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Does the board of a CA formed 501(c)6 not-for-profit have to…

Does the board of a...
Does the board of a CA formed 501(c)6 not-for-profit have to adhere to the 51/49 rule - comprised of 51% individuals who do not benefit from the organization? If so, if the articles of incorporation and the bylaws to do stipulate this, are there any CA statutes, regs, or common law rules that would allow the Board Chair to make interim or temporary appointments to the board to correct an imbalance related to this rule so the organization is in compliance?
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Customer reply replied 10 months ago
CORRECTION: "...if the articles of incorporation and the bylaws do NOT stipulate this..."
Answered in 19 hours by:
9/18/2017
Asad Rahman
Asad Rahman, Attorney
Category: Business Law
Satisfied Customers: 2,527
Experience: Practicing Attorney with 10 years experience
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Yes, the rule does apply pursuant to Corp. Code 5227. Even if it is not stipulated in the bylaws, the organization must still comply with applicable state and federal laws.

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Customer reply replied 10 months ago
Thank you. One related follow up question... does that code section mean to state that the "disinterested" board members (the 51%) cannot have ANY compensation from the organization, like a stipend for their time, or does it mean that they cannot have any business relationship with the organization that benefits them financially? In other words, does the 51% rule mean that 51% of the board has to be all volunteer?

They can still receive some salary for their work as a board member.

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This is a fantastic resource promulgated by the Attorney General. https://www.oag.ca.gov/sites/all/files/agweb/pdfs/charities/publications/guide_for_charities.pdf

Asad Rahman
Asad Rahman, Attorney
Category: Business Law
Satisfied Customers: 2,527
Experience: Practicing Attorney with 10 years experience
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Asad Rahman and 87 other Business Law Specialists are ready to help you
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Customer reply replied 10 months ago
Excellent. Thank you for the resource, much appreciated.
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