to the organization, they derail all projects and efforts of expansion, and they dictate the everyday dealings of the organization and nothing cannot be done without their approval. They are not acting in the best interest of the organization, and as far as the bylaws they do not do anything to follow the bylaws (for example, they are supposed to have certain committees such as fundraising, or business dev., yet neither exist and they do nothing to generate funding). And the bylaws were also amended to give full power to the chairperson, the Executive Director has no authority at all. Also, all the board members were brought on by the chairperson, and have conflicts of interest (i.e. certain members are on other boards that are in direct competition with us, others are employees of other board members, therefore influencing their votes)

Expert:  MShore Law replied 1 year ago.
Thank you, allow me some time to research this matter on your behalf. I will be back with you shortly.
Customer: replied 1 year ago.

ok. Thank you. I appreciate your help.

Expert:  MShore Law replied 1 year ago.
thank you, it may take 20 mins or so. I just do not want you to wait without any guage of time.
Customer: replied 1 year ago.
No problem take your time.
Expert:  MShore Law replied 1 year ago.
Thank you, do at least 10% of the persons holding the outstanding capital certificates, subvention certificates or bonds having voting rights agree that the board should be removed?
Customer: replied 1 year ago.
I don't believe anyone has capital certificates. And everyone on the board with voting rights has been brought onto the board by the chairperson, and has some connection to the chairperson. How would I find out if anyone has capital certificates?
Expert:  MShore Law replied 1 year ago.
thank you, does the board release annual financial information? Just so that I have a sense of the number of persons whom agree with you, what percentage of the members of the nonprofit (those whom vote at meetings) believe the board should be removed?
Customer: replied 1 year ago.
No one at the nonprofit has any voting privileges besides the board members.. Not even the Executive Director or Assistant Director.. They have sole voting.. Any financial statements would come from our accountant. The board doesn't release anything
Expert:  MShore Law replied 1 year ago.
Thank you, in this case then it would be necessary to actually file suit on behalf of the corp to remove the president and board. In what way has the board violated the bylaws?
Customer: replied 1 year ago.
They never vote on anything, no one pays the annual dues which are required in order to keep voting privileges, They haven't voted the chairperson into office, she just took the seat and her tenure has expired and there has been no election.. The treasurer never attends any meetings. The bylaws state they are suppose to have committed for business dev and fundraising and many other but no such committees exist and they do not do anything to benefit the organization. They bring in no revenue no donors grants or sponsorship. And even if there is suppose to be a vote on the chairperson makes the decision. It's a dictatorship.
Expert:  MShore Law replied 1 year ago.
Thank you, what type of nonprofit is it, and what is its charitable purpose?
Customer: replied 1 year ago.
We focus on Human Services, congregate housing for HIV/AIDS, Immigration Services, and a few other programs related to those topics. Our only funder is AIDS Institute.
Expert:  MShore Law replied 1 year ago.
Thank you, this is the applicable law no removal of board members of a NY non-profit:
§ 706. Removal of directors. (a) Except as limited in paragraph (c), any or all of the directors may be removed for cause by vote of the members, or by vote of the directors provided there is a quorum of not less than a majority present at the meeting of directors at which such action is taken. (b) Except as limited in paragraph (c), if the certificate of incorporation or the by-laws so provide, any or all of the directors may be removed without cause by vote of the members. (c) The removal of directors, with or without cause, as provided in paragraphs (a) and (b) is subject to the following: (1) In the case of a corporation having cumulative voting, no director may be removed when the votes cast against his removal would be sufficient to elect him if voted cumulatively at an election at which the same total number of votes were cast and the entire board, or the entire class of directors of which he is a member, were then being elected; and (2) When by the provisions of the certificate of incorporation or the by-laws the members of any class or group, or the holders of bonds, voting as a class, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the members of that class or group, or the holders of such bonds, voting as a class. (d) An action to procure a judgment removing a director for cause may be brought by the attorney-general or by ten percent of the members whether or not entitled to vote. The court may bar from re-election any director so removed for a period fixed by the court.

As the law does not afford an applicable remedy for the immediate removal of the board, you have
two options:

1. show that unlawful acts have been committed by the board members in question, then have counsel for the board file suit on behalf of the membership in court to have the board members removed by order of the court based upon criminal or unlawful behavior; or

2. an to appeal to the membership at large to recall the board (at large).

Please let me know if this does not answer your questions, or if you have any follow up questions.

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