5 minute read
RECALL ELECTIONS
What they are, whey they're essential, and what to do
by Alex Sohal, Esq.
Director recalls play a vital role in ensuring effective governance and accountability within common interest developments throughout the state. In certain instances, the membership may consider the removal of directors, a process known as a recall election. This process is governed by both the Davis-Stirling Common Interest Development Act and the California Corporations Code, which establish guidelines and procedures that associations follow to carry out a director recall. This article aims to provide an overview of how director recalls are conducted in compliance with these laws and some key considerations for the board if it receives a petition for a director recall.
The triggering action for a recall election is the delivery of a petition to the association signed by at least 5% (10% for stock cooperatives) of the membership. The specific method of delivery of the petition is typically stated in the bylaws, and the association should confirm that the signatures are valid by verifying addresses and owners. In some instances where there may be some skepticism of the signatures, making a few phone calls or reaching out via e-mail to confirm members are aware of the recall petition’s purpose can be helpful. The association must also determine whether the recall is for the entire board as a group, every director individually, or some portion of the board, as this can impact the timeline for conducting the election.
Upon receiving a valid recall petition, the board must set a date for the special meeting via written notice to all members within 20 days of receipt of the petition. The date of the meeting, pursuant to Corporations Code §7511, must not be less than 35 days nor more than 150 days after receipt of the petition. Failure of the board to set the meeting date within 20 days of receipt allows the petitioners to set the date, so prompt action by the board is recommended. Reaching out to counsel upon delivery of the petition to discuss any uncertainty or questions regarding the petition would be appropriate.
The next steps depend on how many directors are subject to recall, as stated in the petition. There is also some flexibility in how an association may navigate the different options. The number of potential open seats is clear if the recall is for the entire board or only one director. Either the recall is successful, and all directors (or individual directors) are recalled, or the recall is unsuccessful. Given this clarity, the board can conduct the recall election and the election for the replacement directors simultaneously. If the board chooses this method, the association must follow the typical director election requirements.
If the recall petition is for less than the entire board but more than one director, the exact number of open seats is still being determined, as the recall may be successful for some directors but not others. As a result of this uncertainty, some boards choose to delay a director election until after the recall election is completed so the exact number of open seats, if any, is known. This option is allowed under the law and could be used by a board to reduce any confusion among the membership regarding the ballot and overall procedure.
If the recall election is successful and the replacement director election is held directly after the recall election, there will be a significant amount of time when the recalled directors remain on the board. This could cause some unrest amongst the petitioning members. The association’s bylaws should be consulted to determine whether a director is required to step down immediately upon recall or if they may remain on the board until their successor is elected. In any case, the recalled director may submit their resignation at any time. Any director elected to fill a recalled director’s seat is to serve the remainder of the term of the recalled director.
With respect to a director election needed due to a recall, the typical director election requirements apply, including the nomination period, pre-ballot notice, and secret ballot process. The question of when the director election should be conducted can be nuanced and varied across associations. It is recommended that an association reach out to legal counsel to discuss the timing of the election to ensure it complies with the association’s governing documents and the law.
It should be noted that if an association’s governing documents allow cumulative voting, the thresholds for a successful recall election are calculated using a specific formula unique to each association, and the board should work closely with counsel to ensure the correct figures are used. As you may see if you review the formula, this is a rather convoluted system that typically causes confusion and strife amongst the petitioning members as it allows a minority of the voters to block a recall.
As managers, you must always remember your relationship with the association and whichever board is currently serving. If a recall petition is submitted, working closely with counsel to ensure the correct procedures are followed and treating the petition reasonably are good steps to help ensure there is no claim of favoritism or animosity from a newly incoming board.
