At this time of year, the boards of directors of many community associations across the state have already begun to plan for their association’s annual meeting. Holding an annual meeting is required by law for any community association established under the Georgia Nonprofit Corporation Code; however, it is also an opportunity for the board to take stock of the past year’s accomplishments and present the board’s plan for the coming year to the members. The “main event” at many annual meeting is often the election of directors for the coming year. In addition, the board of directors likely has an obligation to report on the affairs, finances, and budget projections of the association, whether by virtue of the Georgia statutes under which the community was established or the community’s bylaws. In any event, board members should be familiar with the general procedures and requirements for annual association meetings.
Notice
Step one in holding a successful annual meeting is letting the members know about it in advance! Meeting notices should be in writing and should be given to each member of the association within the timeframe and format required by the applicable law and/or the association’s bylaws. For example, condominium associations and homeowners association subject to the Georgia Property Owners’ Association Act must give notice at least 21 days before an annual meeting. The bylaws of other associations may prescribe a certain timeframe. Notice of the meeting should state the time, date and place of the meeting and should mention any significant matters to be considered at the meeting, such as election of directors or a vote on a proposed amendment to the restrictive covenants. The notices should be sent in accordance with the applicable law and the association’s governing documents, for example, by first class mail, hand delivery or electronically. If an association’s annual meeting notice is not sent within the proper timeframe or by the proper method and/or does not contain the proper information, the actions at that annual meeting, including election of directors, may be open to a legal challenge. Board members should review their community’s bylaws and the applicable law carefully to familiarize themselves with the requisite method and timeframe of delivery and content of the meeting notice.
Budget
A report on the financial condition of the association must be given at the annual meeting. This generally involves a presentation of income and expenses for the past year and presentation of the proposed budget for the coming year. A community’s governing documents will generally set out a procedure regarding adoption of the budget. Generally the board of directors has the authority to adopt a proposed budget and, depending on the governing documents, the budget will either become effective when it is affirmatively approved by the members or, in the alternative and more commonly, it will become effective unless disapproved by the members. The bylaws of many communities require that the proposed budget be sent to the members prior to the annual meeting, sometimes even before the meeting notice. Unless the governing documents require affirmative approval of the budget by the members, a membership vote on the budget usually is not required and it is not good practice to allow a vote on it. That said, failure to follow the proper procedures with respect to adopting the budget may expose the budget to a challenge by a discontented owner. The board should become familiar with the budgetary procedure early in the year and be sure that the association strictly adheres to the procedure. In addition, at the annual meeting the board may want to explain any significant changes to the budget from the previous year in order to avoid any confusion and opposition that may arise if a member feels there is not a reasonable basis for the budget change.
Conduct of Meeting/Agenda
The conduct of an annual meeting is usually established by the association’s governing documents, which in many instances applies Robert’s Rules of Order. In most associations, the president of the association presides over the annual meeting and is charged with keeping the meeting on track and moving through the business items. Prior to an annual meeting, the board members should familiarize themselves with some of the basic parliamentary procedures related to running an association meeting, such as calling the meeting to order, making motions and calling for votes. These parliamentary procedures can help in running the annual meeting so that the association’s business can be conducted successfully.
In addition, the board should adopt an agenda in contemplation of the annual meeting and be sure to follow it at the meeting. Distributing and following a clear agenda can assist the board in smoothly running the annual meeting and making sure that inappropriate topics do not derail the association’s regular business. Some boards find it helpful to adopt an agenda which allocates a certain amount of time for consideration or discussion of each agenda item or to reserve time at the end of the meeting for any questions.
Quorum/Proxies
A certain number of association members must be present at the annual meeting in order to call the meeting to order and conduct business. This is called the “quorum.” If quorum is not met, the association may have options for adjourning the meeting to a later date when more members are present. Members may be present in person or by proxy to count toward quorum. A member may designate a third person – either a particular individual or, for example, the acting secretary of the association – on a written proxy to attend the association meeting and cast a vote on their behalf. Proxies must be signed and dated to be valid and may be revoked if the member who gave the proxy attends the meeting. By providing proxy forms to members at the same time as notice of the annual meeting, a community association can facilitate member participation at the annual meeting and better ensure that the association can hold votes and otherwise conduct its business at the meeting. However, an owner is not required to use the proxy form provided by the association. Before the annual meeting, board members should review their community’s governing documents to determine how many members must be present at the annual meeting in order to meet quorum so the association to conduct business.
Votes
Various issues may be presented to the membership for a vote at the annual meeting. For example, directors may be up for election, an amendment to the restrictive covenants or the association bylaws may be proposed, or matters of procedure may arise. Each of these items requires approval by a particular number of members. For example, in many associations, the individuals receiving the most votes at a meeting are elected to the board, while in others, electing a director requires approval of a majority of the members in attendance at the meeting. An action such as adopting an amendment may require approval of 2/3 of all members regardless of whether they are in attendance. Prior to the annual meeting, board members should review their community’s governing documents and determine the requisite vote necessary to adopt any measures that will be proposed to the members.
In addition, board members should become generally familiar with how votes are allocated among association members and how to count those votes. For example, in some condominiums, because of the variation in size among the units, owners may be entitled to weighted votes based on the square footage of their unit or even the number of bedrooms. Thus, a majority of the voting power may be more (or less) than a majority of the owners by number. In others, members cast equal votes.
Prior to their community’s annual meeting, board members should become familiar with the general procedures for association actions and the reporting and voting requirements set out in the community’s governing documents and plan accordingly. Many other considerations may play into each of the items discussed above depending on the nature of your community and the particular circumstances surrounding the meeting, including, for example, specific provisions of the governing documents and law applicable to your community and the particular actions your association is proposing. Board members may consult the association’s legal counsel if they have any questions about planning or preparing for the annual meeting or determining some of the legal procedures and requirements related to holding their community’s annual meeting.