For California corporations, the general rule is that an act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board. Cal. Corp. Code § 307(a)(8). This general rule is not without its exceptions. Two of these exceptions are found in the statute: Section 310 and Section 317(e). Other exceptions take a little digging to discover.
Section 311 requires that a resolution designating a committee of the board be adopted by a majority of the authorized number of directors. For example, the authorized number of directors may be 7. Assuming that the default quorum rule in Section 307(a)(7) applies, a quorum is four directors. If only a quorum of directors is present, most actions and decisions could be taken by as few a three directors. Under Section 311, however, four directors would be required to designate a committee of the board.
Section 307(a)(8) establishes the rules for meetings at which a quorum is present. Under Section 305(a), a vacancy (other than a vacancy created by removal) may be filled by “approval of the board”. However, if the number of directors then in office is less than a quorum, the vacancy may be filled by:
- The unanimous written consent of the directors then in office,
- The affirmative vote of a majority of the directors then in office at a meeting held pursuant to notice or waivers of notice complying with Section 307, or
- A sole remaining directors.
The SEC’s Dark Side
On Monday, the Securities and Exchange Commission announced that it had made a whistleblower award of $3.5 million.
- Who received the award? That information was redacted from the order.
- What was the covered action? That information was also redacted.
- On whom were monetary sanctions imposed? That information was also redacted.
- What percentage of the monetary sanctions were awarded to the whistleblower? That information was redacted.
Without knowing these basic facts, there is simply no accountability to the public for a government program that is handing out tens of millions of dollars to individuals.
Update, I have corrected the example to change “5” to “4”. Thanks to an attentive reader!