The Law of Virtual Board Meetings
© 2002, Tyra Hilliard, Esq., CMP. All Rights Reserved.
You are the Director of Meetings for the National Widget Company, Inc.
The CEO comes to you and tells you that, due to budget cuts, the Fall
2002 board of directors meeting needs to be held online rather than face to
face. After much frantic research
on meeting technology, you submit a proposal to the CEO for how the board
meeting may be held online. Board
members, you explain to the CEO, can participate from their desktop computers
from the comfort of their offices or homes all around the country.
The technology enables all board members to concurrently view the agenda
and handouts on their computer screens. For
conversation, board members type in a “chat” box, which immediately pops up
on everyone’s computer screen, enabling virtual conversation and voting on
items of business. Your CEO is
thrilled with your ingenuity and the cost savings of a virtual meeting.
Good job! Oh, except that
this meeting may violate the law.
Know your organization
Whether you are an independent, corporate, or association meeting planner, you need to be aware of the legal status of the organization for which you are planning a meeting. Is it a partnership, a limited liability company (LLC), or a corporation? In what state is the organization organized or incorporated? These issues are important because state laws may govern how often a meeting must be held and in what manner it must be held.
The law of corporations
If the organization for which
you are planning a meeting is a corporation, be aware that the scenario above
involving the National Widget Company, Inc. may be contrary to state law
requirements. The law that applies
to an organization is the law of the state where the organization is
incorporated, which may be the same as or different than the state in which it
is headquartered. Most states’
laws require that all members of a corporation board of directors be able to
“hear” one another simultaneously at a board meeting.
An online meeting with no audio component would violate this legal
The law of corporations in most
states allows a vote of the board of directors by written consent, so a board of
directors could use an online forum for discussion and take action (that is,
vote) in writing. Check the
corporation’s bylaws and state law, however, as the written consent may have
to be unanimous.
Participating in a simultaneous
telephone conference call in addition to a virtual online presence would be a
combination of technologies that would satisfy the letter of the law in most
states. Using a webconferencing
technology via a computer with an audio component would also meet the
requirements of a legally valid board of directors meeting.
An extreme minority of states
(California and Illinois, predominately) have recently changed their corporate
law to allow the board of directors of a corporation to meet in any manner in
which all members can “communicate” with one another (rather than “hear”
one another). The word
“communicate” in the laws in these states would allow online meetings of a
corporation board of directors, whether or not an audio component is included.
Tyra W. Hilliard, Esq.,
CMP (firstname.lastname@example.org) is a
meetings industry attorney and Assistant Professor of Event Management at The
George Washington University in Washington, D.C.
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