CLIENT ALERT
By: J.P. Harris
March 31, 2020
Just as for-profit leaders adapt to social distancing and conducting business remotely, so too must not-for-profit leaders find ways to persevere while minimizing face-to-face meetings. The New Hampshire Attorney General’s Office, Charitable Trusts Unit issued an advisory making it a little easier for not-for-profits to conduct board meetings so that operations can continue without in-person meetings of the directors.
Some not-for-profits adopted bylaws before the current crises that permitted telephonic or electronic meetings, but many had not. Without the structure from bylaws to establish the rules for telephonic or electronic directors’ meetings, not-for-profits risked noncompliance and technically unauthorized actions. The NH Attorney General’s advisory relaxes the rules for those not-for-profits that had not yet adopted explicit procedures for conducting remote meetings.
According to the advisory, if the charitable organization’s bylaws contemplated face-to-face meetings, but did not contain language expressly prohibiting electronic or telephonic meetings, the Charitable Trusts Unit “will take no action” against a board of directors for using electronic or telephonic means to conduct business so long as the organization later ratifies the actions at a subsequent in-person meeting. This will of course require some diligence to ensure that actions are in fact ratified perhaps months after the fact when the board can next meet.
Some organizations are required to open their meetings to the public. The NH Attorney General addressed this circumstance as well. The Charitable Trusts Unit will “take no action” against such a board for using electronic or telephonic means to conduct a meeting so long as arrangements are made for the public to view or listen contemporaneously to the meeting. One example of such a procedure would be to publicize a call-in number to the public, so interested individuals can listen to the proceedings.
If the bylaws of an organization require annual meetings, the Charitable Trusts Unit will “take no action” against directors who opt to delay their annual meeting until after the state of emergency expires.
The advisory also addresses the difficulty in obtaining original signatures for annual reports due to the Charitable Trusts Unit. Once again, the Unit will “take no action” against directors for filing documents with photocopied or scanned signatures, including scanned signatures from a notary public. For more information about the Governor’s Emergency Order #11 regarding remote notarizations, see Remote Notarizations in NH During This State of Emergency. Organizations also have the option of seeking a 6-month extension to the deadline to file annual reports.
The NH Attorney General’s advisory applies only to not-for-profits, however. As of now, for-profit enterprises must still comply with applicable statutes regarding their governance. RSA 293-A:8.20, for example, permits directors of for-profit companies to meet remotely, so long as all directors can simultaneously hear each other during the meeting. For-profit companies also have the option of acting by unanimous consent under RSA 293-A:8.21.
As not-for-profits struggle to fulfil their missions in these uncertain times, remaining compliant with governance rules can add unwanted complexity. The NH Attorney General’s advisory eases some of that burden. For those not-for-profits that currently lack explicit provisions for telephonic or electronic meetings, it would be prudent to consider adopting such changes when the dust settles in case circumstances such as the COVID-19 pandemic arise again.