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Loren
Loren, Attorney
Category: Business Law
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Experience:  30 years experience representing clients .
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I have a private family foundation that was started in 1992.

Customer Question

I have a private family foundation that was started in 1992. My ex-wife and I are the only directors and officers. She has never had any involvement in the foundation other than signing the original documents of incorporation in 1992. Is there a way to remove her without notifying her.
Submitted: 1 year ago.
Category: Business Law
Expert:  Loren replied 1 year ago.
Thank you for using JustAnswer. I am JudgeLaw and I will do whatever I can to answer your question and provide you excellent service.

Before we begin, a bit more detail would be helpful please.

Do the bylaws provide any guidance as to removal of a director for cause?

How are the directors re elected from year to year?

Thank you.

JudgeLaw
Customer: replied 1 year ago.

I have replied to your request for further information. Did you receive it?

Expert:  Loren replied 1 year ago.
Please repost your reply in this thread.

Thank you.

JudgeLaw
Customer: replied 1 year ago.

I have been very negligent in holding annual meetings. There have been none since inception of 1992.


"3.2 Number and Tenure. The Board shall be composed of two or three Directors, unless otherwise provided by the Board or the members. The number of Directors may be changed from time to time by amendment to these By-laws, but no decrease in the number of Directors shall have the effect of shortening the term of any incumbent Director. Unless a Director dies, resigns, or is removed, he or she shall hold office until the next annual meeting of members or until his or her successor is elected, whichever is later."

Expert:  Loren replied 1 year ago.
Thank you, XXXXX XXXXX the additional information.

I am sorry to hear of your dilemma. I realize how frustrating this is for you and I hope to provide you information which is accurate and useful, even though it may not be the news you were hoping to get.

It is not really possible under Delaware law to remove a sitting director without notice to them.

Unlike many other jurisdictions, Delaware does not have a separate code governing not-for-profit corporations. Instead, not-for-profit corporations are governed by the same Delaware General Corporation Law (the “DGCL”) that applies to for profit corporations. Typically, although other entity options are available for forming a Delaware not-for-profit organization (such as a trust or a limited liability company), most Delaware not-for-profit entities choose to incorporate as a nonstock corporation (i.e., a corporation that is not authorized to issue capital stock and that has “members” and a “governing body” rather than “shareholders” and a “board of directors”).

Therefore, Delaware statutes provide:

§ 114. Application of chapter to nonstock corporations.

(a) Except as otherwise provided in subsections (b) and (c) of this section, the provisions of this chapter shall apply to nonstock corporations in the manner specified in the following paragraphs (a)(1)-(4) of this section:

(1) All references to stockholders of the corporation shall be deemed to refer to members of the corporation;

(2) All references to the board of directors of the corporation shall be deemed to refer to the governing body of the corporation;

(3) All references to directors or to members of the board of directors of the corporation shall be deemed to refer to members of the governing body of the corporation; and

(4) All references to stock, capital stock, or shares thereof of a corporation authorized to issue capital stock shall be deemed to refer to memberships of a nonprofit nonstock corporation and to membership interests of any other nonstock corporation.

In order to remove the ex as a director, you will need to call an annual meeting in accordance with the bylaws.

New director elections must be held by the members of the foundation.

Otherwise, assuming your ex is uncooperative and the foundation was not addressed in the decree of marital dissolution, you would need to either modify the divorce decree or get a separate order from the court to dissolve the foundation and reestablish it in form and substance acceptable to you.

I am sorry. I realize this is not the answer you were hoping for. As a professional, however, I am sometimes placed in the position of having to deliver news which is not favorable to a customer's position, but accurately reflects their position under the law. I hate it, but it happens and I ask that you not penalize me for having to deliver less than favorable news.

It is my privilege to assist you. Let me know if you need further information. I hope I have helped you beyond your expectations in the service I have provided to you. I am here for you.

Please remember to rate my answer when our communication is completed so I will be compensated for my time in providing you with the information you requested.

If you feel the need to provide a low rating, please stop and reply to me via the REPLY button with whatever issue or clarification you may need. I will happily answer your follow-up questions and assist you until I am able to explain the answer to your satisfaction. Please also remember that I cannot control whether the law is favorable to your situation, so please do not penalize me for having to deliver bad news.

Thank you.

JudgeLaw

Customer: replied 1 year ago.

One last question. I am in the process of re-incorporating the Foundation in Colorado where I live. Does that change your answer?

Expert:  Loren replied 1 year ago.
Thank you, XXXXX XXXXX the additional information.

Reforming the foundation in Colorado will still leave you with, presumably, assets titled in the name o the Delaware Foundation.

If the bylaws of the Delaware entity allow you to transfer foundation assets without the consent of the ex then your problem is solved.

Otherwise, you will have a Colorado entity which will have to be separately funded from scratch.

I hope this clarifies the answer.

JudgeLaw
Customer: replied 1 year ago.

If we have moved beyond the scope of my first question, let me know and I will add more funds. I am moving the corporation from DL to CO.. My understanding is that all I have to do is dissolve in DL and converting to a CO registration. Basically I am just moving the domicile of the corporation to CO.. Please let me know what you think.

Expert:  Loren replied 1 year ago.
Thank you Rick. I am happy to answer your follow up questions until you are satisfied. My goal is to help you.

The corporation or foundation only exists under its own state charter. You are not really moving the domicile; you are, legally, starting a completely new entity. In other words, you can not really "convert" from one state to another. The Colorado entity is a brand new entity and will not "inherit" any of the assets of the Delaware entity.

Regards.

JudgeLaw
Loren, Attorney
Category: Business Law
Satisfied Customers: 20767
Experience: 30 years experience representing clients .
Loren and 7 other Business Law Specialists are ready to help you
Customer: replied 1 year ago.

Thanks for your help. I realize I will need more extensive advice before I move anything or do anything.

Expert:  Loren replied 1 year ago.
Thank you, Rick, for your positive rating of my service to you and your generous bonus. Let me know if you need more help or have future questions. I will be here for you. Just ask for me by name at the start of your question - "JudgeLaw" or use the following link (which you can bookmark in your browser): http://www.justanswer.com/law/expert-JudgeLaw/


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