The Governor of North Carolina recently signed House Bill 320 (short title “Modernize Remote Business Access”). But, what does this new virtual meeting law even mean? And how does it affect homeowners associations?
Watch Chris Gelwicks from The McIntosh Law Firm explain how House Bill 320 can affect homeowner associations
The Governor of North Carolina recently signed House Bill 320 (short title “Modernize Remote Business Access”). But, what does this new virtual meeting law even mean? And how does it affect homeowners associations?
Understanding the New Virtual Meeting Law in North Carolina
Homeowners associations in North Carolina have always had the option to hold board meetings through phone calls or video conferencing. However, member meetings are a different matter. While the COVID-19 pandemic saw the Governor issuing Executive Orders that permitted associations to hold member meetings electronically, those have since expired. Besides, even with those EOs at play, associations were still not allowed to conduct business and vote on matters during virtual meetings.
This is all changing, though, with the new virtual meeting law passed in North Carolina. House Bill 320, short titled “Modernize Remote Business Access,” was signed by the Governor on September 20, 2021, and made changes to the Nonprofit Corporation Act (North Carolina General Statutes Chapter 55A). It is worth noting that the bill does not make any changes to the North Carolina Planned Community Act or the Condominium Act.
What Are Meetings Anyway?
First of all, it is important to define what meetings are. Meetings differ from mere gatherings or assemblies. A member meeting is where the association and its members conduct business. In other words, it is where voting takes place. At meetings, there are actions taken and minutes jotted down. In contrast, a gathering or assembly is purely informational. At these events, no business is conducted, no votes are cast, and no meetings are taken.
Changes to the Nonprofit Corporation Act
House Bill 320 made considerable changes to the Nonprofit Corporation Act. Some of the most notable ones are discussed below.
55A-7-01 and 02
Nonprofit corporations, including homeowners associations, can now hold their annual, regular, and special meetings in person or “by means of remote communication.”
55A-1-70
According to this change, associations may now conduct business using electronic means unless otherwise restricted by the association’s bylaws or articles of incorporation. Associations must provide members with a choice to “opt-in” to communicate using electronic means and let them know how they can do so. Essentially, members must agree to this by providing the association with their email addresses.
55A-7-09 (a) and (b)
If the board permits, members may participate in meetings through remote communication. The board must fulfill some requirements, though, such as:
- Verify that each participating person is a member of the association
- Provide remote members with a reasonable chance to participate and vote
Of course, network connectivity issues do happen. In that case, if a member is having problems with their Wi-Fi, that is no longer the problem of the association.
The new virtual meeting law does not clarify whether or not associations can hold hybrid meetings (i.e. a mix of in-person and remote participation). However, given how the bill is worded, such meetings are likely not allowed.
55A-7-09 (c) and (d)
According to this change, it is within the board’s sole discretion whether to hold a meeting solely by remote communication or solely in person. The exception to this is when there is language in the bylaws or articles of incorporation that prohibit the board from doing so.
Additionally, remote meeting notices must include sufficient information on how members can join electronically. If there is a website or password, those details and other pertinent instructions must appear on the notice.
Proxies
The change to Section 55A-7-24 of the Nonprofit Corporation Act addresses proxies when it comes to electronic meetings. According to this, members who have opted in to communicate through electronic means can appoint a proxy via electronic record. This electronic record must include the member’s electronic signature or must be sent from their designated email address.
It is also possible to revoke a proxy submitted via electronic record in one of two ways:
- If the member attends the meeting, or
- If the member revokes the submitted proxy in writing
The bill is unclear as to how many email addresses a member can designate. If a member who has opted in changes their email address, it is recommended for them to update it with the board. However, the bill does not specify whether the member holds this responsibility or if it is the board’s duty to update email records every so often.
Notices
According to the changes made to Section 55A-1-41, the association can send an electronic notice (via email, for instance) to members who opted in to communicate via electronic means. Such a notice is deemed effective. Members are also considered to have received said notice once the association sends it.
Pursuant to the change in 55A-7-05, a notice is fair and reasonable if:
- The association provides notice of the date, time, and place (if any) of the meeting not less than 10 days nor more than 30 days before the meeting; and,
- For remote meetings, the notice must include instructions and information on how members can log in and participate, as provided in Section 55A-7-09.
Sometimes, you will need to halt a meeting midway for whatever reason and continue it on some other day. If you continue the meeting by remote communication, the announcement should include the means of remote communication. It is imperative to make these details clear.
Voting
Associations have always taken action or voted on matters using written ballots. The rewritten Section 55A-7-08 now includes the option of electronic voting. With this, associations can use online platforms such as SurveyMonkey or other mediums that allow members to log in and vote for an item. All members must be given the opportunity to vote by written ballot, electronic voting, or both. The board can decide, in its sole discretion, whether voting will be conducted via written ballots, electronic voting, or both. Associations can only rely solely on electronic voting if all members have opted in by providing their email addresses, as stipulated under 55A-1-79(b).
Written ballots must contain or request information enough to identify the person voting — the member or the member’s proxy. Such ballots must consist of the description of the vote and the opportunity to vote for or against each proposed action. They must also include the return by date. Members can then submit written ballots to the association using any reasonable means provided by the association. This includes electronic means such as email.
For electronic voting, associations can provide electronic ballots or an electronic notice that presents the proposed action, provides an opportunity to vote, and details the instructions on how to vote. The return by dates for both the written ballots and electronic voting must be the same.
What This Means for HOA Boards
Given the changes made to the Nonprofit Corporation Act, virtual meetings will likely become more prevalent. This is a step in the right direction, as virtual meetings do have several benefits, including higher attendance rates. However, it also means boards will have more work to do. For one thing, boards must construct new rules and procedures for managing virtual meetings. Some key questions to ask include:
- When should you call for an in-person meeting versus a virtual meeting?
- How will you run virtual meetings?
- With built-in recording functions on virtual platforms, will it still be necessary to take minutes?
- If you do record the meetings, who will have access to the recordings?
- Where will you store the recordings and for how long?
- Pursuant to Section 55A-7-09 (a) and (b), how will you verify that all participants are members of the association?
- How will you take votes during virtual meetings?
- If two members from the same household use separate logins to attend the meeting, whose vote will count?
Generally speaking, it is still a good idea to take minutes of virtual meetings and forgo recordings. Keep in mind that recordings cannot replace or substitute meeting minutes.
As for identifying members, the notice can include instructions asking members to display their full names. Of course, some members may gather together and use a single login to participate as a group. In this case, ask each one to identify themselves before the meeting. This will take more time and work since you will need to go through the membership list instead of the usual sign-in sheets at physical meetings.
Remember that Robert’s Rules of Order still apply even to virtual meetings. When in doubt, it is best to consult a lawyer.
The Bottom Line
The new virtual meeting law in North Carolina certainly changes a lot of existing procedures that many associations are used to. While they can be confusing at first, it remains of paramount importance that boards familiarize themselves with these changes. If you find yourself stuck or at a loss, it always helps to seek advice from a lawyer.
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